How to handle salary negotiations for new hires and existing top performers

Shauna Muldrow, Payroll coordinator, Ashton Staffing

Salary negotiations can be one of the most challenging facets of the hiring process.

“Salary negotiations don’t exist in a bubble, whether you are interviewing for a new job or looking for a salary increase at your current job,” says Shauna Muldrow, payroll coordinator at Ashton Staffing. “Salary negotiation windows exist from the time you offer a job to a candidate until the candidate accepts the job.”

Smart Business spoke with Muldrow about the ins and outs of a successful salary negotiation for both sides — employer and employee.

What are some key factors to understand about salary negotiations and employee compensation?

Some key factors are the level of the position within your company, the skills and experience needed for the job, the fair market value for the job and the salary range for the job within your geographic area. Employers’ budgets are also a contributing factor in salary negotiations. You should align pay with organizational goals; make sure that the performance you are rewarding supports the organization’s mission and goals. Ensure the compensation system is procedurally fair.

Lastly, implement an excellent and measurable pay schedule. No compensation system can succeed without a clear, concise and comprehensive pay schedule.

What are some best practices for salary negotiations with new hires?

There are a variety of factors that determine which employee benefits a company offers. A company should view benefit packages as part of the total compensation of an employee. There are mandatory benefits such as unemployment and some optional benefits such as health insurance and paid vacations. A few practices for new hire salary negotiations are:

• Friendly approach — Your goal is for everyone to be on the same team. Approach the process that way from the beginning.

• Prepare — You risk offering too little or too much if you go in unprepared.

• Other options — If you simply cannot increase the amount of the salary, consider adding a few perks. Sometimes, something as simple as a gym membership may be enough to bring a desired candidate onboard.

• Honesty — If the candidate is an absolute superstar and you do not want to risk losing that person to the competition, make your best offer up front.

How should employers handle negotiations with existing top performers? Is this any different from new hire negotiations?

Yes, it is different from new hire negotiations. Negotiating a salary increase requires research, industry analysis, knowledge of economic trends and professionalism. You should review your company policies concerning compensation and benefits. Schedule employee meetings during a time when you can devote your full attention to an employee seeking a salary increase. Let the employee fully state his or her case for an increase. Present the company’s position on pay practices, using your research and expertise to support the company’s compensation structure. At some point, a factor in salary negotiation should be a sense of fair play. Both sides — you and your employee — should feel as if they have won.

What common mistakes do many employers make and how can they mitigate them?

A couple common mistakes made by employers are:

• Lack of documentation, and failure to document promptly and accurately. Pay attention to preparing every document regarding warnings, complaints and disciplinary action. The document should include the date it was created, the name and signatures.

• Policy issues. Employers should always follow company policies and standards.

• The failure to conduct adequate background checks on potential employees. Make sure you have a complete background.

• Ethical problems, such as the failure to appropriately evaluate employee performance. Make sure your assessment of your employees is accurate.

A great way to avoid these mistakes is to follow policies and standards. Keep a hard copy or electronic file on all employees and uphold ethical standards of behavior in all situations.

In today’s economy, what role are nonmonetary compensation packages playing and how can you make them work best for your company?

Nonmonetary incentives are proving themselves as much more effective tools in the workplace. A small startup, for example, might offer you a smaller salary but could instead offer you a nonmonetary option. Nonmonetary incentives have been used to reward employees for their good work by providing opportunities for training, flexible work schedules and improved work environments.

You can make nonmonetary incentives work best by using one of the most effective incentives: Praise is a powerful motivator.

What should you tell employees who are unhappy with their final salary?

Compensation is one of the major ways companies attract and keep employees. When a company no longer can provide a salary that satisfies an employee, it is best that the managers deal with the employee’s unhappiness directly. Once the employee comes to understand the company’s position, he or she may be less likely to vent the grievance to other employees.

Explain in detail how the company came to its salary decision and what the employee can do, if anything, to earn a bonus or salary increase. Provide positive feedback for the employee when it is appropriate. Being unhappy with pay sometimes is symptomatic of feeling underappreciated. Recognizing the employee’s talents and efforts will help them feel like the positive work atmosphere compensates for the salary. You should also encourage your employees more, restore trust in your employees and take an interest in your employees’ development, as well as keep employees in the loop as to what is going on.

SHAUNA MULDROW is the payroll coordinator at Ashton Staffing. Reach her at (678) 359-3786 or smuldrow@asht[email protected]

Insights Staffing is brought to you by Ashton

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