How can HR managers negotiate salary?

Salary, Remuneration, Compensation, etc. is the only thing that brings a huge smile on the face after a month-long of hard toil. Deciding upon an appropriate salary is an art of negotiation between the employer and the employee that has to be done tactfully from both sides. Salary negotiation is the most awaited phase of the employment process and it generally arises in 2 important stages. One during the hiring stint, which decides the first salary structure of the new joinee and the next comes at intervals many times during the employee’s appraisal stage when the salary needs to be revised and accommodations need to be done to pay the employee based on his/her hard work. There are certain tips that HR needs to keep in mind while going through a salary negotiation process.

What is salary negotiation?

A job offer comes with a predefined salary package. Not everyone might be satisfied with the kind of pay offered to them. So, talking with the recruiting partner (generally the HR), to adjust the salary offered based on their skill set, capabilities, needs and expectations are called salary negotiation. The window for salary negotiation is between the time the job is offered to the time the candidate accepts the job and after a successful salary negotiation, which is a process where none of the negotiators should feel that they are devalued, the firm feels excited to welcome the candidate to their family.

What are some of the strategies that HRs can use to successfully negotiate salary during the hiring process?

The most critical negotiation step comes during the hiring process when the candidate is a new joinee and is just about to join the firm. The HR must have a carefully worded negotiation process which must include the following strategies to have a successful negotiation:

  • Have salary ranges for different job roles: A firm comprises different jobs which are of different importance and criticality. So, having salary ranges according to the job levels which is verified according to the industry standards and publishing it beforehand, will provide a lower band and a ceiling for the joinee to negotiate salary.
  • Be clear with the candidate from the beginning: The best way to successfully handle a salary negotiation is by being clear from the start and do that the first question that the HR should ask is what is that the candidate desires in a compensation package and then the HR can use this to successfully culminate a negotiation.
  • Additional monetary benefits: Try to create a compelling offer by adding additional components as joining bonus, performance pay, stock-based compensation. Adding these to the salary structure leaves less space for negotiation by the employee.
  • Understand the person’s needs and add non-monetary benefits: Not every candidate might run after huge salary figures. Having a fair idea about the compensation structure that the candidate has in mind and thus creating a structure that includes health insurance, travel benefits and many more, is a suitable strategy to negotiate salary in terms of both monetary and non-monetary benefits.

What are some of the salary negotiation considerations that the HRs should keep in mind during hiring?

Some of the considerations that the HRs must keep in mind are:

  • What is the job level that is being offered to the applicant?
  • Economic conditions affecting the industry
  • Economic conditions affecting the job market
  • Salary levels as compared to market average
  • Skillset offered by the applicant
  • Importance of the role offered
  • Scarcity of the skills offered by the applicant
  • Appraisal and promotion practices in your company

How can HR negotiate salary during the appraisal process?

The appraisal is that time of the year where employees wait a year long to have a conversation with HR about their work and how the company plans on rewarding them in return for their hard work. It also includes feedback to the employees on how they can improve and thus provide maximum returns to the company. So, during this process, many employees expect that they might be receiving salary hikes and thus round 2 of the negotiation process begins. These are some ways how the HR can deal with this:

  • Have a discussion: Discuss the situation at hand, try to reach a solution calmly rather than turning it into an argument.
  • Provide an appraised structure based on research: Taking into consideration the employee’s performance and the prevalent market standards, provide an appraised salary structure.
  • Pay may be slightly higher for retaining employees: A tactic to retain top performers is by paying them slightly higher than the market average which in turn will be advantageous for the firm in the long run.
  • Provide additional perks rather than monetary ones: Providing certain extra benefits like increased leaves and others may help in concluding the salary negotiation process.

What are some of the salary negotiation considerations that the HRs should keep in mind during the appraisal process?

Some of the considerations to be kept in mind during the appraisal process are:

  • How well is the candidate paid before the appraisal
  • Considerations of other factors like cost of living of the place
  • Company’s budget for a pay rise
  • Prevalent rate of inflation
  • Company’s previous trends of salary appraisals
  • Company’s performance in the previous fiscal year
  • How many extra responsibilities to be transferred to the employee
  • The employee’s performance in the past year and how much of a valuable asset he/she is to the firm

What are some of the tips that HR must have in mind before going for a salary negotiation process?

Salary negotiation can be a daunting task both for the employer and the employee. Making it a fair process so that both sides feel that they reached a common conclusion is a must. So, some of the tips for HR to follow before going for salary negotiation are:

  • A mutual decision has to be reached; it is not about winning.
  • Have correct information regarding the previous salary structure received by the applicant in his/her previous firm.
  • Have defined ranges, only between which salary negotiations can take place.
  • Apart from the monetary part of the compensation structure, there are limits on the non-monetary aspects too.
  • Do not go overboard, even to accommodate a skilled candidate.
  • If the salary is non-negotiable, make it clear to the candidate while making the job offer.

There is a huge responsibility on the shoulders of HR while undergoing the negotiation process. The entire future of the firm along with the cost structure of the firm can change if HR makes one wrong decision. So, a lot is at stake for the firm. So, a calm and sensible salary negotiation will ensure that the company does not lose a valuable, superior candidate.

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