Tips on Negotiating Salary from HR Insider | BambooHR (2024)

Negotiating salary may seem like a mere budget item for businesses, but it can be a life-changing conversation for employees. For this reason, HR leaders need to know how to approach this discussion correctly. Not only will employees feel cared for and respected, but the company can still meet its objectives and financial obligations.

It’s not a matter of if employees will negotiate their salaries, but a matter of when. One survey from PayScale found 37 per cent of workers had asked for a raise from their current employers. A further 42 per cent of job candidates have asked for a higher salary while negotiating a job offer.

So how do you approach these conversations both compassionately and pragmatically? Is there anything you can do to retain employees seeking a higher salary if the answer is no? And for employees, how do you go about salary negotiation successfully?

Here are 10 salary negotiation tips that every HR professional and employee should know.

1. Practice Your Salary Negotiation Speech

Whether you’re starting a new job or seeking a promotion, you should have a basic script in mind for negotiating salary.

There is too much riding on your speech, so you want to avoid winging it. Instead, find a friend or mentor that would be willing to practice your speech with you. Then rehearse your ‘script’ a few times until you’re confident in what you’re saying. After all, practice makes perfect.

While there is no guarantee the conversation will go exactly as you planned, having a rough idea will show that you’re confident and convincing during your actual salary negotiation.

2. Be Honest and Transparent

A large number of employees don’t know how their salary matches up with that of their colleagues. This can make it nerve-wracking for them to ask for changes, and many are finding it much easier to simply switch jobs instead. In 2021,63 per cent of employees reported leaving their jobs because of low pay.

But salary isn’t the be-all and end-all of retaining employees. Even if a salary negotiation with a current employee or candidate doesn’t match their requested salary, you can still overcome many of the reasons employees might want to leave.

When you explain the “why” behind your decision, you can help employees feel heard and respected. Pay ranges are aligned to the role and its responsibilities, not to the person filling it. Be transparent – let them know your market researchand why you landed on a specific number.

A successful negotiation clarifies what both sides have to offer in the context of the local job market. For employees, that means researching compensation data for your desired position to get an honest idea of what you can ask for. Then be ready to justify the numbers you come up with based on your skills and core competencies. This will give you more weight when negotiating salary.

3. Negotiating Salary with the Right Mindset

Knowing your worth helps you change your frame of reference and see negotiation not as a win-lose situation but as a win-win. Negotiation doesn't mean conflict—it means communicating your needs to get what you deserve. Good employers want to pay you what you deserve to keep you with them long-term, so they need to know what you expect.

If you have an aversion to conflict that makes negotiation feel unnatural, understanding a job offer as an ongoing exchange can help you feel comfortable with the mechanics and best practices of negotiating. Done right, your salary negotiation will lead to a future where your work helps the organization grow, and your contribution leads to increased compensation.

4. Ask Responsive Questions

The end goal of a successful salary negotiation is to clarify expectations, so the employee or candidate can make a fully informed decision. Transparency on your end goes a long way, but you’ll also need information from their side to fully align on their future employment.

Here are some areas you should research in preparation for compensation negotiations, so you can stop misunderstandings before they start:

• Job Title & Description: Make sure your job titles and descriptions are targeted to the candidate pool.
• Candidate History & Expectations: Consider where candidates are coming from – are they expecting an exceptionally high salary compared to what you’re offering?
• Employee Needs & Values: Understand what is important to your current employees and what they value. Employee satisfaction surveyshelp you adapt your compensation to grow in the same direction as your employees.
• Why People Leave: Learn from your exit interviews. Ask about their decision to leave, including what made them want to leave, the offer that convinced them to leave, and how you can improve your workplace for future employees.

From an employee’s perspective, how you act and appear when negotiating salary makes a difference in how well it goes. Before the discussion, do your own research on the company and the person you’re meeting with. Then, during your negotiation, be sure to touch on the following topics:

• Expectations of your manager and a clear understanding of the job requirements
• What your roles and responsibilities will be
• How you’ll fit into the team
• How success is measured—both quantitative and qualitative metrics
• What the long-term goals of the company are, what steps are needed to get there, and how you can help

5. Salary Negotiation in the Right Surroundings

Digital interviewing is a relatively new consideration for an effective presence during salary negotiation. What you wear still matters (at least from the waist up), but your environment through the screen is important as well.

Try to avoid common virtual pitfalls by making sure you’re in a space where you can put your best foot forward—find an area free of noise and distractions so you can focus on the interview and ask responsive questions. Finally, make sure your background is presentable and professional. Your space doesn’t need to impress, it just shouldn’t distract.

6. Be Firm but Flexible

Being prepared for the negotiation is essential, but there’s only so much you can do in advance. With this in mind, come with a salary range in mind rather than a single figure.

This helps you in two ways:

1. It establishes your bottom line. If they come in lower than your bottom number, maybe the position isn’t the right fit. It gives you the freedom to hold a firm boundary on your worth.
2. A range gives you flexibility. The person making the final decision wants you to be happy, so a range allows both sides to finesse the numbers until a compromise is reached.

7. Think About the Total Package

Sometimes negotiating salary doesn’t have to result in a higher salary. Companies have a lot of leverage with their total compensation package, and there are creative ways to approach compensation that canhelp employees feel satisfied. Having acomprehensive compensation strategy in placebefore you start negotiating salaries with employees or candidates will help streamline these conversations and improve your ability to keep employees happily engaged.

Here are a few things that be offered as part of a valuable total compensation package:

• Flexible PTO options or additional PTO days
• Flexible work schedules
• Remote work or hybrid work options
• Relocation packages
• Commuter benefits
• Health and wellness benefits
• Tuition or continuing education benefits
• Child or dependent care support

Creating a valuablecompensation strategyhinges on understandingwhat matters to your employees. Not every benefit matters to every employee, but you can tailor the package and your approach to meet their preferences. Once you understand their needs, you can communicate the value of your total compensation package to both current employees and prospective candidates, whether or not they’re asking for a higher salary.

For employees, compensation encompasses more than what’s deposited in your bank account, so ask about the total benefits package for the role. Again, there may be a strict budget salary-wise, but the hiring team wants to do everything they can to keep you! HR supports them by developing programs and benefits tailored to specific employee needs, helping their organization to stay ahead of their competitors for talent.

If you’re drawn to a company but unsure about the salary number, here are a few programs you can ask about:

• University tuition reimbursem*nt
• Training, professional development, and certifications
• Mentoring and coaching
• Childcare
• Health and fitness
• Scheduling and work flexibility (e.g., remote and hybrid work arrangements, earlier or later shifts, and compressed work weeks)

8. Understand Your Constraints

Some employees or candidates maydecide to walk away. That’s OK; if their employment with you isn’t meeting their needs, it will be challenging to keep them engaged and motivated. But deciding to part doesn’t have to be the end of the conversation. You can work out the details to minimize hard feelings and leave the door open to the potential of aboomerang employee.

An employee departure is the time to start the ideal transition for your organization and agree on the length of a notice period. For hard-to-replace employees, this could include a one-time retention bonus for them to stay on for an additional month or two while you find and train a replacement. In the end, though, the employee has the final say of when they need to leave.

Don’t be pushy. Convincing someone to take an offer they won’t be happy with won’t create a positive long-term solution for the company or the employee. Employees don’t just want money now; they wanta career that promises more in the future. And short-term wins, like giving an overly high salary to a valued employee or candidate, could cause detrimental long-term problems for your company. These include employee dissatisfaction,issues with pay inequity, and a struggle to sustain above-market salaries.

When you’ve done your research, shared the value of the total compensation package, and know what’s important to your employees, you knowyou’ve done all you can to keep the employee engaged. Knowing where to draw the line on salary negotiations ensures you can provide competitive staying options while keeping the company’s overall objectives squarely in place.

9. Keep the “Human” in Human Resources

One of the most important steps to making sure employees feel heard and respected in a salary negotiation is to continue to act like a human being. Be real, candid, and empathetic during compensation conversations. Using the ideas from the previous tips helps make sure the employee knows you respect them as an individual instead of seeing them as a replaceable cog in the machine. Pairing your words with a consistent employee experience helps drive this home.

Even if employees and candidates don’t get the higher salary or they choose to walk away from a job offer, they’ll remember how your company handled the conversation. Being human can be the difference between re-energizing an employee or seeing them leave, between a candidate choosing your company over similar options, or between scathing and glowing reviews from former candidates and employees.

10. Use HR Software For Negotiating Salary

As with any job you want to excel at, you need theright toolsin place to help you succeed. When negotiating salaries, having a good HRIS tool can go a long way. You’ll need a tool that includes the necessary information and data to help you be more prepared for salary conversations, including:

• Employee sentiment
• Compensation and job history
• Employee demographics

When you gather all this information in one place, you’ll be able to sit down and talk with employees with empathy leading the conversation and data backing you up.

Following these tips will hopefully give you more confidence going into your salary negotiation or review. Politeness, punctuality, and personality are the first steps towards earning you favorable compensation, but a few tweaks to the specifics will definitely help. Think about negotiating like you’re on the same team as the other person, both trying to reach the same goal—getting you the job you want!