In the finance industry, where candidates seeking investment banking jobs and operations jobs have a bevy of offers to choose from, hiring managers can be tempted to sprint blindly through the hiring process to ensure talent doesn’t walk away. However, offer negotiation is one of the most common phases to lose high level talent, especially when salary is involved. You might think that your work is done after sending the offer letter, but don’t take their signature for granted.
Here are six of the most common slip-ups made when negotiating job offers with candidates, and some tips for avoiding them.
1. Focusing only on the money
This first mistake may sound counterintuitive – these are mostly salary negotiations, after all – but just because salary is of central importance doesn’t mean it’s the only important thing.
There are other factors to consider as well, particularly those concerning what a candidate is looking for from an employer that isn’t strictly about money. A specific work-life balance, for instance, or an adjustment to their position title. One of the biggest sticking points is actually vacation time. Most candidates want to negotiate paid time off as much as they want to discuss salary or other considerations.
2. Expecting to negotiate after a lowball figure
Just about every finance industry hiring manager knows at least one fellow hiring manager or recruiter who prides themselves on lowballing candidates from the start. They also know that this strategy rarely works the way it’s advertised.
Any employer that isn’t starting salary negotiations with a competitive offer is putting themselves at a big disadvantage. Most candidates will dismiss you as lacking seriousness, or else be so embarrassed by having to ask for the $10,000 or even $20,000 more they rightfully deserve that they’ll simply move on to the next firm instead. Starting with an insultingly low salary doesn’t beget trust or respect from the candidate. Remember, your end goal is to have an engaged employee that is excited to come to work. So make sure you begin the conversation with an acceptable offer to start your working relationship off on the right foot.
3. Not taking company fit into account
Every once in a while, a candidate enters salary negotiations who is so clearly talented that recruiters will do just about anything to hire them, from increasing the usual offer to extending the negotiation period. Oftentimes in these instances, every ingredient is perfect but one – company fit.
As good hiring managers know, the greatest candidates are not also the greatest fits. This is why it’s so important to enter salary negotiations with your company culture firmly in mind. Does the candidate share your values and beliefs? Establish this first, then consider meeting their salary demands.
4. Forgetting that employees talk
This is a negotiation mistake whose severity can take a period of months to become apparent. Some hiring managers assume that salary talks will remain private between the employer and the job candidate, but employees can and do discuss salaries amongst themselves.
If a new hire receives a compensation package that’s significantly different from that of their peers – whether it’s more generous or less – it can easily create a work environment with an undercurrent of jealousy and resentment.
To avoid a situation like this, recruiters need to enter negotiations with a fixed idea of their firm’s salary structure and a commitment to stick to it.
5. Not having a counter-offer in mind
Experienced hiring managers anticipate that a potential hire will want to ask for more after receiving a target salary offer – everyone wants to feel like they’ve had some say in how much they make – but a surprising number fail to understand how to play the counter-offer game.
“A top candidate has just asked for $8,000 more than what you’ve offered. What do you do?”
Say a top candidate has just asked for $8,000 more than what you’ve offered. Before negotiations even began, you established that you could add $5,000 to your offer without putting too much tension on the salary bands. You’ll need to establish for yourself how important the extra $3,000 is to the candidate. Is it worth losing great talent over so slim a margin?
These kinds of questions and scenarios should be debated amongst the hiring team before any major interview to be best prepared. Generally, any counter-offer within $5,000 of your initial offer is considered agreeable, particularly in the finance industry.
6. Overlooking candidate responses
The interview process is the best time for learning about a candidate’s personality and how they would contribute to your firm’s success, but it isn’t the only time. Negotiating salary can also tell you a lot about a person – their ability to communicate, what they truly value and even their demeanor after failing to get exactly what they want.
Insights like these are invaluable to a hiring manager, especially at a point in the hiring process when it isn’t too late to withdraw an offer if warning signs begin to go off. This is your last chance to ensure a prospective hire is right for your company. Don’t let it go to waste.