Salary Negotiations: What HR Managers Should Know

It's not easy for both employers and workers when it comes to salary negotiations. HR staff should be familiar with regular salary negotiations with potential new employees. Employees believe about getting fair compensation for their work and proving that they are worth the money, and HR managers need to keep the company's expenses within budget and gaining supervisors' approval. 

Salary negotiation is a delicate process. There have to be ground rules so that neither party will feel devalued or confused from the process. Here's how an HR manager can successfully manage salary negotiations:

1. Collect data about your organisation

First, HR managers need to research about their organisation. Here are some questions to help them identity crucial points before managing salary negotiations:

• How is your organisation doing as a whole?
• What decisions has your organisation made when it comes to raises and salaries?
• What are the budgets for new workers?

You need to find the answers to these questions, and then you will understand the limitations of what you can offer. If it's about hiring, it's vital to learn how much current employees in the same roles are earning. 

HR managers should also learn about the business priorities of their organisation and which parameters to use when determining salaries. For instance, are salaries and raises based more on the employees' performance or skills, or is it experience?

2. Collect data about the market

HR managers will also need to research the current job market and the general economic climate. You can learn from other organisations in a similar field that matches your organisation's size and location. Here are some questions that will help you collect data about the market:

• What kind of salaries are they offering to their workers?
• What is their typical raise for experienced workers?

You must collect reliable information for each role on your team. You can access the information through other HR professionals and salary surveys. This is where you put your networking skills to use. Try to maintain your relationships with other HR staff to exchange valuable knowledge.

3. Collect info from your team

Since you can only offer salaries based on the limited budget, there are consequences when you offer a higher salary than what was planned. You have to collect as much information as possible to make the right decision.

This involves gathering info from your team, too. You need to develop a concrete rationale for your decisions. Be articulate when you explain the offer to the applicant. You should be ready to answer questions and justify your stance. 

In case of a pay raise, remember that offering a higher raise to a worker means that another employee will earn less. Create a guideline to choose which amount of raise each employee deserves. Consider each employee's value to the company and whether they exceed or fall behind the expectations. 

4. Listen to the job candidate

After you have finished your research, it is time for salary negotiation. Here's how to learn how much your candidate is looking for: 

1. Ask for the candidate's salary expectation during the application process.
2. Find out the level of the candidate's most recent salary and benefits.
3. Ask from the candidate's previous employers during the reference checking process. 

When you're finally negotiating with the candidate, you should ask relevant questions and listen carefully. Find out why your candidate has come to that specific salary figure. You should also ask if there's any room for negotiation.

The primary purpose of salary negotiations is that both parties are satisfied. It should not be about winning or losing. 

5. Communicate effectively

When it's HR's turn to talk, make sure what you understand what you can offer to the candidate. You have learned about the limits of your offer when you figure out the budget that has been assigned to that particular role. 

Even if you think that the salary you're offering is not negotiable, there are other benefits that you should consider before making an offer. Some benefits you can offer are medical coverage, extra leave days, and allowance. 

Benefits can influence the candidate's decision to accept or reject your offer. Maybe there are some benefits your organisation is unable to offer. If that's the case, then you should let the candidate know about it.

In the end, it's in everyone's favour that you reach an agreement with the candidate. 

Guidelines in negotiating salary

1. Decide the price ceiling, the maximum salary, and benefits you can offer. Once the limit has been reached, be prepared to lose the qualified candidate. 

2. Do not start the negotiation from too low and offer a competitive salary instead. If not, the candidate will feel uncomfortable asking for a much higher salary and will simply move on to the next job interview.

3. If you want to leave some room for negotiation, make an offer that is a bit below the maximum offer. That way, the counteroffer will likely be reasonable and within your budget.

4. If you decide to accept the candidate's counteroffer, the negotiation is over, and you have just hired a new employee to your team.

5. You should avoid over-negotiating, especially if the requested increase is small. The primary purpose should be to get a signed offer from a highly qualified candidate as fast and efficiently as possible. 

6. Be aware of the range of competitive salaries. If the candidate's counteroffer is outside the market range, proceed with caution. This happens when the candidate is inexperienced. You can then use this opportunity to explain your side of the offer. 

It's not easy to negotiate a salary with a potential new employee. This guide should help HR staff to negotiate salaries effectively and professionally. 

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Source: Cake HR

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