I currently have three brands running simultaneously. My fashion business in Lagos, my personal brand and this fashion education platform. A lot of work goes on in the backend of running these brands so I have people in separate teams helping out. This has exposed me to hiring a lot of employees over the years. From the little exercise I sent my email list, I realized that some of you didn’t know what to pay staff or even how to negotiate salary with new employees. So I decided to whip up this post based on my experience and I am sure it will help you.
The first thing you need to know is job seekers now have access to a lot of information on salary negotiation. Just Google “How to negotiate my salary” right now and see what comes up. 49.7 million results in less than one second. So it is up to you to be prepared to negotiate too. That’s what this post will help you do.
How to decide how much you’re willing to negotiate for an employee’s salary
The first thing you need to do is ask yourself the following questions:
- Will a higher salary be significantly out of line with existing pay levels for comparable positions in your business? If your answer is yes then you need to reanalyze. Remember that if you decide to go beyond your business pay scale to hire a staff, you risk poor morale among existing staff if they learn that a new employee in the same role is being paid a higher salary.
- Are there other equally qualified people available if the prospect says no? If your answer is yes, you are on the winning side.
- Has the position been hard to fill? If your answer is yes, the prospect is on the winning side.
Rules To Follow When Negotiating Your Employee’s Salary
1. Don’t Intentionally Lowball And Expect To Negotiate From There.
You should know what your competitors are paying. It’s not right to know that hiring someone costs anywhere from 30k and you go ahead to offer them 10k so you can negotiate from there. You’ll only be putting the prospect in a difficult position when to start asking for 20k more. Many employees that know what they bring to the table won’t even have the time to go back and forth with you. They’ll just tell you they aren’t a go fit.
2. Offer a salary less than 10k of what you can pay.
This is easy. You want to hire a store manager and can afford to pay 35k per month. Offer the prospect 25k. People want to feel like they negotiated their salary. So they’d most likely negotiate within 30-35k. You want to make sure that your starting offer is 10k less than what you can actually afford to pay.
3. Avoid looking stingy and don’t punish a prospect for naivety.
Please do not over negotiate. This will make prospects to feel like you’re stingy. This is why it is important to have your best offer within negotiation range so you can easily spot greed and recognize naivety.
Although it’s a shared responsibility between you and the prospect to know the competitive salary market. If you know a counter offer pulls you far outside of the competitive market, proceed with caution. You may be facing a greedy prospect or a naïve one. Take time to learn who you’re dealing with.
On some rare occasions, I have asked a prospects what their salary expectations were. On one occasion, the amount the prospect mentioned was way less than my starting price. She was willing to learn and showed a lot of promise so I offered her the starting salary which made her 100 times more eager to please. Her salary has grown since. I would have easily punished for her naivety but not doing so when I had the chance made her see me in a different light and treat my business as her own.
4. Consider using Non-monetary incentives to entice a potential employee
If you’re not able to match the competitive salary market or a prospect’s salary request, consider expanding other components of the package. I’ve found that applicants often are willing to compromise base on compensation in other areas.
Flexible working hours will cost you little to nothing but might be what makes your employee accept a lower salary. You may also provide option of performance-based bonus after a specified period of time or room for salary increase as the business grows.
You might be tempted to spend a lot of time at this stage. But remember, your number-one goal is to hire a competent employee in as little time as possible. You need to think hard before you let 5-10k get in between you and your goal.