Making a Counteroffer

If, after you've determined that your candidate is worth more, you decide to try to negotiate with a candidate who has asked for more money, consider the following suggested strategies:

• See if the candidate would be willing to accept additional benefits in lieu of extra pay. Perhaps additional vacation days would be an attractive alternative. Depending on the benefit you offer, additional benefits could cost you less out of pocket than a higher pay rate. (However, keep in mind that federal laws contain nondiscrimination rules that may prevent you from offering one employee more benefits than you offer to other employees in similar jobs.)
• Consider keeping the wages you offered the same, but reducing the number of hours you'll require the person to work. That may make the wages per hour more in line with what the candidate wants.
• Offer to give the candidate the extra money in increments, subject to performance appraisal.

You offer a candidate $12.50 an hour and the candidate wants $14 an hour. Offer to increase the candidate's wages to that level over a year's time in two six-month increments, provided that the employee's performance meets standards that you make clear at the outset.

• Agree to pay more, but add additional responsibilities to the job that may allow you to cut costs from somewhere else.
• Offer the candidate stock options in your company instead. (Obviously, this only works if you're incorporated and want to undertake the administrative burden of offering stock options.)
• Offer the candidate a commission, a gainsharing incentive, or a bonus in lieu of extra pay. If the candidate accepts, he or she will be even more motivated to do a good job.

Offer the candidate 10 percent of the increase in net profits over a certain time period. If your business's net profits increase $2,500 over a six-month period, the employee's gain would be $250.