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What is Offer Negotiation?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 07 September 2016
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Offer negotiation is the process of entering into discussion with a prospective employer regarding the exact terms of the employment. This process normally begins after the employer and the applicant both agree that entering into a working agreement would be mutually advantageous, but before the employment contract is actually signed. The idea behind offer negotiation is to secure the salary, benefits, and any other perks that the applicant wishes to enjoy in exchange for his or her commitment and dedication to the employer.

There are many different strategies for engaging in offer negotiation. Many of these rely upon the establishment of reasonable expectations by both parties. Employers often realize there is a need to provide additional incentives when attempting to hire someone with outstanding credentials. At the same time, applicants must be well-versed on the usual policies and procedures of the employer, and determine if the potential exists to command everything he or she wants as part of the employment package. Unless both parties have researched the situation thoroughly and believe there is room for salary negotiation or some other aspect of the job negotiation, the effort is much more likely to fail.

One common approach is for the employer to submit a job proposal to the applicant. This proposal normally includes details on salary, health insurance, the accrual of vacation and sick time, pension plan options, and other basic incentives. This initial proposal serves as the starting place for the offer negotiation.

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Assuming that the initial offer does not include everything that the applicant wishes to have as part of the employment contract, he or she will submit a job offer counter proposal. This will encompass every incentive from the initial proposal that the applicant found acceptable, plus any additional incentives that he or she believes is fair and in keeping with the job responsibilities. This counter proposal is delivered to the employer, who then has the option of reviewing the applicant’s request for additional benefits, and either accepting the revisions, or countering with some type of compromise proposal.

The process of offer negotiation continues until both parties have reached an agreement as to the outcome. Often, this involves compromise on the part of both parties, with the applicant winning some additional incentives, and the employer securing the services of the applicant without meeting all of his or her demands. In the worst case scenario, the negotiation will reach an impasse, and one or both parties will break off the negotiation completely. When this occurs, no employee/employer relationship is established, and both parties are free to seek opportunities elsewhere.

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