As a business owner, salary negotiations can be quite stressful and difficult. If you fail to get it right, it may impact on your profit margins and your business. Here are some tips on salary negotiations for businesses. With some planning and implementation of simple tactics, you can reach a positive compromise in salary negotiations.
Top tips on salary negotiations for businesses
Surely, these tips can go a long way in helping you navigate the salary negotiation process with employees.
Do your research on market values and salary trends
First, you can calculate expected salary of your employees after doing some research. You can begin by deciding on a figure that matches their skill sets. This may involve considering their amount of experience, their field and industry, job roles, company size, and location.
Sources for such research could include recruiters and other professional contacts. For instance, you could check out websites such as Payscale or Glassdoor. Similarly, you could scan job advertisements.
Start with the lowest salary range
Second, get a good idea of the lowest salary for the different roles. This way, you have a start point for the negotiation process. Furthermore, you indicate that you have a good understanding of employee expectations and of what is fair.
Remember, many employees who are negotiating wage increases begin on the high side. Thereafter, they accept a lower offer as part of their negotiation strategies.
Know your upper limit
Third, you should know your walk-away point. In other words, simply decide on what precise highest figure seems fair and you will not go higher. Surely, this implies that you would be willing to let down employees who refuse to accept such an offer. Perhaps, you could base this figure on current market rates and the financial realities of your business.
Check if the employee meets the criteria
In addition, you can check if it is the appropriate time and situation to increase an employee’s salary. Sometimes, this may strain your relationship with the employee. However, you may still need to weigh the request with the following criteria:
- Length of stay: if the length of stay has been up to one year or more.
- New responsibilities: if the employee has taken up new job responsibilities.
- Performance: if the employee is performing well on important skills/job roles
- Excellent performance: if the employee is performing excellently and exceeding expectations.
Generally, the employee should meet up at least two out of the above criteria. Otherwise, you may have to explain your reasoning and let them down gently. You may also suggest a path to improvement.
Give necessary room when budgeting
Furthermore, it can be worthwhile to factor in necessary pay raises in your annual budgets. For instance, if there is an annual performance review coming up, you may expect employees to request salary increases during such times. So, plan ahead of time. Have an idea of planned raises way before an annual performance review.
Practice active listening
Moreover, it is important to ask questions and use active listening. You may even take brief notes. Your aim should be to identify your employee’s priorities and needs. Ultimately, this helps you reach a mutual compromise more quickly.
Offer the first figure. Usually, the first number sets the tone for the rest of the negotiation.
Consider other alternative benefits
Finally, you may offer other benefits if you do not want to increase an employee’s salary. This can be a way to keep them motivated. For example, you could offer more vacation days, or flexible working hours.
A few other tips:
You may schedule such negotiations towards the end of the workweek. This usually results in a more relaxed and positive negotiation process.
Practice before hand if needed. This can make you more confident and in control. Remember, you are supposed to be in charge of the conversation.
Wrapping it up
Salary negotiation processes can be stressful whether it is for a new employee or an existing one. You can use these Tips on Salary Negotiations for businesses to help you hire or retain better and highly qualified employees.
