How should I approach candidate salary negotiations?

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Salary regularly tops the list of motivating factors for workers and it's important that you can provide an attractive package whilst staying within your company guidelines.

Valuing the job
Just like many areas of business, employment is a deal done on the basis of supply and demand. The workers with the skills and experience influence supply in the job market, and the companies currently hiring for certain positions influence the demand.

As you go through the process of arranging to recruit a new employee, you will also reach a budgetary decision on how much you can offer them as a salary package. When placing your job advert be aware that you want to attract the right level of candidate, and also that you keep the range similar to what your current employees are earning.

How much you need an employee and how rare their skills are is the fundamental basis for calculating how much a job is worth. Our Salary Calculator tool will give you an idea about how much various roles are worth.

Having seen the salary in the job description, you are immediately putting the candidate in the frame of mind that they know a rough amount to aim for. Most people value their skills and experience above what they are actually worth and if you provide a salary bracket, most will aim to be in the upper area of that.

Here are a few key things to remember when entering a negotiation:

It's not about who opens, the negotiations, it's about the conclusion you come to. Don't be put off if the candidate raises the question of salary. For many, if the salary isn't right, there's little chance they would take the job anyway.

Your candidate will have done their own research by looking at alternative job adverts and using salary calculators. Make sure you are prepared for their questions and can tell them why your job is valued at the level it is.

Make every effort to identify the most recent salary and benefits your candidate received. They will generally hope for around 10% above that, unless they are making a drastic career change.

Negotiation is not about winning. If either party feels they have capitulated, not negotiated, both parties lose in the long term. If your candidate is getting less than they think they deserve then they will immediately be unhappy and you may be looking for another new candidate (with all the associated costs) within a few months.

Don't agree to something you can't uphold. If you agree with a candidate they are going to get a certain amount then get the request turned down by your finance department, it's going to put you in a very difficult situation.

Use conditional increases where possible. If you are not able to agree a starting salary, you may be able to swing the balance by agreeing a guaranteed increase after they have successfully completed a probation period.

Bargaining tools
It's not just a case of how much money you can offer a candidate – you have a lot of other benefits you can offer candidates that may even be more valuable to them than a bit of extra cash every month.

Commission – Generally based on meeting monthly or quarterly KPIs. A great way of making sure effort equals reward.

Profit sharing or share options – Paid to employees based on the success of the company as a whole.

Additional paid holidays – Especially attractive to employees just out of education or those with young families.

Education reimbursement – Helping employees continue their education shows you are willing to invest in their future.

Life insurance – Ensuring your employees family will be well looked after if the worst happens gives them peace of mind.

Pension – Adding your own contributions to an employees monthly payments is a benefit many candidates will take seriously.

Company car – Usually offered to employees who spend a large proportion of their working life on the move or those with a long commute.

Subsidised travel or season ticket loans – Any assistance you can provide on travel is generally well received.

Flexible working – Allowing workers to achieve a better work-life balance is an increasingly important factor.

Childcare – Either setting up an in-house facility or partnering with a local nursery.

Gym membership – Whether subsidised or free, it's a great way for employers to offer a tangible benefit.

Subsidised food & drink – the cost of snacks, coffee, water and lunch over the course of a year can be a frighteningly large chunk of a salary.

Casual dress – It's not usually seen as a benefit, but think about how much money you could save an employee if they can wear the same clothes in the workplace as they do in their spare time.

You are free to theoretically negotiate with more than one candidate at a time, but only get into a deeper discussion with the candidate you are hoping to offer the job.

Discuss this issue on The Employer Forum.