Hiring Negotiations – Balance Between Value And Compensation

Finding the balance between what you can afford to pay and what the employee is worth

A huge challenge that young startups face is securing good talents to build the business. Many founders admit that they have to compete for talents with the more established brands, who mostly have better remuneration and terms of service. The newer startups are thus left with those employees who may not have the required level of expertise they need to grow at the right place, simply because those are the ones they can afford to pay.

While there is no straightforward approach to this discussion, there is usually no cause for hard feelings, because recruiters know that most talents will go for better-paying jobs, then start at the bottom of ladder with a startup.

It is usually not a cause for hard feelings, because recruiters know that most talents will go for better-paying jobs, then start at the bottom of ladder with a startup. So, even though you know the employee deserves more pay based on expertise, experience, and value, you are constrained to offer what your startup can afford to pay. On the other end, what you can afford to pay could really be way below what that talent is willing to settle for at that point in his career.

The question now is how do you find a balance between what you can afford to pay talent and what the talent is truly worth? How do you manage to secure that talent (you really need) to work for you? Even when you get them to work for you, how do you ensure that they stay long enough to make the desired impact?

Up your offer and hire the talent you need not the talent you can afford!

Take this scenario. Your company is having financial challenges because you cannot seem to keep your books together. You make your calculations and figure that you cannot afford to hire a chartered accountant just now, so you choose to keep laboring your administrative assistant with the task of financial records (which he or she does manually). So, in your reasoning, you are saving money by not hiring the right talent. Three months down, you discover that you are losing even more money.

My suggestion is to hire the talent you need and prevent losses. Every staff is either coming on board to increase your revenue or reduce your losses. If that talent will significantly achieve one or both, then you should up your offer. It may require you to take a pay cut in the short-term, or cut back on some other expenses. If your calculation shows that you will benefit in the long term, take the step.

Offer better terms of service

Money is not the only reason people accept or refuse offers, so if it is truly impossible to increase the pay you are offering to the talent, then consider offering other terms that could be convenient. You could offer them a chance to work remotely on one weekday, flexible work hours (if your business permits it), end-of-year profit-sharing (if the team hits or surpasses its targets), etc. Study your business and decide on which one or two you can incorporate into your offer.

Offer an incentive to stay longer

It is one thing to get the right talents and another to keep them on long enough to make an impact. To keep your talents long enough on the team, you could consider an appropriate incentive. For instance, some startups could offer conditional equity. At the end of two years of working with the company, the employee gets a percentage of equity or may be given an opportunity to buy into the company. This works in two ways. It gives the talent a sense of ownership and could really improve the input to the growth of the startup. Secondly, they stay long enough to get the benefit or incentive as has been stated. You do not have to go with these exact examples. Pick something that suits your business, and is strong enough to keep your talents. With the right incentives, talents will stay and build the brand.