How to Negotiate a Candidate's Contract

   

After investing countless hours recruiting and interviewing candidates, it’s time to make an offer and begin the negotiation process. Agreeing to terms that both you and the candidate are happy with can be tricky. It’s important to prepare, be thoughtful and always keep in mind the end goal of bringing a talented new hire on board who can contribute to the team. Here’s a comprehensive guide from start to finish with tips for employers on how to negotiate with a candidate and land your next big hire!

Before Making the Offer: 

Making an offer to a new recruit is exciting, but there’s a lot more that goes into it than meets the eye. Preparation is key. Before making the offer, you’ll want to consider the following:

1. Establish whether there is room for negotiation or not.

While the traditional path to making an offer is leaving room for negotiation, many companies are taking a more progressive approach and opting to eliminate the frustration that often arises for both parties during the negotiation period by offering multiple compensation packages.

By giving the candidate two or three packages to choose from, you enable them to pick an offer that best fits their preferences and priorities, while still remaining in the realm of what you’d like to offer as an employer. This option also evens the playing ground for candidates who may not be as amenable to the negotiations as others.

A package can include more than just salary and equity.

Don’t get caught up in the dollar signs, but think of what else might be important to the candidate. Did they mention that they have kids? Maybe they’ll appreciate flexible hours or a different paid vacation policy to be able to spend time with family.

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2. Do your homework.

When putting together an offer, it can be helpful to make a checklist of a few items to research before putting the deal together. First of all, examine your company. Think about the role you’re filling, the weight it holds in the company and the scarcity of skills that the candidate you’re offering may be able to bring to the table.

It’s also important to take into account the industry standards for the role you’re filling. This will help you understand what the candidate might be expecting in the deal.

(We recently did a deep dive to uncover salaries in the Tech industry. Download our Technology Salary Report here.

Historically, common practice was to ask the candidate’s most recent salary before making an offer. However, some progressive hiring managers contend that it’s not a fair practice because you should be compensating a candidate for the job you’re hiring for and future responsibilities, not their previous role. In fact, Bill de Blasio, the mayor of New York City, signed a bill in May 2017 prohibiting employers to ask about candidates' pay history during the recruiting process. 

Once you have all of this information, it’s time to decide on a salary you’re willing to pay. Don Charlton with JazzHR recommends calculating an offer within 10k of what you’re comfortable with.” Finally, before making an offer, be sure to set a “walk-away” number, or the highest salary you’re willing to pay this particular candidate. It’s good to know this number before entering negotiations.

3. Think about timing.

As they say, timing is everything. Be efficient when putting together an offer and don’t be afraid to set a deadline for the answer. Although the average offer deadline is generally seven days, we've found that shorter deadlines can be more effective given the speed at which competing offers can come in. If you do choose a tighter deadline, explain to the candidate why, such as your company's immediate hiring needs and the time and cost of finding a new candidate should they decline.

Be wary though, as squeezing a candidate to accept an offer too soon can come off as pushy or desperate, adding stress to the process and actually detrimentally affecting your chance of hire. However, no deadline, or extending one beyond a week gives the candidate too much freedom and may indicate that you’re not ready or excited for them to start. 

Pick a deadline and lay it out in the open for both parties from the start.

The Offer and the Counter:

You’ve done your homework, crafted a solid offer and presented it to the candidate. Now what? The way you handle a counter offer can make or break the closing. Here are a few tips on getting through these last steps and landing the hire.

1. Be prepared to discuss.

Part of any negotiation is the willingness to discuss a deal and understand where both sides are coming from. Hopefully, by this point you’ve gone through your checklist, done your homework and understand the candidate enough to know where the pressure points of the offer might be if there are any.

Be available to discuss the offer with the candidate on any medium that they choose, whether phone, e-mail or in person, so that they are comfortable in discussing the topic with you.

 
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Image: Nik Macmillan via Stocksnap

2. Examine the counter.

If the candidate counters your original offer, take a minute to understand where they are coming from. While deciding how to respond, think about if you’re willing to lose the candidate. Are there other qualified people who can fill the position? In some cases, you can think creatively with the compensation package by adding performance-based bonuses or adjusting vesting periods.

You can also learn a lot about a person by the way they counter an offer. Virginia Lloyd, the Director of Talent at x.ai says,

“Putting your best offer forward and being able to share market data to back it up is important to building trust and ensuring people are joining for the right reasons. If it’s all about the dollar signs, this likely isn’t the right place for them.”

3. Find the middleground.

Be wary of over-negotiating with the candidate because it can come off as stingy or disrespectful and may cause you to lose them or start the working relationship off on a bad note. When declining a counter offer, make sure to have a good reason for the price point you choose to stay at. However, if you accept their counter, it’s unnecessary to explain why you budged on your original offer.

Even though the negotiation process often causes stress, it’s really meant to serve as a connecting point for employers and candidates to ensure that both parties are happy starting out on the new journey together. The most important thing is to remember what the goals are for your company and avoid getting caught up in games or decisions that are fueled by rash thoughts.

Think of the process as exciting and enjoy learning about what’s important to your potential new hire.

Interested in learning industry standards for tech salary positions across New York City, San Francisco, Washington D.C. or Los Angeles? Download our 2017 Technology Salary Report for free.

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More: For Employers