Creating the right compensation packages can be difficult. Offer too little, and you will lose top talent. Offer too much, and you could strain your budget. Striking the right balance requires a strategic approach — one that’s fair, competitive, and aligned with both business goals and employee expectations. That way you create packages that align fairly with your internal frameworks and don’t require negotiation.
At Welcome to the Jungle, we’ve learned that compensation isn’t just about the numbers. It’s about understanding people, communicating transparently, and creating packages that reflect both the candidate’s value and the company’s reality.
Know your benchmarks
Before hiring, you must have internal compensation guidelines. Do your research. Setting a realistic range isn’t just about meeting expectations — it’s about building sustainable teams with fair, competitive packages that don’t compromise your business’s financial health.
Create a comprehensive benchmarking system that draws from industry and location specific salary benchmarks, market insights and conversations with peers. Establishing clear salary bands helps maintain internal equity and is particularly important in your ability to address the gender pay gap.
Significant discrepancies in compensation between existing and new employees damages culture fast.
Your compensation structure should allow for flexibility and growth. Be clear on where you benchmark your salaries. For example, you might pay at the 50th percentile for London tech salaries, but you allow fully remote work from anywhere in the UK. That could be an incredible benefit for some candidates.
The consequences of paying at too high a percentile across the board can be severe. Some companies extend offers they simply can’t sustain, which can lead to painful layoffs. Know your limits and stick to them.
Ensure you know the value of your compensation and benefits package
Base salary is only one component of a comprehensive compensation package. When discussing offers with candidates, share the full package early in the process, including bonuses, benefits and other perks that differentiate your offer. Direct candidates to a company page that showcases your workplace culture, employee testimonials and day-to-day life content. This should include authentic photos of your workspace, and specific examples of how your benefits and policies function in real life. Do you have better than average healthcare, parental leave, an amazing dog-friendly office space or incredible stock options? What do you stand for compared to other employers? Shout about this.
Stock options can help attract and retain employees long term. The value is often poorly explained. Ensure you can explain what you’re offering and why this matters over time.
Questions to consider ahead of discussing stock options with candidates include:
- What is an option?
- What is the vesting schedule?
- What are the options worth today?
- What could they be worth in the future?
- When would you get money for your options?
These additional elements will often be the difference between a candidate being able to picture working successfully at your organisation, or not.
At Welcome to the Jungle, we’ve experienced the importance of the full compensation package firsthand. We have a hybrid model with two days in the office that provides employees the flexibility they need to do their best work and connect in meaningful ways while in the office. Since June last year, we’ve run a four-day work week without reducing compensation — a benefit that has enhanced our ability to attract and retain top talent. Having an excellent, gender neutral parental leave policy is something that many candidates say makes our company stand out against others.
Understand candidate priorities
In the interview process, ask candidates what motivates them to do their best work.
When candidates join Welcome to the Jungle, they all fill out a survey to rank their top priorities in their next job. In 2024, our data showed the top three things candidates were looking for in their next role were flexibility and wellbeing, working with great people and development and progression.
Understanding what matters to candidates helps you as an employer highlight the aspects of the package that resonate most with them. Even if the salary might be lower than their expectation, the flexibility, holiday policy or human connection in the office might be more important to their lifestyle and priorities.
Have this conversation early in the recruitment process (on the first call, ideally) so an offer can be shared and accepted quickly.
To understand candidate priorities, employers can ask:
- What are you looking for in your next role?
- What motivates you to do your best work?
- What aspects of your current or previous roles have contributed most to your job satisfaction?
- What working arrangements help you perform at your best?
Transparency is key
Employees’ value honesty and transparency. Our data covering 2024 shows that jobs with public salaries received at least 60% more applications than jobs without. Recruiters waste a lot of their valuable time interviewing candidates with salary expectations that are wildly off. If you’re not in position yet to share salaries transparently, you could share salary bands.
Employers should honestly communicate what their salary frameworks are, covering how to explain budget constraints and growth and progression opportunities.
Being upfront doesn’t mean you’ll lose candidates. You are more likely to gain their trust. When you explain your reasoning clearly and honestly, candidates appreciate the transparency and understand how they fit in and how they can grow — even if they ultimately decide the offer isn’t right for them.
When interviewing, understand what is motivating for candidates, and share compensation, opportunity for growth and the value of the benefits transparently. That will enable you to find the best talent for your organisation.
Ultimately, the goal isn’t just to close a hire. It’s to begin a relationship based on transparency, fairness and aligned interests — one that will hopefully last for years.
Read the orginal article: https://sifted.eu/articles/how-to-negotiate-compensation-package-with-candidates/
