3 examples of salary negotiation conversations
One of the most critical—and often most nerve wracking—parts of the hiring process is the salary negotiation conversation. While most resources out there focus on this conversation from the candidate’s perspective, it’s just as important to be thoughtful and intentional when you’re negotiating on behalf of your company, either as a recruiter or hiring manager. And like a lot of difficult conversations, it can help to do some research and role-playing ahead of time.
When does salary negotiation happen?
The most common time for salary negotiation conversations is when you’re extending an offer to a candidate. However, if you manage a team, your team members might occasionally approach you to ask for a raise or you may do periodic salary reviews (for more on how to handle these types of conversations, be sure to check out our Pyns on How experienced managers manage tough salary conversations and The 3 things we look at when reviewing your salary).
It’s also worth noting that there’s a growing movement for transparency around compensation which can impact the amount and type of negotiation that occurs. In the US, some states are mandating that salary ranges be published in job ads or provided to applicants at certain stages of the interview process. Some states and local governments have made it illegal to ask candidates for their salary history. And some companies have policies against doing salary negotiation.
These laws and policies are becoming more common because negotiation can have unintended consequences like benefiting those who are good negotiators and punishing those who don’t negotiate. Negotiation also tends to compound existing inequities. Research shows, for example, that women tend to ask for less than men, and what could be a small pay gap at the beginning of someone’s career can grow to $1 million (or more) over the course of their career. Make sure you know the specifics of your location and company before embarking on salary negotiation conversations.
What does salary negotiation really include?
We often think of negotiation as focused solely on salary, but negotiation conversations can be much broader and incorporate all aspects of total compensation and benefits. This could include:
- Other monetary compensation
undefinedundefinedundefinedundefinedundefined - Non-monetary compensation
undefinedundefinedundefinedundefinedundefined - Equity
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This list provides some of the general categories and types of compensation, but keep in mind that these are always evolving to adapt to workers’ current priorities. For example, between 2021 and 2022, PayScale found that the benefits that increased the most included remote work, a work-from-home stipend, flextime, mental health or wellness programs, and switching to a four-day work week. To learn more about creating your compensation strategy, see our blog post on this topic.
Where does salary negotiation happen?
The exact format of negotiation can vary from company to company, but a typical approach is to make a verbal offer, then a written offer. If the candidate chooses to negotiate, this conversation might take place verbally or through written communication. Once you’ve reached an agreement, it’s customary to create a final written document with the agreed-upon offer for the candidate to sign.
In the cases where a current employee is asking for a raise or renegotiating some aspects of their compensation or you’re conducting a salary review, these conversations will often take place verbally, though you may also share some information via email or in writing as well.
What happens when you can't come to an agreement during your negotiation?
In the ideal situation, everyone will be satisfied with the outcome of a negotiation. But this isn’t always the case. One of the best ways to prepare is to imagine several different scenarios and consider how you would respond.
Scenario 1: Lack of alignment
A candidate or employee might disagree with something you’ve said or with how your organization benchmarks their job, earning potential, or pay range.
Do they feel that there is a different or more accurate market benchmark for their role? If so, what is it? Or do they think that they should be paid higher in their range due to tenure, performance, or experience?
In this situation, open up the conversation to understand their perspective. Get curious to learn more about their perspective and let them know you will need more time to talk with others at your organization and see if you can meet their request.
Here are some open-ended questions you can ask:
- “How do you feel about . . . ?”
- “How do you see it?”
- “Tell me about that . . .”
Express empathy using statements such as:
- “I can see that this has been upsetting for you.”
- “It sounds like this is frustrating you.”
- “I want to make sure I understand you. You said . . . ”
In this situation, you can end the conversation by saying something like:
“Let me summarize your key thoughts. From what I understand, you feel [SUMMARIZE THEIR FEELINGS]. Our open questions are [LIST OUT QUESTIONS]. Let’s schedule another meeting on [DATE]. Make sure you send me any data or other questions you want to discuss in the next 2 days so I have a chance to look closely at them and discuss things with HR/my manager as needed.”
Scenario 2: The candidate/employee has a question/request you haven’t anticipated
Managers often say that they feel less prepared for salary review conversations when they feel the need to have all the answers on the spot. Don’t stress yourself out!
There’s nothing wrong with scheduling a follow-up conversation—even the most experienced managers will do this from time to time.
In this situation, you can say something like:
“To sum up, you wanted to know [LIST OUT QUESTIONS]. For the next steps, I will work on getting the answers for you in [TIMEFRAME]. I’ll be back in touch by [DATE/TIME] to share what I learn.”
Scenario 3: The candidate rejects your offer
You may find yourself in a situation where the candidate outright rejects your offer. Depending on your preference and company policies, you have a few options. You might simply choose to thank them for their time and end the conversation there. Or, you might want to ask if they’d be willing to share the reason for their decision. Many recruiting teams like to keep track of how many offers are rejected and why, so you’ll be helping your recruiting partner if you’re able to gather this information. If they share that they received a better offer from a competitor, you might ask for more information and see if your company would be willing to match or exceed it.
Scenario 4: You need to withdraw an offer
In cases where a candidate is asking for more than your company is willing to offer, it’s more common to restate your final offer and let the candidate decide rather than formally withdrawing your offer. However, in some cases, you may have already begun the negotiation process and need to withdraw an offer. This could be due to internal changes like hiring freezes or restructuring or because you’ve learned that the candidate has misrepresented themselves in the application process. In these situations, you want to be as forthright as you can, but also consult with your legal team in case there are any specific considerations to keep in mind during these conversations.
Example salary negotiation conversations
Minimal negotiation
Scenario: You have a range of $70,000–$80,000 for a role and you’re on a call with a candidate to make a verbal offer.
You: I’m very excited to offer you the role. The salary for this position is $70,000 and we also offer a comprehensive benefits package that includes things like health and dental insurance, a home office stipend, and unlimited PTO. I know there’s a lot of information to take in, so I can send you more information about the benefits for you to review.
Candidate: That sounds great. I’m really happy to hear that, though I do have a question about the salary.
You: Sure, go ahead.
Candidate: Based on my research of the role and offers I’ve received from other companies, I believe $75,000 is a more appropriate starting salary.
You: Thank you for sharing that information. If we adjusted the salary to $75,000, would you be willing to accept this offer?
Candidate: Yes. I’d love to join your team if we could agree on a starting salary of $75,000.
You: Okay, great. We can adjust the salary to $75,000. I will update the offer letter and send you a copy to sign, along with the benefits packet so you can review it and let me know if you have any questions.
Extensive negotiation
Scenario: You have a range of $70,000–$80,000 for a role and you’re on a call with a candidate to make a verbal offer.
You: I’m very excited to offer you the role. The salary for this position is $70,000 and we also offer a comprehensive benefits package that includes things like health and dental insurance, a home office stipend, and unlimited PTO. I know there’s a lot of information to take in, so I can send you more information about the benefits for you to review.
Candidate: While I’m happy to hear that you’d like to offer me the role, I have to say I’m really surprised by the salary.
You: Can you share a bit more?
Candidate: I was expecting a starting salary of at least $100,000 for this role.
You: We take a number of factors into consideration when creating our salary bands, including the market rate, years of experience, and location of the role. Based on all that information, the most we’re able to offer for this role is $80,000.
Candidate: That’s still significantly lower than what I was expecting…
You: For [ROLE NAME] in [LOCATION] with [YEARS OF EXPERIENCE], we believe this is a competitive offer. Can you share a little more about how you arrived at $100,000?
Candidate: I’ve spoken with several peers who have similar years of experience and they’re all making that amount or close to it.
You: I see. Well, unfortunately, I’m not able to meet that number. As I mentioned, the highest I can do for this role is $80,000.
Candidate: I’m not willing to accept that as my starting salary.
You: We can’t adjust the salary beyond $80,000, but I may be able to offer a more comprehensive equity package. Is that something you’d be interested in?
Candidate: It would depend on the specifics.
You: Okay. Let me summarize what we’ve discussed today. You aren’t willing to accept a starting salary of $80,000 with our standard equity package, but if we’re able to create a more attractive equity package, you would be open to accepting this offer?
Candidate: Yes, that’s right.
You: I’m not able to give you a specific number right now. Let me speak with [MY MANAGER/FINANCE/HR] and get back to you. I’ll follow up via email by [DATE].
Rescinding an offer
Scenario: You had a conversation with a candidate where you had made an offer and agreed on a starting salary. But since the conversation took place, your company instated a hiring freeze and you need to inform the candidate.
You: When we last spoke, we had agreed on the conditions of your offer.
Candidate: Yes, that’s right.
You: I’m sorry to let you know that the situation has changed and we now have a hiring freeze in place. This means that the job offer is no longer available.
Candidate: What? That’s terrible news!
You: I can’t share too many details, but I want to let you know that has nothing to do with you or your qualifications. We just can’t make any offers to any candidates at this time.
Candidate: Wow. I wasn’t expecting that.
You: I’m very sorry this isn’t the outcome either one of us was hoping for. I know you’d be a great asset to any company and I would like to help your job search in any way I can.
Candidate: Do you know how long the hiring freeze will be in effect for?
You: I don’t know, but if you’re open to it, I can keep your contact information on file and reach out if the situation changes.
Candidate: Yes, I’d really appreciate that.
You: Of course. I’ll also be sending you a formal letter that describes what we spoke about today.