Speaking of money, how do you negotiate salary?

A Dutch corporate lawyer was recently awarded €113,000 in compensation from her former employer. They paid a younger, male colleague in the same position substantially more. HR expert Iris Vink explains the benefits of paying your staff equal salaries.

One in five people changes jobs to get a salary increase (in Dutch). But it usually takes more than a raise to keep your employees loyal (in Dutch). “Salary is a key factor”, HR Business Partner and Career Advisor at Ivy Talent Iris Vink admits, “but a good work-life balance and pleasant workplace atmosphere are also important to Dutch people.” Vink offers five tips for fair and attractive salary negotiations.

1. Conduct market research and a competitive salary analysis

First, determine how much you can afford to pay and which personnel costs you will have. Next, conduct market research. “Browse job ads to see what your competitors are paying for similar positions”, Vink says. “Make sure to consider the job level too. Is it a junior, medior or senior position? Use tools such as Glassdoor or Intermediair's Salary Compass. Your employees and applicants also compare your offer, so make sure you can back up your proposal with research.”

Floris Modderman owns a video production company in Amsterdam. As his company grew and he hired more and more people, he had to think about how much he could afford to pay his employees. “In addition to my accountant, I asked befriended entrepreneurs for advice and looked at salaries at other media agencies. I also compared the salary grades laid down in the CAO for media employees. I was shocked at first when I saw all the other personnel costs you have to keep in mind when you give someone a raise. For example, holiday pay, payroll taxes and all sorts of contributions. Awarding a 5 or 10% raise probably equates to a 20% increase in overall personnel costs.”

2. Be clear about salary from the start

Create clarity about your salary offer from the start, for instance by stating it in the job ad (in Dutch). Research shows that four in five job applicants are less likely to respond (in Dutch) if there is no mention of salary in the job ad.

“The last thing you want is to attract the wrong candidates”, Vink warns. “Employers sometimes assume that the role on offer is the main draw and that salary does not matter. However, it is important to remember that applicants have certain expectations. Make sure to discuss salary during the first interview, so you both know what to expect. If you wait until the second or third interview to mention salary, you may have wasted a lot of time and effort if you cannot work it out.”

3. Offer equal salaries

Offer your employees equal pay. Offer a salary that matches that of colleagues with similar positions and do not discriminate. For example, between men and women. Vink continues, “Suppose you have a certain salary in mind based on other colleagues in the team. A female applicant then asks for a lower salary. Then of course you can think: Ha, that's nice! However, offering them the higher salary you originally had in mind will pay off in the long run. After all, if she talks to her co-workers about her salary later and finds out that she is being paid less than her male counterparts, she may lose faith in your leadership. And then she may leave for greener pastures with another employer.”

4. Use secondary terms of employment as a bargaining chip

If you cannot close the deal with salary alone, discuss other ways to meet the needs of your employee or applicant. Explore offering Secondary terms of employment  like more leave or a bonus scheme (in Dutch). This often costs less than offering higher base salary. You can also set up a profit sharing scheme: when profits are high, everyone benefits. When your company is struggling, employees are paid a little less. This gives you more security and creates understanding, as well as serving as a powerful motivator.

“For the Dutch, a good work-life balance and a pleasant workplace atmosphere are very important”, Vink explains. “Due to the corona pandemic, employees want more flexibility (in Dutch). So offer them the opportunity to work from home and determine their own hours. Personal development is another key concern for many people, so invest in career opportunities and training.”

Even though my salary demands were not met, I am happy with the compromise we reached.

Modderman recently had a performance review with employee Isabelle Jansen. She had just been promoted and felt she was entitled to a raise. Modderman had sent her an offer by email, which Jansen was reluctant to accept. “She felt that her recent growth merited a higher salary. But I thought the raise she had in mind was too big of a jump”, Modderman explains. “At the same time, we really wanted Isabelle to stay. That is why we looked into alternative options. Isabelle was taking driving lessons at the time, so we offered to help her cover the costs. Isabelle also mentioned she wanted a pension plan. Although we did not have one at the time, her idea prompted us to get a pension plan for all employees through a pension fund for media companies.”

“Not getting the raise I had in mind was a blow at first”, Jansen recalls, “but I decided to stay with VideoBird anyway. I am happy with the compromise we managed to reach. I felt listened to and was taken seriously throughout the entire process. That is very important to me. I have been given responsibilities and lots of growth opportunities, and I get to weigh in on our productions. I love the atmosphere at VideoBird and we often have fun events for the entire team. This summer, for instance, lots of us went on a working holiday to Portugal.”

5. Make agreements on salary raises

If you cannot currently meet an employee’s salary demands, explain how their salary can grow in the future. CAOs usually contain provisions on salary growth. If you do not have a CAO, you can make individual agreements. You could agree to an annual salary raise of €50, or 2% or 3%, for example. Subject to a good performance appraisal. Honour your agreements and record them in writing in the employment contract. That way employees know where they stand.

“We do not have salary grades or levels like in a CAO. But we do try to create clarity about growth opportunities at the company. And that includes salary”, Modderman explains. “We are still exploring ways to set up a bonus scheme to reward employees for landing a new customer, for example.” Jansen echoes the importance of clarity: “I want to know where I stand and how the company will help me develop. Can I expect my salary to grow and which requirements will I have to meet first? If the company cannot offer me something now, I want to know what to expect in the future.”

Rules and regulations

By law, all employees must earn at least the minimum monthly wage. As of 1 July 2023, the minimum wage has increased.

From 2024, there will also be a minimum hourly wage. This means that your employees must earn at least a certain amount every hour, instead of every four weeks or month.