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Part 7 - What HR Really Thinks About Salary Negotiations: Insider Insights

salary negotiations Sep 15, 2024

When entering salary negotiations, understanding the perspective of the Human Resources (HR) department can be incredibly valuable. HR professionals are typically the gatekeepers of compensation decisions, balancing the needs of the company with the expectations of candidates and employees.

However, it’s important to recognise that HR often operates on behalf of internal stakeholders—such as department heads, managers, or even senior executives—who have their own interests and goals. This dynamic can significantly impact the negotiation process, adding layers of complexity that candidates should be aware of.

The Role of HR in Salary Negotiations

HR’s primary responsibility in salary negotiations is to ensure that the company remains competitive in attracting talent while maintaining internal equity and adhering to budget constraints. Here’s a closer look at how HR approaches these negotiations:

1. Balancing Budget Constraints with Talent Acquisition

HR’s Perspective: HR professionals are tasked with managing the company’s compensation budget, which includes adhering to predefined salary bands. These bands are often determined by factors such as the company’s financial health, industry standards, and internal equity. HR must balance the need to attract top talent with the reality of budgetary limits.
Impact on Negotiations: Candidates might find that HR’s ability to offer higher salaries is constrained by these financial limitations. Understanding this can help you approach negotiations with realistic expectations and focus on how you can justify being at the higher end of the salary band.

2. Ensuring Internal Equity

HR’s Perspective: Internal equity is a key concern for HR. They must ensure that employees in similar roles with similar experience levels are compensated fairly relative to one another. This is crucial for maintaining employee morale and avoiding potential legal issues related to pay discrimination.
Impact on Negotiations: When negotiating, it’s important to recognize that HR may be limited in how much they can deviate from established pay scales, especially if doing so could create disparities within the team. To navigate this, candidates should focus on clearly differentiating their skills, experiences, or achievements that might justify a higher offer.

The Impact of Internal Stakeholders on Negotiations

While HR is the face of the negotiation process, they often represent the interests of internal stakeholders such as department heads or senior management. These stakeholders can significantly influence the outcome of negotiations, sometimes adding complexity to the process:

1. Alignment with Departmental Budgets

Internal Stakeholder Influence: Department heads often have their own budgets and financial constraints, which can affect how much they’re willing or able to allocate for a new hire’s salary. HR must align their recommendations with these departmental budgets, which can limit flexibility in negotiations.
Impact on Negotiations: Candidates should be aware that HR may need to consult with department heads before making final salary offers, which can slow down the negotiation process or result in offers that are lower than expected. To counter this, it’s useful to build a case that aligns your value with the department’s strategic goals, demonstrating why investing in your salary is a smart move for the department’s success.

2. Managerial Expectations and Priorities

Internal Stakeholder Influence: Managers who are hiring for their teams often have specific expectations about what they’re willing to pay based on the role’s perceived value, the candidate’s experience, and the urgency of the hire. HR must navigate these expectations while also advocating for fair and competitive compensation.
Impact on Negotiations: Understanding that managers may have a significant say in the final offer can help candidates tailor their negotiation strategy. For example, if you know the hiring manager is under pressure to fill the role quickly, you might leverage this to negotiate a higher salary or additional benefits.

3. Strategic Company Goals

Internal Stakeholder Influence: Senior executives may dictate broader company-wide compensation strategies based on long-term financial goals, market positioning, or company culture. HR’s role is to implement these strategies, which can sometimes limit their flexibility in individual negotiations.
Impact on Negotiations: Candidates should align their negotiation strategy with the company’s overall goals. For instance, if the company is focused on innovation, highlighting your ability to drive innovative projects might make HR more willing to negotiate on salary to secure your talent.

How Candidates Can Navigate HR’s Role and Stakeholder Dynamics

Given HR’s role in balancing the interests of various stakeholders, candidates should approach negotiations with a strategic mindset. Here are some tips to navigate this complex landscape:

1. Understand the Company’s Structure and Decision-Making Process

Research the company’s organizational structure to identify key decision-makers. Understanding who influences salary decisions can help you tailor your negotiation strategy. For example, if you’re aware that a particular department head values specific skills, emphasize those in your discussions with HR.

2. Leverage Information on Stakeholder Priorities

If possible, gather information on the priorities and pain points of the department or team you’re joining. Use this knowledge to position yourself as the ideal candidate who can address these needs, making it easier for HR to justify a higher salary to internal stakeholders.

3. Be Patient and Prepared for Multiple Rounds

Negotiations involving multiple stakeholders can take longer, as HR may need to consult with various parties before finalising an offer. Be patient and prepared for back-and-forth discussions. Each round gives you an opportunity to reinforce your value and address any concerns that stakeholders might have.

4. Emphasise Long-Term Value Over Immediate Cost

When internal budgets are tight, HR and department heads may focus on the immediate cost of hiring. Shift the conversation to emphasise your long-term value, such as how your skills can lead to cost savings, increased revenue, or other benefits that outweigh the initial salary expense.

Conclusion: Navigating the HR Landscape in Salary Negotiations

Salary negotiations are rarely straightforward, especially when HR departments are balancing the needs of internal stakeholders with the company’s budget and compensation strategy. Understanding HR’s role, as well as the influence of internal stakeholders, can provide you with a significant advantage. By aligning your negotiation strategy with the company’s goals and the specific priorities of the stakeholders involved, you can navigate the complexities of the process and secure a compensation package that reflects your true value.

This blog post is part of our ongoing series on negotiation strategies, designed to give you the insights and tools you need to excel in your career.