Compensation negotiation expectation

Hey there, time traveller!
This article was published 15/02/2025 (273 days ago), so information in it may no longer be current.

I saw a post on LinkedIn this week saying, “Never accept the first job offer.”

This, like some other advice on social media, is an oversimplification that doesn’t account for the complexities of fair and equitable compensation.

While negotiating a job offer can sometimes be appropriate, it shouldn’t be assumed every initial offer is meant to be countered. Employers who do their due diligence in determining fair compensation should be making offers reflective of both market conditions and their financial capabilities. Encouraging negotiation as a default practice can create unnecessary friction and, in some cases, lead to unintended consequences — like losing your dream opportunity.

A well-structured and competitive employment offer is one of the most critical components of talent acquisition. Employers and candidates alike have a vested interest in ensuring compensation is fair, sustainable and aligned with both the market and the company’s financial realities. The notion job offers should be negotiated as a standard practice introduces complexities that can have unintended negative consequences for both parties.

Instead of encouraging a culture of lowball offers and protracted negotiations, employers should focus on making strong, research-backed offers from the outset and employees should engage in open, fact-based discussions to understand the reasoning behind those offers.

From the employer’s perspective, determining a fair salary offer should be a deliberate process grounded in market research and financial viability.

Organizations must assess industry standards, regional economic conditions and internal salary structures to ensure offers are both competitive and sustainable. Paying employees equitably is not just a legal or ethical obligation; it is a strategic imperative that affects retention, engagement and overall organizational performance.

When an employer makes an offer, it should reflect what they can afford to pay based on their financial health and what the role is worth in the broader labour market. If an employer consistently lowballs offers under the assumption candidates will negotiate, it creates an environment where those who are less experienced or in more desperate need of employment are disproportionately disadvantaged. This approach fosters pay inequities, discourages transparency and ultimately damages employer reputation.

From the candidate’s perspective, the pressure to negotiate can be daunting, especially for those new to the workforce or transitioning into a new industry.

Negotiation favours those who are confident and experienced in advocating for themselves, leaving others to accept lower compensation simply because they lack the same level of assertiveness or industry knowledge. This perpetuates wage gaps and can create disparities within teams, leading to resentment and disengagement.

Rather than expecting candidates to fight for fair pay, employers should set an expectation their offers are carefully considered and reflective of market conditions. In turn, employees should shift their focus from negotiation to understanding how the salary was determined and what additional benefits the role includes — because sometimes, a great benefits package is worth more than an extra couple of bucks.

A major concern for employers when it comes to salary negotiations is internal equity. If one candidate negotiates successfully and secures a higher starting salary than their peers in similar roles, it creates a fairness issue that can lead to dissatisfaction among existing employees. Compensation structures should be designed to ensure individuals in comparable roles with similar experience and responsibilities are paid equitably. When an employer concedes to a salary negotiation that exceeds what was initially offered, they may find themselves in the difficult position of either adjusting other employees’ salaries to maintain fairness or risking internal discord.

Additionally, an inflated starting salary that results from aggressive negotiation can set unrealistic expectations for future raises and promotions.

Employers typically structure compensation increases based on performance reviews, tenure and overall financial considerations. If an employee negotiates a high starting salary but then expects annual increases at the same pace, they may quickly become frustrated when the company is unable to deliver. Salary increases should be part of a planned and sustainable compensation strategy that is equitable to all employees in the organization, rather than a reactive response to individual negotiations.

Employees who accept a well-researched and equitable offer are more likely to have a clear understanding of their future earning potential within the organization — and fewer surprises when their annual review doesn’t come with a gold-plated bonus.

Rather than defaulting to negotiation, employees should take a proactive approach to understanding their offer. Asking straightforward questions about how the salary was determined can provide valuable insight into the employer’s decision-making process. Candidates should inquire about the market research used, how the role fits within the company’s overall compensation structure and what factors influenced the final offer. Transparency in this regard fosters trust between employers and candidates, reducing the adversarial nature of the hiring process.

Job offers shouldn’t feel like high-stakes poker games — the job search is hard enough as it is.

Beyond salary, employees should also consider the full scope of benefits associated with the role. Compensation extends beyond base pay to include pension plans, paid sick days, vacation allowances, health benefits and professional development opportunities. A candidate who fixates solely on salary may overlook other critical aspects of the employment package that contribute to long-term financial stability and job satisfaction.

Employers should be prepared to communicate the value of these benefits clearly and employees should take the time to assess how these elements align with their personal and professional priorities. After all, a great vacation policy is basically an invitation to plan that dream trip.

Creating a hiring environment where employers make fair, market-driven offers benefits everyone involved from the outset. It eliminates the need for candidates to feel pressured into negotiating, ensures internal equity and prevents the cycle of artificially low offers that disproportionately affect those who are less equipped to negotiate.

Employers should take responsibility for offering what they can afford to pay and employees should engage in informed discussions to understand the broader context of their compensation. By prioritizing transparency, fairness and strategic planning, organizations can build stronger, more engaged workforces while ensuring candidates feel valued and respected from the very beginning of their employment journey.

And, ideally, avoid turning the hiring process into an Olympic-level game of salary tug-of-war.

Tory McNally, CPHR, BSc., vice-president, HR consulting, is a human resource professional, radio personality, speaker and problem solver. She can be reached at tory@legacybowes.com