Why no hiring manager should ever negotiate salaries with candidates.

When I did my first interviews for ramping up my team I always felt uncomfortable when it came to the salary part of the discussion. In the beginning I did not really know why, but it was never a good feeling.  First of all I had the issue that salary was a topic in which I was not really interested. Second, I thought that it is my job to find the ‘sweet spot’ – that is: the number where the candidate is almost saying no to the offer, but still says yes with a little pain in his or her face.

I started to find bad reasons and arguments why whatever number the candidate came up with is too high:

“You have to consider the fact that the cost of living here is lower than where you are at the moment”

“We should start a little bit lower. Perhaps after your succesful probation period we could raise your salary.”

“We also have a nice bonus package and pay for a certain portion of your ticket for public transportation. So in total you will have what you are asking for just not in cash.”

I spent a lot of evening walks during that time thinking about these interview situations. At some point I drastically changed my behaviour. Here is why I stopped negotiating salaries:

  • Time-Waste: If you go into these classical negotiation situation where the candidate says 100k EUR, you reply with 40k EUR and after discussing and fighting way back and forth you end up agreed upon 52k EUR + 10% bonus based on goal achievements, then you have wasted your time, the time of the candidate and much more important: the joint time you have together to get known to each other.
  • Balance: One of my team members once gave me in a feedback talk a compliment that describes quite well why I was wrong. He said that I am very good in balancing the local needs of my employees and the global needs of the company. Perhaps he was right with that compliment, perhaps he was not. I realized that – broken down to one sentence – THIS is exactly what the job of a people manager is about. I understood, why I was feeling bad about salary negotiations: There is a guy or a girl sitting in front of me and I want him or her to become one of my team members, but I am not having a balanced view on the salary discussion. I try to solely optimize the companies side of things and try to push him down in his salary expectations.
  • Trust: I always wanted to create an environment in which each of my team members can trust me as a person as well as a manager. I wanted them to have trust in my decisions and in what I am saying. Salary is a very personal topic. A negotiation about it can never end good for the candidate, because meaningless what the outcome of that negotiation is, the candidate will be left alone with the feeling “I could have achieved a better result if I just had negotiated better.”. Hence the only thing that one achieves with a salary negotiation is, that the candidate feels bullshitted during one of the very first meetings with his future manager. Wait a moment … how exactly can I expect this candidate to trust me as his manager later on  if I made him feel bullshitted on a very personal topic like salary, within one of the first meetings he has with me?
  • Personal Ignorance: I realized that it absolutely has no positive effect on my life if my company was paying a candidate some k EUR less per year. If you just think about how companies spend their time and money, it is ridiculous to even think about not giving this candidate that you really want to hire the 50k EUR he is asking for vs. the 47k that you are going to offer him.

My decision not to negotiate salaries created obviously new problems: I still had to come up with a reasonable number that one can write down and which is acceptable to the candidate and the company. Actually I learned that this problem is way less complicated, than it may sound at first.

I decided to be open and honest to candidates when it comes to the salary topic.  In any interview since then I said these words to candidates: “Okay, we have to talk about the hard facts, too. What are your salary expectations? But before you give me an answer to this question, let me tell you that I never ever negotiate salaries. Let me explain to you why…” and then I gave them my reasoning from above. Afterwards I explained them the HR-approval process within the company and I outlined my own limitations for their salary:  I need to make sure that salaries remain fair within the department for more or less comparable positions with roughly the same XP-level in order to avoid frustration (e.g.: if employee A figures out that employee B gets 50% more salary for the same job at the same experience level).
Besides that, there is only one thing to say: If I want to hire the candidate, I will fight for whatever he is asking for and it is my responsibility to make it possible.

After that I ask the candidate to come up with a number. From that point I solely act as a consultant that is working on behalf of the candidate. By that I also offered two of my team members more money than they were asking for.
The classical manager will prolly scratch his head in this moment and just ask “WHYYY?!” and the answer to this is quite simple: if a candidates salary expectations are way below his ‘market value’ just because he does not know better, and if the candidate is that awesome that you are going to hire him, then also other companies and head hunters will realize this awesomeness sooner or later. Hence someone will offer him more money in some months. He then leaves your company and you are going back into the recruiting process and have gained nothing but lost time in incorporating a new employee within your department, which left again after a short period of time.

One could argue that my time-waste argument from above is wrong, because now I wasted time on explaining my reasons to not negotiate. Well, from my point of view it is not wasted time: The candidate learns something about me, he gets to know me better and after all he sees a difference to all the other interviews he has prolly done in the past. (Actually there was one guy in my team who refused a financially more attractive offer from another company and joined my team, because of the feeling and the trust that was generated during this talk.)

When I was explaining these thoughts to a friend, he argued that it is a great idea to have salary negotiations for positions in which negotiating is part of the job (e.g. Management, Sales,…). I totally agree that negotiations should be part of a hiring process of these positions. But do not abuse personal salary discussions with the candidate for testing his negotiation skills. As said before: the trust that you are able to get from your new team member is worth much more (to you and to your company), than the 30 minutes that you have to sit down to figure out an alternative way of testing negotiation skills during your interviews.

Bottom line my advice for salary discussions in interviews is: Work FOR (and not against) your future team member, be a consultant to him on how to achieve a meaningful salary for him that makes him a happy member of your team for a long time.

This is the first blog post of my series Management by Accident in which I will write about my learnings and experiences in my life as a manager. I highly appreciate feedback on my posts. Leave a comment below, get in touch with me via one of the social networks or catch me on some chat via Skype or IRC. Thanks for reading!

13 thoughts on “Why no hiring manager should ever negotiate salaries with candidates.”

  1. “if a candidates salary expectations are way below his ‘market value’ just because he does not know better,”

    This is where being technical in the field you are hiring for is tremendously helpful: if a candidate does not know better, he is either trying to “wing” his way through an interview, or he is a total beginner. If he is trying to bullshit his way through an interview, exit stage left; if he is a beginner, *and* you are hiring for an entry level position where you are planning on training this person anyway, it’s all hunky-dory.

    However, if you are hiring for awesome, it’s time to end the conversation: an expert or a master in their field will always know exactly how much they are worth, and she or he will be expensive, damn expensive. That’s one checkpoint indicator you are talking to a master and not a bullshitter.

    Now, lots of companies have asshole managers who actually don’t want experts or masters because they are afraid that this person would cause team instability by diverging from “team culture” (whatever that nonsense is supposed to mean), and they are just looking for a computer equivalent of a laundry machine repairman. In such a case, it is time for the candidate to exit stage right, and the company to land on a blacklist…

    1. Thanks for your comment 🙂 I agree and disagree at the same time. You are right that an ‘expert’ is more likely to know his price. But it strongly depends on the personality of this guy. If he is just interested in the cool challenging problems and never was interested too much in the money part of the IT business, then he perhaps is ignorant about it NOW and still an expert. That does not mean he will not be interested in the money part later on if another company offers him way more and he is pointed to the topic with his nose.

      Besides that I have hired people from all over the world to come to Berlin. And an expert from China, Malaysia, Russia, India, the US or Brazil has hard times to find meaningful salary ranges for an equivalent position in Berlin on the web. It can easily be that 30k EUR gross seems to be a lot to an expert that is coming from a country where it actually IS a lot….this does not mean it is a lot where he is going to work abroad.

      1. Some background first on what I am about to write: in spite of my pseudonym, I have done a lot of interviews (good portion of which were for a consulting / outsourcing company), as the interviewer: I was doing what you are doing, for both employers and for clients, and my job was specifically to weed out the fakers and the liars from the guys with technical chops, but more importantly, to identify guys with both experience and insight necessary for senior and/or mission critical positions.

        EXAMPLE
        I am asked to hire a team lead, a senior system engineer.

        1. weed out system administrators from system engineers:
        “what is the difference between a system administrator, and a system engineer?” It’s a simple as that. No matter what the answer is, it will leak tremendous amounts of information, and I will either be exiting stage left in 2-3 minutes, or I am really talking to a system engineer, in which case…

        2. so you’re a system engineer, eh? A senior system engineer! Excellent. Your resume is impressive.
        Now, I will be asking you some very technical questions; please understand that this is in no way meant to be personal; the questions are meant to determine your level of technical capability, experience, and most importantly, insight. Specifically, I will be asking you very technical questions about experience and technologies you listed on your resume; you will not be asked anything that is not on there.

        So I see you have “large scale experience in automated provisioning”. Please explain the PXE booting process to me, in detail, and then, explain to me how the DHCP protocol works…”

        With that in mind, of all the many interviews I have held over the years, pre-screening candidates, I have yet to walk into an interview where the expert (or better yet, senior, or a master) is ignorant of her or his market value. Both master and the senior will often have international experience, having been “around the block a few times” to know how things work in the industry. After all, working in the industry is one part of how she or he became an expert!

        Otherwise, who you would be hiring goes directly against your core idea of “hiring characters, not skill sets”, which I know, at this point seems counterintuitive (an academic, maybe?) Large portion of expertise comes from experience. Now, an academic or an enthusiast might prove to be an excellent hire, even much better than a professional, if the interviewer and the company understand that they have to forge the person into an expert. That involves assigning a master to mentor them. The unicorn in the room is the expert who is also an enthusiast to the point of doing what they do at work in their spare time for themselves: those guys are very opinionated (rightly so), they don’t work well with “B and C players” (rightly so), and they will turn into a master. If they have social skills, they will turn into excellent mentors, too, and if they get to work with other A players (highly technical people), awesomeness of every kind is likely to ensue. Definitely a good investment, which means that the person should be given lots of decision making power and lots of responsibility (or as you wrote, “95%”; well done.)
        Professionals, by the way, are the riskiest of all to hire, even if they ace the technical interview (which they very often won’t be able to). That is the sad truth about our industry, because, unlike Germany where one must pass state exams in order to be Dipl.Ing. Informatik, everywhere else it’s a “free for all, everybody get shotguns”.

        An expert will always care about proper compensation, precisely because she or he have worked in the industry, and will have experienced the disenchantment and cynicism which comes from working in information technology industry specifically. They will be jaded, because they learned the hard way that no place is perfect, and they will want adequate compensation for the pain and suffering, no matter how much they might like, or even love their job. They know better. From experience, both expert and the master know that they won’t just be doing what interests them, but many other things besides (dealing with people, people politics, or politics of poorly picked technical solutions which now cause incidents in the wee hours of the morning…)

        If working at your company is different than what I described above, then you truly have the very good fortune of working at a unicorn company, and a dream job the rest of us can only dream about, but can never seem to find (people either lie, or bend the truth to the interviewees, a lot, in our industry).

        1. Hmmm. Thanks again! I will think about it before I reply anything. re unicorn company: Well, actually I have resigned from my management job and I am just sticking with my current company for three more weeks… 😉

  2. Silly me, forgot to explain *why* being technical in the field one is hiring is helpful: when the candidate replies with below market value salary expectations, and one’s aim is to hire for awesome (or an expert, or a master), it’s time to kick it into high gear: the deeply technical questions should come fast and hard. Really fast and really hard.

  3. I’m torn on this matter. I think you bring up some very good points regarding the challenges of negotiating a salary with the individual you’re basically trying to establish a rapport with, as well as build trust. At the same time, the statement ‘I don’t negotiate salaries’ is one that would generally make me inherently suspicious during an interview. Seen in the context of the entire post though, I can tell that your proposal is that you’ll side with the employee and honestly tell them what you think and help them get what they feel is fair compensation.

    However, this approach has a fundamental flaw in my opinion. Specifically, that it is virtually indistinguishable from the good guy/bad guy and Higher Authority Gambit (to borrow a bit of terminology from Roger Dawson). I.e. a situation where you also side with whomever you are negotiating with, and offer to negotiate on their behalf with a higher authority (who coincidentally is the potential bad guy).

    There’s virtually no way to distinguish between the honest person approach, and this somewhat common negotiation tactic. Obviously, you’d never increase someones salary using this negotiation approach, so I’m inclined to believe you really do want to help your candidates. But that still doesn’t make it any less nebulous in practical terms.

    1. Hi Lasse & thx for your comment! Actually I never thought of the fact that people could feel as if I am pushing responsibility artificially away to any higher authority. But you are right, that feeling could be created in the way I was doing interviews. Which is really bad! Have to think of how it can be done better. The problem is: I believe one can not do better than being open and honest. Hence it will be tough to be open and honest and to not leave room for these feelings (as long as a higher authority still really has a saying about things).

  4. Sounds cruel, but one thing we’ve used quite effectively when negotiating with candidates is go back to basic psychology – silences, reflecting etc.
    And, always, always, always give them the old ”we’re happy to review this within the very near future, depending on performance” etc etc.

    At the end of the day you should always remember that the winning candidate will become your new colleague, add value to your business and become a member of your team.

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