5 Lessons About Negotiating Salaries With Employees

by / ⠀Career Advice Entrepreneurship / November 12, 2013


When a potential employee accepts a job offer you – as the employer, manager, and entrepreneur – must willing to negotiate further terms. Nowadays, job seekers have at their disposal a plethora of details regarding salary negotiations thanks to the numerous books and websites readily available. The majority of them join a job interview with solid knowledge of their employer and respective company. If you want to close a mutually satisfying deal, you must be equally prepared. The same thing applies when you negotiate with an employee who is already working for you.

1. How much can you negotiate for an employee’s remuneration?

A potential employee will probably propose a higher salary than you’re having in mind. When that happens, you have two possibilities: to agree with their proposal or stick to your offer. In case the candidate keeps trying to persuade you, you have to decide whether or not you’re willing to increase the amount of your pitch. As a business owner and avid entrepreneur, it’s up to you to decide how desperately you want that individual to work for you. Before stating anything, consider the following three questions:

  • Are there other, similarly qualified applicants available if this candidate rejects your offer? In case the answer’s yes, you don’t have to worry because you’ll be free to decide how much you can give away.
  • Do you have difficulties in finding the right employee for this job? Is the market affecting your possibilities to recruit proper candidates? In case your answer’s yes, maybe you should try to reach an agreement with the candidate.
  • Can a higher pitch be considerably out of line with current salary levels for similar positions in your firm? Keep in mind that internal equity in payment levels is very important, since it can have a significant impact on the spirit of teamwork, as well as on your fairness.

2.     Analyze performance levels

After answering the above mentioned three questions, there are other essential aspects that you have to consider. Are your candidates skilled enough? Do they seem compatible with your company’s requirements?

  • Skills: Will the employee be able to perform his job effectively? Evaluate his capacity to accomplish his tasks by analyzing his past performance, if relevant. Besides, you have to check whether or not he has the experience, abilities and skills needed for this position.
  • Compatibility: Do you think he will do a good job? Evaluate his capacity to work with clients and suppliers. Plus, you should also evaluate his ability to meet your requirements and expectations.
  • Payment: Is he willing to accept the pay levels you consider to be appropriate? Evaluate your company’s capacity to allure and maintain the caliber of talent needed for success. Will this candidate be a valuable asset to your business?

Once you’ve managed to clarify all these issues, you have to start negotiating with the candidate.

3. Opt for a formal negotiation

When it comes to already existing employees, you should go for a formal performance and payment review cycle. The majority of businesses choose a semiannual performance review cycle. This process is really effective, since it does the following things:

  • Sets a schedule that both the worker and the employer can utilize to get ready for negotiation;
  • States the desire of the employer to get involved in a negotiation;
  • Reduces the number of off-cycle modifications and negotiations;
  • Sets expectations regarding the vital business goals of the employer and the rewards that will be offered to those who meet or even exceed those goals.

 4. Negotiate efficiently

Employers can negotiate efficiently with their workers if the process relies on performance management. They should team up with employees and inform them about their business objectives and recompenses associated with accomplishing those objectives. This collaboration will bring numerous benefits because:

  • The employees will be familiar with the performance expectations of their boss;
  • The employees will do their best to meet or even exceed these expectations.

5. Non-monetary benefits that can attract a potential employee

In case you don’t have the possibility to match the salary demand of your potential employees, but you really want to convince them to accept your job offer, opt for non-monetary incentives. Sometimes, candidates are willing to trade a higher salary for other benefits. For instance, flexible scheduling is an alternative that will surely please the applicant and won’t cost you anything. Besides, you can offer them extra time off or the possibility to telecommute. A signing bonus might also delight a potential employee, so don’t hesitate to provide it.

As an avid entrepreneur and proud business owner, it’s essential to have good negotiation skills. You must polish that skill of drawing employees towards your company without necessarily motivating them with huge financial compensations. As long as you know how to talk to the people, it should be a lot easier to reach into their minds and make them work for you.

The article is being written by a regular guest author and freelance writer William Taylor. He is a negotiation expert and poses excellent negotiation skills. He strongly recommends http://www.thegappartnership.com.au for negotiation workshops.

 Image Credit: Shutterstock.com

About The Author

Matt Wilson

Matt Wilson is Co-Founder of Under30Experiences, a travel company for young people ages 21-35. He is the original Co-founder of Under30CEO (Acquired 2016). Matt is the Host of the Live Different Podcast and has 50+ Five Star iTunes Ratings on Health, Fitness, Business and Travel. He brings a unique, uncensored approach to his interviews and writing. His work is published on Under30CEO.com, Forbes, Inc. Magazine, Huffington Post, Reuters, and many others. Matt hosts yoga and fitness retreats in his free time and buys all his food from an organic farm in the jungle of Costa Rica where he lives. He is a shareholder of the Green Bay Packers.