It can be challenging to talk about money, and when it comes to negotiating an employee’s compensation, the process can be time-consuming and stressful for all parties involved. Employees are seeking fair compensation and want to feel valued for the experience and skills they bring. At the same time, employers need to keep expenses within budget and protect their bottom line.
Because of these varying needs, negotiations need to be approached with both empathy and practicality. Compensation negotiations require intense research, analysis, and preparation. Turnover is high in today’s competitive job market, and the right compensation strategy can help you recruit and retain top talent.
How can you give yourself the best chance at reaching an agreement that benefits both your organization and your employee? Here are some quick tips to get started:
Preparation is key.
There are many things to consider when you prepare for compensation negotiations, including performance reviews, succession planning, and the cost of turnover. Compensation negotiations require a careful balancing act. You want to offer a package that is competitive enough to persuade an employee but that is also sustainable for the long-term success of your organization. Negotiations can be tense at times, which is why it’s important to come prepared with a plan that incorporates meaningful data and flexibility.
Use data to make fact-based decisions.
Citation Canada, formerly HRdownloads’, 2023 Ultimate Guide to HR Compliance in Canada is a valuable resource that can help you prepare for compensation negotiations. This guide details pay equity and compliance tools that can help you determine a salary range based on factors like company size and revenue, length of employee tenure, and location and industry.
Approach negotiations with collaboration and empathy.
Remember that there is a person on the other side of the conversation that is considering their financial wellness and whether your organization can support their personal and professional needs. Compensation negotiations require respect and empathy, with mutual benefit being the goal. If the conversation can be open and honest, things will go much smoother.
Five things to consider when preparing for employee compensation negotiations
With these quick tips in mind, you’re ready to dive deeper into developing an effective compensation strategy for your organization. Our HR experts have compiled a list of five of the most important things to keep in mind when managing compensation decisions.