For most candidates and firms, negotiating pay goes smoothly. But if mishandled, deciding on remuneration can easily cause friction and erode the professional relationship before it even starts. Add in British awkwardness around money, and the process gets even more complicated.
Like many things, offer negotiation is part art and part science. The creative aspect is about intuitively understanding your audience and creating a package which is attractive for them. The science part centres around getting the information you need and communicating your position consistently throughout the process.
How to approach the salary issue
The offer stage should be relatively painless if you have been thorough in your communications about the role. Companies market the opportunity and outline their price, while candidates tacitly agree to the number given by replying to the advertisement.
There are two routes we see companies go down at this point:
1. Assume the candidate is comfortable with the offered rate
2. Check the candidate’s expectations again
There was once a third option, but thankfully it’s used less frequently nowadays:
3. Ask what their current pay is
For those committed to closing the gender pay gap — which currently sits at 15.5% in the UK — that last approach can be problematic. After all, if you assess someone’s worth based on what they used to be paid, you run a greater risk of undervaluing them. Have confidence in setting the right price for the role that needs to be done in your business (Read more in our guide to hiring fixed-term contractors versus permanent employees).
Option 1: Assume they are comfortable with the advertised rate
We recommend having remuneration listed on the job posting for transparency’s sake.
If you do so, it makes sense to assume the candidate is happy with the amount, right? Plus, avoiding money-talk keeps the conversation centred on whether they have the skills and experience for the position. It can also give you an advantage in further negotiations due to the anchoring effect, since you’ll be starting any further discussion from the initial rate that you determined rather than the candidate’s expectations.
In some ways, though, assuming they are happy simply kicks an important discussion into the long grass. If it turns out later that there were irreconcilable differences between the candidate’s expectations and yours, you’ll both have wasted time on the interview process and the result will be disappointing for both sides. So it might be best to…
Option 2: Check their salary expectations
Double checking has several benefits. It places the onus back onto the person to think through the reason for their pay request. A standard answer is often something along the lines of, “you’ve advertised this for between £50-70K. That’s fine with me”. It’s okay to leave it at that, but then what happens at the offer stage? By finding out explicitly what they want, you reduce unknowns and make future interactions easier.
But beware — placing too much emphasis on pay can turn the conversation sour and lead to a standoffish atmosphere. Try to leave some wiggle room to:
- Account for the fact the original rate might be off
- Allow space for both parties to become more interested in the other throughout the process, and for the pay to flex accordingly.
To avoid this complexity, it’s tempting to simply go straight to Option 3 and ask how much they’re being paid. As mentioned, we’d avoid doing this, and instead follow up with a leading, but not rigid, question.
Something like “Which is best — £50, 55, 70,000? What are you looking for?” allows the candidate to explain what their expectations are and still leads to a region that works for you — win-win!
We’d definitely avoid asking about whether they have mortgages, financial commitments and the like, unless you want awkward conversations! These kinds of questions aren’t relevant and can lead to discriminatory practices, so there’s a good reason they are banned in an HR context.
Making the offer
We’ve written before about why it’s essential not to lowball. Although you don’t need to necessarily increase the salary from the one you’ve discussed, an additional gesture (more share options, slightly better title etc.) can help to solidify your position and shorten the negotiation process.
Major vs minor objections
In general, we’d recommend emailing or messaging an offer soon after you have completed the reference process. In some cases, you might need to organise some action points with the candidate. For instance…
- Book a call with you if there are major points to review
- Email back with questions if there are minor issues to clarify
- Respond with an answer within seven days if neither of the above applies
What makes an issue major or minor? Here are some examples as a rule of thumb…
- I want more time to make a decision
- The financial offer needs to be better
- I need a better job title
- What are the benefits?
- I have a holiday booked in X months, will this be problematic?
It’s important to be flexible with deadlines. There is no point in giving someone an end of the week deadline when they will only finish their other interviews on Thursday. Deadlines can also cause bidding wars as candidates use your deadline to create tension in the deal for another company to offer better terms. This is one of the few situations where it makes sense to hold back a little bit.
When to offer less than you expect to pay
The only time it might make sense to offer less than you are willing to pay is when you sense a bidding war could start. This might sound counterintuitive, but going lower gives you space to increase your offer down the line and appear flexible.
Several factors can make a bidding war more likely:
- They are a high quality professional
- There is a shortage of their skills
- There is a high demand for their skills
- You know they are actively interviewing for multiple positions
There’s a big caveat to going low — you might spook the candidate and push them away before a bidding war can even begin, so use this tactic with care.
We also wouldn’t recommend offering less for permanent or salaried employees. There are too many other factors at play beyond salary, and changing the goalposts could simply erode trust and lead to a lost opportunity.
Negotiating with candidates is hugely important, but so is finding more of them. Take a look at our breakdown of the best UK hiring channels at the moment.