How To Negotiate Offers

Great recruiters do five things very well (I call them the GRE ó the “Great Recruiter Essentials”):

Great recruiters consistently find top candidates. This is primarily through awesome networking skills. They know how to get their contacts and candidates to provide names of outstanding people who are NOT looking for a job (anyone can get names of people looking for work).

Great recruiters provide their candidates with solid career management advice. Top candidates need a solution or consultative sales approach at every step of the hiring process. They require convincing career information as to why the job offers more challenge and opportunity. The best won’t fall for company propaganda or a pushy sales approach.
Great recruiters are great interviewers. They know how to accurately assess candidate competency. By being thorough and professional, they earn the trust of their candidates.
Great recruiters act as coaches to their clients. They strongly influence their hiring manager clients every step of the way. This includes preparing the initial job profile and advising them through the interview and assessment process.
Great recruiters know how to negotiate offers without giving away the farm. It’s easy to close someone who needs a job. It takes a pro to close a top performer who has multiple opportunities.

Over the past two years, I’ve written numerous articles covering the first four Great Recruiter Essentials. In this article, I want to give you some tips on how to negotiate the close. While you need the other GREs to get to this point in the hiring process, you won’t go much farther without the ability to negotiate and close the offer. If you have an unlimited budget, or a candidate who desperately wants the job, little skill is required to put the deal together. The best generally want more money, and they have more opportunities to choose from ó including a counteroffer. Putting a deal together under these circumstances is what separates the great recruiter from everyone else. The following critical points should help you improve your negotiating and closing skills.

Start the close at the beginning. In a recent article, I described how to create an opportunity gap. This is the stretch component or growth opportunity of the job. It’s what the candidate will learn, do, and become. The bigger the stretch, the less money needs to be offered. You have to create this opportunity gap in your first screening call.
Make the candidate earn the job. At each interview, the recruiter and the hiring manager must describe the challenges of the job, and allow the candidate to provide detailed examples of comparable accomplishments. (See my Best Interview Question article). If you start selling a hot prospect too early, you lose. Instead, create great challenges and let the candidate sell you. A job has more value when it’s earned this way.
Create competition and uncover objections. At the end of the first interview, tell the candidate that while you’re seeing a few other great candidate, you’re also quite impressed with her background and would like to go to the next step. Then ask her what she thinks about the job. The best don’t mind competition, and the job is actually more appealing when other top people are interested in it. You want the candidate to express her concerns and objections. This allows you to address these critical issues in subsequent interviews. You know you have an interested candidate if these concerns aren’t about the money. Things like available resources, timing of a move, and the quality of the people in the company are positive signs.
Never make an offer until it’s accepted. I have one rule which I have rarely violated in 25 years of recruiting: never, never, never make a formal offer to a candidate until all terms have been agreed to first. If you’ve ever had a candidate tell you after receiving an offer, “I have to think about it,” you’ve discovered the importance of this negotiating rule. While you do want candidates to think about the offer, once it’s formally extended the candidate will stop telling you what she’s thinking. And if you don’t know what she’s thinking, you come across as a desperate salesperson trying to hustle a deal in an attempt to figure it out. Instead, simply test every aspect of the offer before it’s formally made.
Test all offers first. “Would you be interested in continuing these discussions, if we could put an offer package together somewhere in the $85,000 to $90,000 range?” Don’t make the offer formal until the candidate says yes to this and every other component of the offer is tested the same way.
Try a secondary close. “If we could put a formal package together by Thursday, when could you start?” If the candidate gives you a date, the deal is done. This is called a secondary close. By providing a start date, she has mentally accepted all the other parts of the offer.
Close upon an objection. “If we could increase the offer to $92,000, when could you give us your formal acceptance?” If the candidate comes back with an “I have to think about it” response, there are other remaining issues to be resolved. This is a great way to pinpoint the real problem with an offer.
Test it again. “If I can get the formal offer approved and delivered to you later today, when can you provide formal acceptance?” Anything other than immediately, or tomorrow morning, is cause for concern. By this time, two to three days, maybe even a week or two, has been spent openly negotiating the offer package. Balking now is very bad news. Everything should have been uncovered and addressed before you have reached this point.

There’s a complete chapter devoted to recruiting and negotiating in my book, Hire With Your Head (Wiley, 1998). This chapter provides specific information on each of these topics in greater depth. The overall idea is that putting together an offer package with a top performer isn’t about the money. It’s about crafting a reasonable package that balances short term compensation needs with a long term career opportunity. This is what great recruiters do. It all starts by knowing the performance requirements of the job. This establishes the framework to coach your clients and advise your candidates. Great interviewing skills allow you to understand why the job you are trying to fill represents a great career opportunity for the candidate. Great negotiating and closing skills complete the loop.