Everyone knows that negotiating an offer can be the most delicate stage in the recruiting process. Done poorly, it can decrease the new hire’s job satisfaction before they have even begun their first day. Even worse, the offer may be rejected – and if it was a prolonged negotiation, that may mean that other viable candidates have likewise lost interest in the position, forcing the organization to start over from step one.
The whole point of presenting an offer is to get a “YES!” Not a “Maybe, I’ll think about it…” or a “No, thank you.” In fact, you want to get that yes before you present the final written offer!
How do you do this? All negotiations should be conducted with the candidate and appropriate decision makers during a pre-offer negotiations stage. The idea is that you don’t want to present an official offer unless you know exactly what the candidate is going to say. To make that possible, you need to discuss hypothetical terms and receive a firm commitment from the candidate that it will be worth moving forward with preparing and presenting a formal written offer.
Start the negotiations after you have addressed all the candidate’s needs, wants and motivations. Walk him through hypothetical offer scenarios until you get a “Yes”. Below is an example of such a pre-offer negotiation. You’ll notice that the candidate, Bill, doesn’t make it easy for the recruiter; expect to get some pushback, and be prepared to address likely objections.
Recruiter: Bill, when we first discussed compensation for this position, you told me that you wanted a base of $165,000 because you’re expecting a 5% raise on your current base of $150,000 in the next six months, and you wanted some incentive on top of that to make the job change. For the moment, let’s table the salary question and compare everything else.
Our bonus program is structured the same way as at your current organization and pays at the same range, so you’ll be even there. Our health and benefits will cost you a little less than what you’re paying now, but you had slightly more coverage there, so that comes out about even, too. Finally, I’ve previously given you details on our standard relocation package, which will cover everything that you’ve indicated you’ll need except for 90 days of temporary living expenses. Are there any other non-negotiable points I’ve forgotten?
Bill: What about the vacation policy?
Recruiter: Right, thanks! We are going to be able to match the amount of vacation you currently have, so you’ll come out even there, too. Are we in agreement?
Bill: Perfect. Yes, I think we’re good on those points.
Recruiter: Here’s my question: If I go to bat for you and push for a salary of $165,000 – which is over the target range by $10,000 – and push for an extra $5,000 in relocation benefits to cover your temporary living needs, are you going to say “Yes”?
Bill: I’ll need to think about it.
Recruiter: Bill, I have to know what negotiating leverage I have. Keep in mind that I can get more for you if I can guarantee you’ll say “Yes.” It’s the ultimate negotiating power if I can say, “Bill has given me his word. If we can do A or B, he will set the start day for two weeks from the day we present the offer.” If you were the one doing the hiring, you’d want to be wanted – just as much as you want to be wanted as a candidate. If you went through the long selection process, then negotiated and prepared an offer and jumped through a bunch of hoops to get approvals, you’d want to know the candidate was definitely going to say “Yes”. If you didn’t know how the candidate would respond, how much time, energy and enthusiasm would you put into pushing for the candidate to get more? Make sense?
Bill: Sure, I can appreciate that.
Recruiter: With that in mind, let’s discuss a few scenarios. If I can get you an even larger base of $175,000, you’d accept that enthusiastically, even without the added temporary living expenses, right?
Bill: Absolutely. I’ll give you my word that I would accept that offer.
Recruiter: Alright. What if I can’t get that, but I get a base of $165,000 plus an additional $3,500 added to the standard relocation package to cover your temporary living. Can I count on you to take that offer?
Bill: Probably. I’d at least still be interested, but I’d rather have the first offer.
Recruiter: Okay, so how about this: If it was $7,500 added to the relocation package, what would you say?
Bill: Yes, for sure. I give you my word that I would accept that offer, too.
Recruiter: Okay, worst case scenario time. If the decision makers come back and say $155,000 and no help with temporary living, what would you say to that?
Bill: I would pass on that offer. That’s not going to motivate me to move my family across the country.
Recruiter: Okay, so I can tell them that if they go that low, they should hire someone else?
Bill: Well, no, I didn’t say that. I’d want to at least hear the offer and have a chance to think it over.
Recruiter: I’m giving you the chance to think it over right now, Bill. I need to know exactly what is exciting to you, what is acceptable, and when you would walk away. That way, I know how hard to push on your behalf and when to back off.
If you need to review this with your wife and get back to me this afternoon, that’s fine. But I can’t pursue an offer until I know exactly where we stand.
Bill: Why can’t you just get me an offer, let me think about it, and I’ll get back to you?
Recruiter: That’s a fair question. Here’s why: Getting an offer together and getting approval on it from all necessary stakeholders is a huge, time-consuming process. It requires multiple signatures and sets expectations. We can’t afford to go through the formal approval process, then wait on your decision, have to renegotiate and go through approval again, and potentially still have you say “No, thanks”. By then, we will likely have lost any other potential candidates, and we have to start the whole search process again.
That’s why I want to find out what will satisfy you now. I give you my word that I’m going to put everything I’ve got into getting exactly what you want, with the understanding that you’ll say “Yes” if we put in that effort. Like I said earlier, I’m more likely to get agreement from the decision makers if I can give them that guarantee.
So, to make sure we’re on the same page before you talk to your wife, let’s review the scenarios one more time. If I can get you a larger base of $175,000, we’ve definitely got a deal and you’ll start two weeks from receipt of the written offer, correct?
Bill: Yes, for sure.
Recruiter: Great! And if I can’t get that, but I get a base of $165,000 plus $7,500 added to the relocation package for temporary living, can I count on you to take that offer?
Bill: Probably. I’d at least still be interested, but I’d rather have the $175,000. Let me confirm this one with my wife and let you know for sure this afternoon.
Recruiter: Okay, that’s fair. How about a base of $155,000 plus $7,500 added to relocation. What would you say?
Bill: Hmm… This is where I’d probably walk away. I just don’t think I’d be happy with that offer.
Recruiter: Okay. Now, I don’t expect this, but just in case the decision makers come back with a $150,000 cap on salary because they know another candidate would be happy with that number, and nothing added to the relocation package, because that candidate wouldn’t have to relocate, what would you say to that?
Bill: Honestly, I’d have to say no. I’ll run it by Mary, but I’m confident we’d say no to that.
Recruiter: Thanks, Bill. You run all this by your wife and get back to me as soon as possible – nothing else happens until I hear from you. Before we say good-bye, let’s make sure we’re both clear on the scenarios. Could you repeat them back to me quick?