Mastering salary negotiations: A guide for remote businesses

Negotiating salaries for remote talent is complex. There’s more competition for global talent than ever, so you need to be savvy when it comes to compensation. You also have to consider the expectations of the individual you are negotiating with — you’re factoring in the country, industry, and market rates, as well as balancing the needs of your own business.

This article will explore what you need to know about salary negotiations so that you can offer competitive compensation packages and, as a result, attract and retain top talent.

Remote salary negotiations - why it's unique

Negotiating remote salaries can be tricky as you're vying for talent in a market that extends beyond geographical borders. Let’s take a look at what you need to look out for when negotiating remote salaries.

Navigating global and local talent pools

Shifting to remote work broadens your talent pool to global and local candidates. This change complicates discussions about salary requirements, as HR professionals need to weigh factors like local living costs and average salary standards. The challenge is to balance competitive salaries with the company’s budget and compensation structure.

Approaching cultural nuances in negotiation

Cultural nuances greatly affect salary negotiations, as some cultures approach negotiations differently than others. For example, in Japan, salary negotiations are a sensitive subject and not common. In countries like Australia, asking for a higher salary is encouraged.

HR professionals should adapt their negotiation tactics to have respectful and effective discussions with candidates from various backgrounds.

“Remote” doesn’t always mean “global”

HR professionals need to understand how to negotiate a salary offer in a way that strikes a balance between local and global standards. Even domestic remote team members are influenced by the global market, so you need to negotiate salaries that are fair and competitive for all of your employees.

Strategies for salary negotiations in remote work

So what can you do to navigate salary negotiations without offending employees with the wrong offer, all while ensuring fairness and transparency?

Set globally competitive salaries

One of the primary challenges for HR professionals in remote work settings is establishing salaries that are competitive on a global scale. To do this, consider the following:

Understand global pay scales

You’ll need to gather comprehensive data on global pay scales. This includes information on industry standards, cost of living variations, and currency exchange rates. It also means not only looking at what competitors offer but also understanding the economic conditions in different regions. Analyzing this data helps you set salaries that are both fair and attractive to potential hires.

Use tools for benchmarking

Remote’s Employee Cost Calculator helps you budget for global hires. With tools like this, you can compare and set competitive salary offerings for remote positions across different regions. This tool can help you anchor your salary proposals in robust data while staying on top of current compensation trends.

Communicate salary rationales

Transparency in communication is crucial when discussing salary offerings. You should be prepared to explain to prospective employees how you arrived at specific starting salary figures. This involves discussing global benchmarks, the typical salary range for similar positions, and how the organization’s compensations align with the market.

Factor in the worth of remote work

Evaluating remote employees’ value includes observing their flexibility across time zones, cultural diversity, and contribution to global dynamics. For example, remote roles typically demand skills like self-management and digital expertise more so than in-office roles.

Consider developing a standard evaluation framework for remote work. A robust evaluation framework for remote roles should include the following key factors.

Because you’re assessing an individual in a global context, the typical standards that you might find in your country aren’t necessarily going to work. For example, someone who was educated in France might have a different background than a candidate in Argentina, even though they both can offer the same value to your company.

So, use the above factors to evaluate a candidate’s or employee’s value during salary negotiations. Don’t be afraid to think outside of the box if someone is particularly valuable, despite having a non-traditional background.

How can HR succeed in remote salary negotiations?

The key to remote salary negotiations lies in avoiding common pitfalls and adopting best practices tailored to remote work. We'll take a look at common mistakes in salary negotiations and how to discuss salaries with your remote team.

Common mistakes in remote salary negotiations and how to avoid them

Navigating discussions around salary increases requires a distinct set of skills. Here are some common mistakes and strategies for avoiding common mistakes in remote salary negotiations:

• Lack of preparation: One of the biggest mistakes is entering negotiations without thorough preparation. Do your research on the role’s requirements, market salary rates, and the employee or candidate’s background. Proper preparation can boost your confidence when making or responding to salary proposals.

• Overlooking non-salary benefits: Often, employees focus solely on salary figures, neglecting the importance of non-salary benefits. Flexibility, work-life balance, vacation time, and career progression opportunities can be just as valuable as salary to candidates. So be sure to point out non-salary benefits during negotiations. 

• Inadequate communication: Remote negotiations can suffer from miscommunication due to a lack of in-person cues. It’s vital to be clear, concise, and direct in all communications. Video calling instead of emailing for important discussions can also help to build rapport and ensure clarity.

• Not recognizing cultural differences: In remote negotiations, HR professionals often deals with candidates from various cultural backgrounds. Understanding and respecting any possible differences is essential to avoiding misunderstandings and negotiating appropriately.

• Having a rigid stance on negotiations: Flexibility is key in remote salary negotiations. You should be prepared to navigate discussions creatively, considering various factors like the candidate’s location, their cost of living, and the unique skills they bring to the role.

• Neglecting the candidate’s experience: The negotiation process can greatly influence a candidate’s perception of the company. Providing a positive experience, even if the negotiation doesn’t lead to the individual getting hired, improves the company’s reputation and aids in future recruitment.

By being mindful of these common pitfalls and knowing how to avoid them, HR professionals can navigate the complexities of remote salary negotiations effectively.

Considering the benefits remote employees really want

While 71% of remote team members report having an improved work-life balance, a notable 12% don’t share this experience. This underscores the importance of negotiating alternative benefits for remote employees to improve their well-being and productivity.

For example, HR professionals can consider offering flexible hours, mental health support, and ergonomic setups in their negotiation strategies.

Additionally, tailor benefits to comply with local laws and customs of where your employee is located. Customized benefits can attract diverse talent across the world, and can help you negotiate remote salaries with global talent.

Discussing salary with remote talent

Starting salary discussions with remote talent, whether they’re a current employee or a potential hire, requires a tactful and informed approach. Here are tips for what to do at each stage of the conversation.

Opening the dialogue

You should provide clear information about the compensation structure, including how it aligns with the organization’s remote-first approach. The discussion should be an opportunity for both parties to express their expectations and concerns.

Navigating the conversation

During remote salary discussions, it’s important to listen actively and acknowledge the unique situations of remote team members. The goal is to make these conversations as transparent and informative as possible.

Here are some best practices on discussing remote salaries:

• Ask about specific needs or concerns they have with their role. There may be an issue with their job duties that makes them feel they deserve a higher salary.

• Find out what their long-term goals are with your company.

• Discuss the employee or candidate’s potential for growth and salary progression within the company.

• Offer a platform for the employee or candidate to share their salary expectations and any concerns they may have in the future.

Overcoming negotiation hurdles

Be flexible and understand the candidate's perspective to overcome negotiation hurdles. Here are some strategies:

• Prepare for counter-offers: Anticipate potential counter-offers and know what your company’s limits are. This helps you plan ahead and respond thoughtfully to any counter-offers.

• Emphasize flexibility: Show willingness to explore different solutions, such as adjusting non-monetary benefits or discussing future salary reviews. These can be crucial in reaching a successful negotiation.

• Ensure transparency: Clearly communicate the company’s position and any constraints. Transparency builds trust and helps manage expectations on both sides.

How technology can support remote salary negotiations

With remote candidates or employees, most salary negotiations are done virtually. But that doesn’t mean you can’t have a productive conversation. Using video calls for more personal interactions and following up with detailed emails can keep the negotiation process transparent and efficient.

You’ll also want to use technology to help you make decisions about what to offer. 

Leveraging HR technology like HR Management can simplify the negotiation process. It provides a single source of truth about employees, including their performance history, length of employment, and comparative salary data. Armed with the necessary data, you can make informed and fair salary decisions.

Features like the employee self-service portal helps employees understand their compensation structures and benefits clearly. Take a tour of our HR Management software and see how it can simplify everything from salary negotiations to expense reimbursement.

Master salary negotiations with Remote

Mastering the salary negotiation process is essential for attracting and keeping top global talent. Remote simplifies this process by helping you offer competitive compensation packages, no matter where your team members are located.

Looking for more guidance so your business can offer competitive salaries? Request our Global Compensation Guide and learn how to attract globally, outperform locally, and pay fairly.