Salary negotiation: making an offer that closes the deal

The most common negotiating mistake a small business makes is not having decided its own limits in advance. Without a range, the number gets set in response to whatever the candidate asks for, which means a confident candidate is paid more than a diffident one for the same work — and that difference compounds into a pay structure nobody designed and cannot defend to the people already employed.

Setting a range means deciding three things before the first interview: the figure you would prefer to pay, the maximum you would go to for an outstanding candidate, and the point at which you would rather keep looking. That third number is the one that gives you a position, because a negotiation you cannot walk away from is not one you are conducting. It is also worth working out what the role is worth relative to what you already pay, since a new hire brought in above an existing employee doing similar work creates a problem that will surface — pay information circulates in small teams regardless of any policy on discussing it. Deciding all of this while calm is straightforward; deciding it while a candidate waits for an answer is where businesses commit to numbers they regret.

Asking about salary expectations in the first substantive conversation saves both sides from a mismatch discovered after weeks of investment. It is sometimes avoided out of a worry that raising money early seems transactional. In practice candidates find it reassuring, because their alternative is proceeding through several rounds without knowing whether the job could pay them enough.

The useful form of the question is direct and paired with your own information: what range are you looking for, and here is the range for this role. Offering yours first is not a weak move — it removes the guessing game and makes the conversation about whether the role fits rather than who reveals a number first. Where a candidate is reluctant to state a figure, giving your range and asking whether it works is enough to establish the answer. If their expectation is above your maximum, say so at once and be specific: some candidates will still want to proceed if the work interests them, and they are entitled to make that choice with real information. What you should not do is proceed hoping the gap resolves itself, because it does not, and you both lose weeks in exchange for a conversation you could have had on day one.

An offer presented without reasoning invites a counter-offer, because there is nothing to engage with except the figure. An offer presented with its basis — what the role is worth in your market, what the responsibilities are, how it sits relative to comparable positions in your business — is much easier to accept, because the candidate can see it was not arbitrary.

This also determines what happens when you cannot move. 'We can't afford more' is a statement about your finances, which is not the candidate's problem and reads as a plea. 'This is what the role pays and here is the reasoning' is a statement about the job, which is a position. The second is more persuasive and also more honest, since in most cases the constraint really is what the role is worth rather than what the business could theoretically find. Where a candidate's expectation exceeds the role's value, saying that plainly — the work does not justify that figure, whatever your experience is worth elsewhere — is respectful and clear. It also leaves the door open properly, because a candidate who understands the constraint is the role rather than a judgement about them will often come back later for a different position.

Making your opening offer slightly below your maximum gives you somewhere to go if the candidate negotiates, which many will, and a small movement often closes a deal that a flat refusal would not. The buffer should be modest — enough to represent a genuine concession, not enough to make your opening look like an attempt at exploitation.

Opening well below what you are prepared to pay is a poor tactic against candidates who have interviewed elsewhere and therefore know roughly what the market is. It reads as an attempt to take advantage, and the damage is not confined to the negotiation: a candidate who accepts a low opening and later learns what the role was budgeted at starts the job feeling underpaid, which is a slow and durable problem. The other error is the reverse — opening at your absolute maximum and describing it as final. That may be honest, but it leaves the candidate no way to feel they achieved anything, and it removes your ability to respond to a reasonable request without contradicting yourself. If you genuinely have no room, say so at the outset rather than after a counter-offer, and be prepared to move on something other than base pay instead.

When money is genuinely fixed, some other things move a decision and some do not. What tends to work is anything reducing a real cost or constraint in the candidate's life: flexibility over hours, a shorter or shifted commute, working from home part of the week, control over when they take leave. These are valuable because they are concrete and immediate, and for many candidates a genuine flexibility arrangement is worth more than a modest increase in pay.

What works less often than employers hope is a promise about the future — a review in six months, a title change later, growth opportunity — because candidates have heard these before and know they frequently do not materialise. If you offer one, make it specific enough to be held to: a review on a named date with stated criteria, in writing in the offer, is a real term, while 'we'll look at it after six months' is not and will be discounted accordingly. Learning and responsibility are genuine levers in a small business, where someone can do broader work and be closer to decisions than they would elsewhere, but only stated concretely: what they will actually be responsible for, rather than a general claim about opportunity. Do not offer anything you cannot deliver, because the first broken promise sets the tone for everything after it.

Once the number is agreed, move quickly. Put the full terms in writing the same day, because the gap between a verbal agreement and a written offer is where candidates get counter-offers from their current employer, and every day of delay is an opportunity for someone else to intervene. Set a reasonable response date, and use the call that accompanies the letter to ask directly whether there is anything unresolved — hesitation surfaced now is manageable, whereas hesitation discovered after acceptance turns into a withdrawal or a short tenure.

It is equally important to recognise when a deal should not be closed. A candidate who has pushed past your maximum, or who wants terms the role cannot carry, is telling you something useful, and hiring them anyway usually produces a person who feels they settled. The same applies to a candidate who is clearly using your offer as leverage elsewhere: matching an escalating series of counter-offers rarely ends well. Walking away from a strong candidate is genuinely painful and is sometimes correct, which is exactly why the walk-away number should have been decided before the negotiation started rather than during it.