How to Negotiate Candidate Compensation as a Manager

By the time you’ve found a strong candidate to fill a position, you’re nearing the end of what may have been a long process. It can feel like an enormous relief just to find someone qualified who you can see joining the team. Still, the process isn’t over until they’ve agreed to the compensation package you can offer. So how do you negotiate candidate compensation after extending a job offer?

Skilled and experienced professionals, particularly in in-demand industries, may receive two or more job offers in the same period. In this situation, you may need to find a way to win them over while staying within budget.

Successful pay negotiations are an exercise in strategy, tact, and balance. With the correct planning and preparation, you can meet your budget while still ensuring the candidate feels valued and fairly compensated.

Read on to learn more about how to negotiate compensation for a potential employee as a manager.

Know the Industry Standards

Are you comfortable with your understanding of current industry compensation expectations? This knowledge is key to feeling more confident during the negotiation.

Take a look at what companies like yours in your area are offering. Scout job postings on LinkedIn or check out average compensation on Glassdoor. The Bureau of Labor Statistics is also a helpful resource. Many candidates will have developed their expectations based on experience as well as digging into similar data.

Ideally, you should thoroughly research the average pay ranges for the position before you even start the job requisition and hiring process, but if you haven’t already; now’s the time.

Consider Publishing a Salary Range

Depending on the position and your industry, publishing a salary range upfront can make negotiations down the line easier to manage. Candidates know what you expect to pay, and while some may push for a salary beyond the top of your posted range, you can point back to the numbers you established from the start. In some cases, it may be worth it to your company to pay them more, but that can be entirely within your discretion.

If you publish a range, keep it consistent with industry standards. The low end should be acceptable and attractive, and the high end should be something that a highly qualified and experienced applicant might expect to receive. Also, keep in mind the total compensation offer that can include things like PTO, benefits, bonuses, and long-term incentives.

From the outset, it’s a good idea to know what skills, experience, and qualifications push a candidate into the higher end of a salary range. In that case, you can effectively explain that to prospects during a negotiation.

When negotiating salary as a manager, you are setting the tone for your (potential) future relationship with the employee, so you want to start the relationship optimally.

Ask Questions

If you did not discuss salary expectations during the interview process, it’s important to find out what the candidate expects. If their expectations exceed what you are authorized to pay, you may need to adapt how you negotiate compensation to address the gap.

A high starting number from a candidate does not mean that all is lost. There may be plenty of room to put together a package that compensates them fairly—yet meets your budget.

Ask questions so you have a clear understanding of the candidate’s motivation. Even if you are not able to make the highest salary offer, you may win them over by meeting their needs through the total compensation package.

The goal is to agree on a package that makes both of you feel good. Do they need a flexible work schedule for classes or childcare? Are they worried about adequate health insurance? Is working at home one or two days a week a perk for them? Are they thinking about their future retirement and thus motivated by 401(k) matching?

A great question to ask early is, “What all are you looking for in a compensation package?” Hear them out and review options with finance, HR, and other leaders at your organization.

Explain Benefits and Perks

Early in your compensation discussions, clarify the value of any bonuses, stock options, or other benefits and perks offered in addition to base pay. Help the candidate understand the total compensation package and not just their hourly rate or annual salary.

Beyond their regular paycheck, discuss available company benefits and perks. Good health coverage or generous paid time off (PTO) can often offset pay expectations.

Follow Up with Candidates Who Do Not Accept the Job

A candidate may decline a job offer for many reasons—often completely unrelated to pay. Candidates also consider factors like office location, commute length, job duties, team size, and so much more when deciding on a job offer.

Finding out why a candidate passed on your offer can reveal valuable insights for the next negotiation. The reason might be personal to the candidate, or it may be something you can change for future candidates—or for them. Their feedback will make you better equipped for future pay discussions.

Focus on What You Do Best

Not every compensation negotiation ends with an accepted offer. It’s part of the process of filling a vacant role with your company. However, with preparation, transparency, patience, and good communication, you can increase the chances a candidate you want will choose to work with your company.

If compensation negotiations are something you dread, Insight Global excels at finding, vetting, and hiring top candidates. Whether you need to find an expert to fill an empty role on your team or hire a whole new department, we are here to help.