Conducting salary negotiations – with expert tips for employers
Conducting salary negotiations – with expert tips for employers
Conducting salary negotiations in a targeted manner and concluding them to the satisfaction of all parties involved is a challenging undertaking for managers. Martina Ernst, expert and consultant on the subject of fair remuneration for employees and companies, provides insights in an interview into the optimal preparation for salary negotiations and what you should consider. After working as a human resources manager in the financial industry, managing director and chairwoman of the supervisory board, she is now with her companies SalaryNegotiations and FairEqualPay advisory role
Ideally: How does an optimal salary negotiation work?
How do managers best prepare for a salary negotiation?
1. Overview of the company's compensation policy and salary processes
2. Understanding direct and indirect salary components and their development
3. Evaluate goal achievement
4. Provide support for difficult conversations
Who conducts salary negotiations best?
What (objective) criteria can be set for the salary increase?
What alternatives are there to an immediate salary increase?
What does salary negotiation look like in companies that already have transparent salary structures?
Pay Transparency Directive & Salary Negotiation: How will the Pay Transparency Directive affect salary negotiations?
Conclusion: 5 tips for employers
Ideally: How does an optimal salary negotiation work?
Martina Ernst defines an optimal negotiation from the end: “A salary negotiation is successful when both sides leave the conversation committed to continuing to contribute to the company’s success."
The main thing to remember is that it is not just about salary satisfaction, but much more about creating clarity: "Salary negotiations are 'moments that matter' in which employees feel particularly vulnerable - so it is all the more important to create a win-win situation. Win-win does not mean paying what is demanded, but rather creating clarity about the conditions under which the desired goal can be achieved and what alternatives there are." Active listening is particularly important in this regard: "It is always important to conduct the conversation at eye level and in an appreciative toneAnd ideally, the employee begins to present his/her point of view and the manager first listens actively – and then works together with the employee to find a viable solution. Whoever thinks he has to win has already lost."
How do managers best prepare for a salary negotiation?
Managers should prepare for the following four aspects in particular for a successful salary negotiation:
1. Overview of the company's compensation policy and salary processes
"Most companies - especially large, international ones - have written or traditional processes about when and under what circumstances salary increases occur - and what criteria apply to any salary ranges in a specific position. Being up to date on this is essential for salary negotiations." In addition, information about average salaries in Austria and the gender pay gap in Austria and in the company can provide an important basis for argumentation.
2. Understanding direct and indirect salary components and their development
“Knowing all available salary components expands the scope for action for both sides – this includes basic salary, possible allowances or bonuses, benefits and any special payments.”
In detail, this includes: “Overview of the salary history of the person in question over the last three to five years
Know which increases were made through the collective agreement and which were due to individual performance, promotion and expansion of tasks
Overview of voluntary development measures such as courses, training, etc.
Overview of vacation days/care leave/unpaid leave"
3. Evaluate goal achievement
Jointly defined goals and tasks from job descriptions, employee discussions, etc. should be available for salary negotiations and the fulfillment of goals should also be evaluated. "It is important not to view this evaluation as 'infallible', but to let the employees start with their own view of things."
4. Provide support for difficult conversations
What if negotiating power is low or a difficult conversation is imminent for other reasons? Martina Ernst advises: “Consider alternatives in advance and, if necessary, get your own superiors and/or people & culture managers on board. If you have little or no negotiating power as a manager, difficult salary negotiations can hardly be successful without the support of the organizationn."
Who conducts salary negotiations best?
"The direct supervisor (sometimes more than one person) should always be present at the meeting - and if your own negotiating power is not sufficient, it makes sense to hold an initial exploratory meeting alone and to consult with the real decision-makers in advance, who you should involve again after the meeting. It is just as important not to underestimate your own arguments in favor of the employees, which ultimately lead to whether the supervisors 'move' in terms of salary. After all, who knows the contribution of the employees better than you?"
What (objective) criteria can be set for the salary increase?
Martina Ernst names five criteria for a salary increase. “A salary increase can always be justified if
the employees a higher responsibility or a role with expanded competence in the company – be it in the original job or by taking on a higher-value job.
the market value of the positionthe job you are doing is already significantly higher than the salary you are paying. Otherwise, the risk that committed employees will apply for a job elsewhere would increase.
external applicants for the same position (with a comparable competency profile) get more salary.
a one-time exceptional performance It certainly justifies an increased bonus (if the company pays bonuses) or a one-time bonus, but is usually not a reason for a permanent salary increase.
overtime are often ordered. They justify a flat-rate overtime allowance, which is paid monthly for a predefined number of overtime hours to be worked each month.
We should not forget about collective agreement adjustments, as they also increase salaries – this is often overlooked.”
“If you as a manager have little or no negotiating power, difficult salary negotiations can hardly be successful without the support of the organization.” – Martina Ernst
What alternatives are there to an immediate salary increase?
In order to strengthen employee loyalty and motivation, the request for a salary increase should definitely be taken seriously - Martina Ernst presents a number of alternatives: "The alternatives depend very much on the company in question - and also on the wishes and needs of the individual employees. Possible options include:
Special training/further education that is not directly related to the work content
Paid 'learning days' when employees attend further training outside the company
coaching/mentoring
more visibility in the company
greater flexibility in terms of working hours and/or place of work (e.g. through remote work), wherever technically possible
the opportunity to move internally to another area and thereby learn and grow professionally
Additional paid vacation days for the respective year
The possibility of a sabbatical
Working on an exciting project with high visibility – while at the same time reducing the workload in your current job
'Practicing' as a young manager by taking on responsibility for a project, e.g., interns, trainers, mentoring juniors, etc.
Possibly additional benefits such as climate ticket, fitness center, etc."
What does salary negotiation look like in companies that already have transparent salary structures?
“Both sides know
the salary processes in the company,
the salary components,
personal development and
the criteria for classifying the salary within the salary range established in the company for the respective job.
The aim of the conversation is to determine whether
the employee is ready for the next level of responsibility or the next step towards professional growth.
he/she now has greater responsibility in the job than originally agreed.
the market value of the job has now increased significantly.
the exceptional performance justifies a special bonus.
the value contribution of the employee within the team and in comparison to the team is particularly worthy of mention."
Pay Transparency Directive & Salary Negotiation: How will the Pay Transparency Directive affect salary negotiations?
“The EU Pay Transparency Directive, which must be incorporated into national law by mid-2026, requires
the mandatory Information on average salaries for equivalent work, which will greatly help employees to position themselves in terms of salary.
the transparent statement of the salary range or salary, which is intended for one's own position: this enables a good argument in advance of the salary negotiation why one's own salary should be significantly above the median.
objective and gender-neutral criteria for determining salaries.
comprehensible, objective and gender-neutral criteria when selecting a candidate in the event of a promotionThe last two points make a significant contribution to being able to talk to superiors about your qualifications in relation to these criteria.
The directive makes the discussion about the 'taboo subject of salary' more objective and makes it easier for both sides to understand that it is not about evaluating a person, but about the value of the position they hold."
Conclusion: 5 tips for employers
Recognizing your own limits: "Knowing where your own limits are as a manager is helpful. For which points or decisions do you need to obtain information or approval in advance? How far does your negotiating power extend? Be aware of this."
Keep track of all your company's offers: “What raises, bonuses and special payments has the employee received in the last three to five years? What training, courses and benefits have been offered to him/her? The more information you have, the more interest you will show in the employee’s personal situation and development.”
Getting support from AI: “Some HR software systems even offer AI-based tips for both sides on how the conversation should ideally proceed.”
Focus on fairness and equality: "As employers, we are not the 'enemies' of employees who only have to optimize personnel costs at any price, but we want to create a climate of clarity and comprehensibility in which employees feel that they are being treated fairly and equally."
Fairness leads to increased productivity: “And what does the company get out of it: The feeling of fairness increases the commitment of individuals, which in turn, according to Gallup, leads to increased productivity – a clear win-win for everyone.”
