About your offer
What factors are involved when an employer determines the amount of compensation for a new offer of employment? The quick answer is, high enough to encourage the candidate to accept, yet low enough that the employer can afford to write the paycheck. But nothing is that simple. It’s a complex series of value judgments. Here is a list of considerations that play in the background:
- The tangible value of this job to our organization–How much money will this new employee contribute or save for our company?
- How much does the new employee’s boss earn? A little below the boss’ salary is the upper end for this job offer.
- How much do peers, already employed, earn?
- The projected profitability of the company
- The job seeker’s stated expectations of compensation. Which begs the tricky question, how much money should the job seeker request? New laws in many states preclude the employer from asking the question, How much do you currently earn? However, it’s still fair for employers to ask, What compensation do you expect?
- Larger companies have a specified pay scale. They set strict upper and lower limits for each job title. Here’s the number we can offer; you can accept or you can go away.
Job applicants who have skillfully negotiated an initial WIN with a high starting salary also can find themselves quickly unemployed if they don’t meet expectations, or if business conditions force layoffs.
Despite all of these considerations, we like the quick answer. High enough to encourage the candidate to accept, yet low enough that the employer can afford to write the paycheck.