Top salary negotiation tips for employers
Learn how to negotiate salary as an employer with practical tips to attract top talent and foster long-term retention through open salary conversations.
Over a third (37%) of UK workers are dissatisfied with their current salary and 3 in 5 are worried about their financial situation due to the cost of living. So, with 70% aware of their market value, it should come as no surprise that salary negotiations are becoming increasingly common.
Staying on top of the latest trends and mastering salary negotiations can help you build stronger teams, reduce turnover, and improve morale. However, to achieve the best results, you need a strategic approach and a solid understanding of how to negotiate salary.
In this article, we’ll cover how you can navigate these conversations, set clear expectations, manage counteroffers, avoid common pitfalls, and position salary offers within a broader compensation strategy. Let’s dive in.
Access the insights you need for successful salary discussions
Why effective salary negotiations matters
While salary’s impact on employee morale is well-known, what’s particularly telling is that those who feel they’re paid fairly are 50% less likely to look for a new job, highlighting the tangible impact salary negotiations can have.
Crucially, approaching salary negotiations strategically sends a clear signal that your organisation values its employees. This helps to:
- Motivate teams
- Foster loyalty
- Onboard top talent
- Reduce turnover
Supporting DE&I through salary negotiations
Studies show that men are more likely than women to negotiate salary, with 61% of men negotiating compared to just 41% of women. Men also tend to ask for slightly higher increases and, as a result, typically receive an average pay rise of 6.6% compared to 5.9% for women.
Implementing transparent salary negotiation processes can help you create a workplace where all employees feel valued and rewarded for their contributions.
Preparing for salary negotiations
Whether you’re crafting an attractive employee value proposition, making a job offer, or looking to boost engagement within your current team, salary is always going to play a part.
Preparation is everything when it comes to salary discussions. Without a clear plan, you risk losing top candidates or undervaluing the talent you already have.
Here’s what you can do.
Research market and industry standards
Start by researching industry benchmarks to ensure your salary offers are competitive.
Resources like our UK Salary Trends Report are a great starting point. Use it to find salary benchmarks tailored to factors like geographic location, role seniority, and industry norms. For example, a marketing manager in London may command a higher salary than one in a smaller city, reflecting regional cost-of-living differences.
You should also keep economic factors, such as inflation, in mind as they shape salary expectations. This not only helps you meet candidate expectations but also ensures you’re making informed decisions within your budget.
Define the salary range
Use the insight you’ve gained and the specifics of the role to define a fair, budget-friendly salary range with a clear minimum and upper limit.
This adaptability gives you the flexibility to attract exceptional candidates while staying within budget. Plus, if someone really stands out, you have the opportunity to secure the best hire and avoid training expenses or the cost of re-filling the role later.
You can also publish your salary range within job descriptions to set clear expectations for job candidates. This can boost application rates, with 74% of workers admitting they avoid applying for roles without salary information, while keeping negotiations focused.
If you regularly conduct salary reviews, use these insights to ensure your range reflects market trends and stays aligned with your team’s current salaries.
Consider the full compensation package
Salary is just one part of the puzzle. A well-rounded package with benefits like pensions, healthcare, and mental health support can appeal to candidates, even if the base salary isn’t the highest on the market, with 66% of workers prepared to skip a pay rise to secure their most desired benefit.
Tailoring your offer to different priorities also shows you value your employees. For example, non-monetary incentives like flexible working, additional leave, or career development opportunities can be particularly effective in attracting Gen Z candidates.
You can consider including:
- Retirement plans: Pensions or employer-matched schemes.
- Flexible working: Remote options, hybrid setups, or compressed hours.
- Career development: Training, mentoring, or progression opportunities.
- Health and wellbeing: Private healthcare, gym memberships, or wellbeing initiatives.
By focusing your compensation strategy on the whole package, you’ll appeal to a wider range of candidates, create a standout offer, and show you’re invested in their long-term success.
Structuring the negotiation process
69% of young professionals say they are comfortable negotiating salary, making these discussions increasingly important for employers.
A clear, structured approach ensures smoother, more productive conversations, giving you the best chance to reach agreements that work for everyone.
Let’s explore how you can make that a reality.
Set clear expectations and guidelines
Transparency is key to smooth negotiations. So, when recruiting, be upfront about your organisation’s approach to compensation, including pay structures and benefits on offer.
You should also clearly define the role’s requirements to ensure alignment between you and the candidate. This helps prevent misunderstandings and sets a positive tone for any future negotiations.
This openness can go a long way to building trust and will help foster employee engagement by showing that you value fairness and clear communication.
Prepare for counteroffers and negotiation tactics
With 2 in 3 jobseekers securing a higher salary after negotiating, counteroffers are increasingly common.
Candidates may use tactics such as referencing competing offers, leveraging their current salary, or emphasising personal circumstances like family needs or financial obligations.
But don’t be deterred.
To handle counter offers effectively, you can:
- Decide in advance how flexible you’re able to be within your salary range and wider budget.
- Highlight your company’s culture and long-term career opportunities, focusing on non-financial perks.
- Be honest and realistic about what’s achievable in the long term, avoiding promises you can’t keep.
Whatever the request, take the time to carefully consider it and avoid rushing your response. By being flexible, calm, and professional, you’ll be able to manage counteroffers confidently and reach an agreement that’s within your limits.
Avoid common salary negotiation pitfalls
Salary talks can be challenging, so it’s important to be mindful of potential pitfalls and take steps to avoid them. These include:
- Overpromising: Offering a pay rise after the probation period or agreeing to special working arrangements that don’t fit the role might help close a deal in the moment, however, failing to deliver will quickly erode trust.
- Undervaluing candidates: Whether it’s a new hire or a current employee, undercutting someone’s market value might save money in the short term, but means you run the risk of losing them to competitors in the near future.
- Inconsistency: A stand-out offer for hard-to-fill roles might seem justified, but word spreads fast. These inconsistencies can dent morale. Align all offers with organisational benchmarks to ensure fairness and support your widespread retention efforts.
Conducting the salary negotiation conversation
The salary negotiation conversation can set the tone for your entire working relationship. By listening to the candidate’s concerns and responding thoughtfully, you create an environment where both parties feel valued and excited to move forward.
Here’s how to navigate this conversation effectively.
Foster an open, positive dialogue
Creating a welcoming environment is essential for productive salary negotiations. Encourage candidates to share their expectations openly and actively listen to their thoughts and concerns.
Maintain a positive tone throughout the conversation by focusing on shared goals rather than differences. This approach builds rapport and demonstrates that your organisation values its people.
When candidates feel respected and heard, they’re more likely to accept offers—and even if compromises are needed, they’ll leave with a positive impression of your organisation.
Highlight growth and development opportunities
For most candidates, salary isn’t the only motivator—and framing the role as a career opportunity rather than just a job can work wonders during negotiations.
When negotiating salary, be sure to highlight:
- Training programmes to build skills and expertise.
- Mentorship and succession planning to support professional growth and confidence.
- Clear career advancement pathways to show a future within the company.
Candidates who value career development will see this as an investment in their future, making them more likely to accept your offer, stay engaged, and stick around for the long haul.
Reaching a mutually beneficial agreement
Retention begins on day one. So, the goal of salary negotiations is to find a position where both sides are happy.
Here’s how to formalise agreements and set expectations for future salary discussions, meaning you can start the relationship on the right foot.
Finalise the offer
Once a verbal agreement is reached, make sure all terms are clearly shared in writing. This should include a detailed summary of salary, benefits, and any other agreed-upon terms.
This confirms that everyone’s on the same page, reduces the risk of disputes, and helps employees feel more confident in committing to your organisation.
Set up future reviews and adjustments
Setting up future salary reviews shows you’re committed to your employees’ ongoing development. Let candidates know when they can expect these discussions and, where possible, outline the key factors that will guide them—such as performance, market trends, and inflation.
A clear timeline for reviews helps everyone know what to expect and reassures them that their contributions will be recognised. This not only incentivises productivity but also boosts morale and makes them more likely to stick around.
Building win-win salary negotiation strategies
Effective salary negotiations are about preparation, transparency, and flexibility. When you approach each conversation as an opportunity to benefit both your organisation and your employees, you can secure top talent, boost retention, and create a positive, engaged workplace culture.
Remember, salary negotiations aren’t a one-off event—they’re an ongoing process. By aligning compensation with the growth of your employees and the success of your organisation, you’ll build a loyal, motivated team eager to contribute to your long-term success.
Ready to become a salary negotiation pro? Check out our latest Salary Trends Report