Securing top talent is tough! As an employer, you want to get the best candidate for the best price, but there are things you should consider when making offers and negotiating compensation with a prospective employee.
Negotiations can only be deemed a success if both parties come to an agreement they feel good about. This article aims to give you [employer] some practical advice we have learned over the years while working in this industry.
3 Main Factors To Consider When Making An Offer And Negotiating
- Get to know your candidate’s wants and needs.
- Make them an offer that works for you both.
- Don’t forget that many will value other factors than just monetary compensation.
Get To Know Your Candidate
At the end of the day, the most important factor is to get to know your candidate. Time and time again, we have helped employers and candidates negotiate because we take the time to get to know the candidate and communicate what truly matters to them while also keeping our client’s needs and capabilities in mind.
Ask. Then probe a candidate further. Do they honestly only care about culture, or is money their biggest motivator? Or do they say money is a motivator, but you notice all of their questions revolve around culture, career development, or schedule flexibility?
They might care about money, but maybe they are a single parent who needs to be able to come and go as needed for their child. Or perhaps they were previously in a dead-end job and need to see a path for themselves at your organization.
You need employees to do their job. Absolutely. But the little things can turn an employee into a company champion very quickly. If they feel valued, appreciated, and heard then they are more likely to stop their job search entirely, accept your offer, and hit the ground running. That will ultimately speed up how quickly they become a valued contributor!
Making That First Offer
Once you have gone through the interviews, had the candidate do an assessment, and decided you want them, it is time to make them an offer.
We have seen it all in our many years of IT Staffing and Recruiting at Pira Consulting. There are a handful of mistakes we see regularly that can often be avoided. Below are some of the recommendations our tenured staffers and recruiters want to tell you.
Make A Solid Offer
While getting a great candidate cheap sounds appealing, coming in too low can quickly turn an excited interviewee into a candidate running for the hills. While it’s not fair to judge a book by its cover, candidates can, at times, negatively judge the entire organization based on what they feel is an insulting offer. Instead, we recommend having candid conversations with your Account Manager and with the candidate early on. In the staffing industry, we know that most issues that happen at the end of the process (interviews missed, offers turned down, etc) almost always point to something that was skipped at the beginning of the process.
If you know their expectations and wishes early in the interview process, you WILL avoid issues towards the offer stage.
Lowballing Cost Them Dearly
There is a specific instance that always comes to mind when discussing this one. We had a wonderful candidate who was excited to start at a local company here in Minneapolis, we will call them “Company A”. Company A also thought this candidate would be a great fit. When the candidate gave their salary expectations, it was within Company A’s budget so we thought “Awesome, this will be an easy matchup and everyone will be happy.”
But instead, Company A decided to lowball the candidate, and not by a little bit…like $20k!
While Company A was thinking they were leaving room for negotiations (a lot of room mind you), what they ended up doing was insulting the candidate. They felt Company A did not value them and started to question if it was a good fit.
Everything did not go as hoped. The candidate got another offer that was more reasonable with some extra benefits (extra paid time off) and the candidate went with the better offer.
The thing to understand here is that the candidate wanted to work for Company A. They were very bummed they had to walk away from Company A, but the damage had been done.
If Salary Is Not Negotiable, Beef Up Other Benefits
Sometimes your salary budget is what it is and you do not have adequate room for an increase. OK, that happens. There are a couple of things to consider.
First, be upfront and honest about that from the start. If your company doesn’t have a large budget and relies on employees who value benefits, culture, or some other intangible benefits, then discuss that early so you can weed out candidates who are not going to be a good fit.
Second, offer up some additional benefits like additional schedule flexibility, more PTO, higher company contributions to HSAs or health insurance, stock options, car allowances, stocked break room with free food and snacks, etc.
Stock Options Can Boost Employee Loyalty
One of our clients has a 3x average tenure rate, compared to the industry, because of its stock options. If “sold” right to prospective candidates, these plans can solidify an abnormally high loyalty rate because of the long-term financial rewards associated with staying with the company. As stock options accrue, employees can be deterred from leaving the company because the long-term financial loss of exiting the company (hence exiting the stock plan too) becomes greater than a nominal base salary increase they could receive at another company.
Money Isn’t Everything
In 2021, we think everyone is aware that salary is not the only factor applicants care about. But just in case, let’s talk about this one.
People are complex and value different things. Some will care about money above all else. But others, especially those further into their career, can identify other factors that mean more to them. You need to unearth these factors to give you the best shot at offering an interviewee a package they will accept fast!
Size Of The Company
Some candidates care about the size of the company they work for. There is a “feather in your cap” sort of feeling when working for a large, prominent company. When this happens, some will accept a lower salary simply to get into the company.
Others have done the corporate thing and they hated it. Now when they job search, it is for a smaller company that has less red tape, fewer levels of middle management, and a strong culture they can get behind.
Something you can probe them further on is whether they are interested in a specialization or if they like working on a variety of projects. If they prefer specialization, then they likely would be a great fit for a larger organization. If the candidate enjoys a variety of different languages or types of projects (perhaps they call themselves a “jack of all trades”) then they would likely be more suited for a smaller organization.
One isn’t better than the other. You simply need to find out what this candidate cares about so you can both feel like it is a great fit.
Some Value A Company’s Notoriety
There was a woman a few years back who was hired at a small company, given a nice salary, and was told she was to be groomed to manage the department within a year of her start date. Everything seemed to be a great fit, until two weeks into her employment she handed in her resignation for a job at Target Corporate. This was a huge blow to the small company, and while she did feel bad, she said she “owed it to herself” to take such a great opportunity at such a reputable company.
There was nothing to be done. Even after offering her more money and benefits, she said it wasn’t about the money, it was about being able to say she worked at Target Corporate.
While no one will be able to screen for every scenario, ask pointed questions about a candidate’s goals and what is truly important to them. Yes… they may not be forthcoming, but at least you asked…at least you tried.