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Must know salary negotiation tips for NZ employers

Negotiating salary with candidates can be tricky. However, it’s important you get this right, so we've got some tips.

Salary negotiations are a standard part of any hiring cycle, but something both parties often dread.

From your point of view, this process requires a careful balancing act. You need to show the candidate they’re valued, while not breaking the bank by going wildy beyond the amount you budgeted for the role.

So, let’s explore how you can navigate this discussion and come out with a result that ticks the boxes for you and your prospective employee.

How to negotiate salary with a candidate

1. Be transparent from the get go

In our most recent job hunter survey, 28% of Kiwis said the most frustrating thing when applying for jobs is missing or inaccurate information with the majority of respondents commenting on a lack of information on pay rate or salary*. New Zealanders have a reputation for getting to the point, and being honest – we recommend channeling this in your job listings or at the least when dealing with your preferred candidate. If you know there is little, or no, room for negotiation on salary job listing, communicate this as early as possible to candidates if they ask.

Yes, this might put some candidates off. But it’s better to have this conversation at the start of the process, rather than waste everyone’s time, by making out there’s wiggle room when there isn’t.

Salary negotiations are important in building positive emploee-employer relationships.

2. Have an established range

Some employers prefer to initially present candidates with a salary range, while others give a specific figure.

The second approach is fine to kick things off, but you need to have a range in mind, even if you keep it to yourself. This will help inform your responses to candidate counteroffers, meaning you can quickly decide if you think their requests are reasonable.

You can base salary ranges on factors including what you’re already paying to staff in similar roles, competitor research on what your rivals are offering, the economic climate and the profitability of your organisation.

Establishing these guidelines doesn’t mean you have to stick to them 100%, but be wary of breaking them for all but the most exceptional applicants. Even then, it’s not recommended to deviate too far from your boundaries.

Establish a salary range based on thorough research.

3. Don’t start with a massive lowball

Successful businesses are bottom line conscious, that’s a given. And, while this often means cutting costs wherever possible, beginning salary negotiations with an inappropriately low figure isn’t advisable. Particularly during a talent short market where quality candidates are in high demand.

And remember, until they’ve signed on the dotted line, an applicant can easily walk away – so the impression you create still counts.

Hopefully you asked ‘the salary question’ during the interview stage, and kept notes of your preferred candidates’ responses. Sometimes, you’ll be able to say ‘yes’ straight away to what they’re after, but if not, you can use their answer as the basis for a fair starting point.

4. Keep things friendly and professional

Talking about money is awkward for a lot of people, and your candidate is probably enjoying bargaining even less than you are.

It’s also possible they’ll panic and name a figure which is plainly unrealistic. However, making them feel silly, or applying intense pressure to make them go lower isn’t a good look.

This should be a constructive conversation, because either everyone wins, or no one wins. Especially if you’re dealing with someone new to the workforce, keep emotions out of it and guide the candidate through the process.

For example, when making your salary negotiation counter offers, give an explanation as to why you think your sum is more appropriate.

There's no need for salary negotiations to be confrontational.

5. Have non-salary perks up your sleeve

Sometimes, you can’t deliver the salary a candidate is asking for. However, this doesn’t mean it’s game over.

Before you let the dream applicant walk away, consider offering them other concessions to make your proposition more appealing. These could include:

Additional leave days
Flexible working hours
Working from home
Health insurance contributions
Pay and promotion reviews
Performance bonuses
Stock options
Help with relocation expenses
Tech perks – e.g. a company phone

Presenting a potential employee with benefits like these shows you’re keen to get them onboard, and makes them feel valued.

Tailor what you offer to the individual. Throughout the interview process, you should’ve started learning what’s important to them. Creating a benefits package that matches this will raise you even further in their estimations.

With these tips in mind, you’re in a great position to enter into a salary negotiation with your preferred candidates. Remember, this isn’t a competition. Both you and they want a positive working relationship, and this is the first step in making that happen.

*Trade Me Jobs job hunter survey, April 2022