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!