Deal or No Deal: Getting Salaries Right

You’ve been on the recruitment drive for weeks. By now you’ve met a few ‘decent-but-not-quite’ candidates, one or two who were never going to pass muster, and then – finally – you find them. 

The one. 

They seem to understand the role as if they wrote their own job spec. They know your business. They simply get it. Plus they have the right experience, the right attitude and, more importantly, you can already see what they could bring to the team.  

You advertised the job at £55,000. 

They want £60,000. 

And just to make things more interesting, they have already told you they are currently earning £46,500. 

So, you’ve got a decision to make now. What do you do? 

Do you hold firm at £55,000 because that is the salary you advertised? 

Do you point out that you are already offering them an £8,500 pay rise? 

Do you split the difference? 

Or do you give them the £60,000 because you’ve finally found the person you actually want? 

Welcome to one of the more awkward parts of talent acquisition. 

 

Start with the job, not the person 

The interesting thing about that £55,000 figure is that, at some point, it was probably fairly arbitrary. 

Not completely arbitrary, obviously. You will have had a budget, and something helped you get there. You may have looked at similar roles in the market. You might have considered what the last person earned, spoken to a recruiter, checked job adverts and looked at what competitors appear to be paying. 

Those are all logical, even sensible things to do. 

But when you first decided that the salary was £55,000, the person you were eventually going to hire did not yet exist. 

They were imagined. 

What you did know was what you needed this person to do, and that is the bit I think employers sometimes lose sight of. 

Before deciding what somebody is worth paying, define what you actually need them to achieve. 

Start with the problem this hire is meant to solve. 

What responsibilities will they be carrying? 

What does success actually look like? Perhaps after six months, then after a year. 

Crucially, you have to ask the question, what will that success be worth to the business? 

If you decide somebody is capable of delivering considerably more value than you originally anticipated, it is at least worth asking whether the original salary still makes sense. 

A salary range is a sensible guardrail, no doubt – but those rails don’t need to be bolted down. 

 

Understanding the jobs market 

The jobs market itself is a useful guide – but it is also a creation and subject to fluctuation, just like the housing market. Property prices change, and generally speaking increase over time, and that is the same with salaries. 

Of course, you should understand the market. 

If every comparable role is paying somewhere between £50,000 and £60,000, advertising yours at £38,000 and hoping charisma will make up the difference is unlikely to go particularly well. 

There are obvious downsides to offering more than the market, too. 

Nevertheless, benchmarking has serious limitations. 

You are not hiring somebody to work for the mean average of six businesses you checked out on LinkedIn Jobs. 

You are hiring them to work for yours. 

And there are other intangibles to consider, too. The candidate might bring an existing client network. They might have specific sector experience you had not advertised for, but now realise is a useful added bonus. 

They might already understand precisely the market you are trying to grow. 

Or they might simply be considerably better than the person you imagined when you wrote the job description, with more reason, and, now you think about it, to stay longer-term and be part of future plans. 

Market data should inform the decision – but it doesn’t need to make the decision for you. 

 

Be very careful with the words “they currently earn…” 

Let’s go back to our candidate. 

They earn £46,500. You’re offering £55,000. 

That is already a decent increase, isn’t it? 

Maybe it is. 

But consider: why should their current employer determine their value to you? 

Perhaps they are underpaid. Perhaps they took their existing job at a lower salary to get experience.  

Perhaps their responsibilities have grown considerably but their pay has not. Perhaps they have been promoted internally several times and their salary has crept up incrementally rather than being reset to reflect the actual role they now perform. 

Perhaps the level of salary is exactly why they are now on the move. 

Or perhaps the job you are asking them to do is simply bigger. 

Their current salary is interesting information. It is not necessarily useful information – or at least not critical, decisive or definitive. 

There is another issue here that deserves more attention – a serious issue. 

If somebody has been historically underpaid, anchoring your offer to their existing salary can simply carry that disadvantage from one employer to the next. 

And this matters particularly when we talk about the gender pay gap. 

If a woman is earning less than the true market value of her role today, and her next employer bases its offer largely on what she already earns, the gap does not disappear. 

It travels with her. 

She may receive a perfectly respectable percentage pay rise and still end up being paid less than the role is actually worth. 

That does not mean employers should ignore budgets, throw salary bands out the window or arbitrarily pay every candidate the top of the range. There are going to be nuances affecting these choices. 

But, rather than ask the question “what are they on now?”, how about asking “what is this role worth to our business when it is done well… and what additional value could this candidate bring to it?” 

Those are very different questions that allow you to get to the heart of the conundrum. 

 

Are you paying for value or not? 

There is another trap that is easy to fall into here – and especially in commission-based sales roles. 

Candidates know that negotiation exists. They might even worry that if they don’t negotiate, they let themselves down as a candidate applying for a role where negotiation is deemed a core skill. 

Employers do quite often build some room into salary discussions; but increasingly candidates do too. 

Someone who says they want £60,000 may ultimately accept £58,000, £56,000 – maybe they would even accept £52,000 despite the advertised wage. But if the latter is true, does it really benefit you to exploit that? 

Someone else may say £55,000 and mean £55,000. 

In all cases, when it comes to this final stage, the salary negotiation, employers need to be careful that remuneration does not become a game of one-upmanship about who is better at closing a deal. Talk about cutting your nose off to spite your face! 

Imagine two people doing essentially the same job. 

One negotiates hard and gets £60,000. 

The other accepts the initial £55,000 because they dislike negotiation, worry the offer might disappear or simply assume that is the salary the company has decided the role is worth. 

Is the first employee genuinely worth £5,000 more? 

Or were they simply better at negotiating that one single deal? 

Repeat that across multiple hires, promotions and salary reviews, and it is easy for inconsistencies to begin to creep into a pay structure. 

And again, those inconsistencies might well reinforce existing pay gaps. 

Good salary decisions therefore need some objective basis behind them. 

What is the role? 

What level of responsibility does it carry? 

What skills does this person bring? 

What will they be expected to deliver? 

Are there same-tier employees already in your business? Because if so, what do they earn? 

Negotiation might happen – but it should not be the only thing that decides the outcome. 

 

What does the extra really cost? And what is the cost of not offering it? 

Let’s get back to our star candidate. 

They’ve asked for £60,000. You intended to pay £55,000. 

On the face of it, the difference is £5,000. Except that is not really the calculation. The real question is what saying ‘no’ might cost. 

Suppose you insist on sticking to £55,000 and they accept.  

Great! You’ve stood your ground, the budget has been successfully applied, the role has been filled with the ideal candidate and you are excited about the future. 

But six months later, a recruitment agent has been in touch with them on behalf of one of your competitors, and straight off the bat they’ve offered the £60,000 they originally asked you for. Plus an extra two days’ holiday a year, to boot. 

Now you’re recruiting again. Your time is again taken up organising and attending interviews and feeding back. 

Perhaps you have to pay recruitment fees again. You also have the disruption of somebody leaving. 

And a gap in your team which, oddly enough, is just about the size of an absolutely ideal employee.  

Now, even when you recruit again, you’re losing productivity while that new starter gets brought up to speed. 

And not least, you’re now losing revenue and other opportunities during the process. 

That £5,000 suddenly looks pretty different. 

And maybe you even make the counter-offer now - £60,000 if they’ll stay. Maybe that works. Maybe not. But maybe you should have made the offer six months prior. 

That does not mean the answer is always to concede, however. 

Far from it. 

 

Sometimes, the answer should be No Deal 

There is an opposite mistake employers make. 

You become so worried about losing a candidate that you convince yourselves you have to keep increasing the offer. 

You do not. 

Sometimes £55,000 genuinely is what the job is worth – or at least, what it is worth to you and your operation. 

Sometimes the candidate has expectations that simply do not stack up commercially. 

Sometimes paying £60,000 would create problems with internal salary equity. 

Sometimes another candidate can deliver what you need at a more sensible cost. 

And sometimes you just reach the number beyond which the deal no longer makes sense. 

That is fine. 

Recruitment decisions should not be driven by panic any more than they should be driven by pride. 

The important thing is to be clear about why you are saying no. 

“No, because I refuse to be negotiated with” is not particularly commercial. 

“No, because at £60,000 the economics of this role no longer work” is. 

And that is the difference. 

 

Know your numbers before you make the offer 

Getting salaries right does not mean paying whatever somebody asks for. 

It means understanding enough about the role, the candidate and your business to know when to move and when to hold firm. 

Which means you really need to know the market. 

Have an understanding of what genuinely comparable roles are paying now, as opposed to what you paid somebody three years ago. But also remember that somebody else’s salary band does not have to become yours. 

So know the role, too. 

Define the responsibilities as well as the expected commercial impact before deciding what the salary should be – because then you can set it accordingly. 

Know the candidate, also. That is paramount. 

But do not confuse their salary history with what future value they would bring you. 

Know your limit, however. 

There is a number beyond which the deal genuinely does not work. Don’t cross it. 

Know what saying no will cost as well as what saying yes will cost. Because sometimes refusing another £5,000 will actually save you money, and paying it will simply be unnecessary. It’s the right commercial decision. 

But occasionally, refusing it means losing a five-star hire, restarting a recruitment process and potentially sacrificing far more than £5,000 in lost time, productivity and revenue. 

Salary negotiation is not about winning or losing. 

It is not about whether the employer held firm or the candidate managed to push the number upwards. 

It is about making the right commercial decision. 

Sometimes that is Deal. 

Sometimes it is No Deal. 

The important thing is knowing why, based on the outcome that you need. 

Need a steer on salary levels for a role? Speak to the 2point0 team