What is Salary Negotiation

Salary negotiation is necessary because it shows what an employee expects and how the employer can meet it
Salary negotiation is necessary because it shows what an employee expects and how the employer can meet it

Salary negotiation is the discussion between the employee and the employer of the prospective company to conclude the terms and conditions of employment. Salary negotiations help in securing a higher and better salary for an employee. For any new employee, it can be an intimidating aspect. However, it is one of the most crucial conversations that must take place when an employer makes an offer. Salary negotiation is confined to the potential hires and can be a subject of discussion for old employees. To ensure that you receive an appraisal:

  • Prove that you are worth investing in
  • Be prepared to answer questions on facts
  • Be firm and flexible with the negotiation
Salary negotiation is necessary because it shows what an employee expects and how the employer can meet it
Salary negotiation is essential for an employee while joining an organization

The Purpose of Salary Negotiation

Every employee looks for a position that values experience and skills. Employees who have the right skills and talent may have several job opportunities to consider, giving them the advantage of negotiating their salary and other compensations offered. Being open to salary negotiation is vital in hiring new talent. Also, salary negotiation gives valuable insight into an employee’s long and short-term expectations for how they want to be paid for their work. Salary negotiations can build strong relationships between the employer and the employee.

Salary Negotiation Strategies for Employers

Before beginning the salary negotiation, it is better to prepare the strategies that you can use for a mutually acceptable agreement. Some of the techniques that can help guide the talks when discussing salary and other compensations with the employees are: knowing the industry standards, clarifying job level beforehand, joining bonus, setting up a range, additional benefits, etc.

Knowing Industry Standards

Employers must have enough data about the pay ranges for jobs in the company at different levels. Better experienced candidates are likely to receive a higher salary than the freshers beginning their careers. It is also necessary to research the competitors and what differences they have to offer for similar job roles. Market research helps know the salary ranges, benefits, compensations, bonuses, etc., for the same or similar positions. It is, however, important to onboard qualified candidates as this is crucial to the company’s success.

Clarifying Job Level Beforehand

Employers must avoid any differences related to salary. Differences in salary may happen because an employee may not receive what he has been hoping for. To prevent this employer must carefully craft the job scope before posting the open role. Clarifying the job level and skill requirements attracts job seekers who agree on compensation outside the salary range, making the process easier later. This groundwork helps in minimizing the chances of a failed salary negotiation.

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Setting up a Range

Before defining the pay scale of a candidate, it is essential to know the company’s budget. Set up an upper and lower limit of the salary for the position and pre-determine the factors that may induce the change in this limit. These factors may include unique skills, experience, plans for growth, etc., that can add value to the business. The upper salary limit ensures that an employer can afford labor expenses. The lower limit ensures that employees get reasonable compensation so they won’t leave the company for better pay for their work. Salary ranges can vary considering the amount paid to other employees.

Laying out Additional Benefits

One of the practical techniques for salary negotiation is to outline the additional benefits a candidate will receive as part of the company. You can use the company’s benefits as a tool in salary negotiation. Clearly defining the benefits will entice the employee. These benefits may include access to the company’s vehicle, free meals, a flexible schedule, a performance bonus, travel reimbursements, etc. Additional benefits make the terms of employment more attractive.

Additional benefits offered by a company make the job look more appealing to the new employees
It is vital to lay out the organization’s additional benefits during salary negotiation

Signing Bonus

You can give a signing bonus in cash to the employees on joining an organization. Offering candidates a one-time sign-on bonus and spending extra dollars on it can motivate them to accept the job offer. It can also generate excitement and gratitude about the position.

Understanding Candidate Expectation

It is crucial to understand the candidate’s expectations. Ask the candidates how much salary do they expect. One way to know this is by putting up this question on the job application. It helps in preparing a reasonable salary offer. It may happen that candidates put a high number on the job application, which the company is not ready to pay. In such cases, negotiate with the candidate, for they often put a considerable number with the willingness to compromise. If candidates agree on a fair salary, it clearly shows self-awareness and confidence, and these traits can add value to the company.


After reaching the negotiation limits, be transparent with the candidate that it is not possible to add any further compensations. It is essential to tell the candidate clearly that the company’s values and resources do not allow additional time consumption on salary negotiation, and both should refrain from the same. Once you set the budget limit, politely give the candidate a choice to accept or reject the offer.

Frequently Asked Questions(FAQ)

How do employers negotiate salary?

Employers can negotiate salary with the help of these strategies:
knowing the industry standards
clarifying job level beforehand
offering joining bonus
setting up a range 
additional benefits, and others

Should a candidate counter a job offer salary?

Yes, a candidate should counter a job offer salary if they think they deserve better than what is being offered as they have better skills and experience.

Recommended Posts

What are the three things that a candidate can negotiate other than salary?

The three other things that a candidate can negotiate other than the salary is:
Travel reimbursement
Phone allowance
Severance package

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