How founders can evaluate competing offers, structure counteroffers, and hire top talent without starting a bidding war.
You have found the right candidate.
They passed the technical interviews. The hiring manager is confident. The team is ready to move forward, and the compensation package is within budget.
Then the candidate says:
“I really like your company, but I have another offer with a higher salary.”
For a founder, this is a business decision, not just a salary negotiation.
Increasing the offer immediately can inflate compensation without guaranteeing acceptance. Refusing to negotiate can mean losing a strong candidate over a difference that could have been resolved through a different compensation structure.
At HireForYou.Pro, we approach this situation as a structured hiring decision. The goal is not to beat every competing offer. It is to understand what matters to the candidate, assess the economics of the hire, and find an agreement that works for both sides.
1. What the research tells us about salary negotiations
A study by Michelle Marks and Crystal Harold, published in the Journal of Organizational Behavior , examined salary negotiation among 149 recently hired employees.
The researchers found that employees who negotiated their starting salaries received an average increase of $5,000 compared with the initial offer. Competing and collaborative negotiation strategies were associated with better salary outcomes than accommodating and compromising strategies.
This study examined salary negotiations in general, not specifically the use of competing job offers. The $5,000 figure is a finding from that study, not a prediction of what candidates can expect to gain today.
The relevant takeaway for founders is that negotiation strategy can influence the final compensation agreement.
The Harvard Law School Program on Negotiation also recommends considering multiple elements of a job offer rather than treating base salary as the only variable.
For founders, the conclusion is straightforward: a competing offer is a reason to evaluate the negotiation carefully, not an automatic instruction to increase the salary.
2. Understand the decision before changing the offer
Consider an illustrative scenario involving a B2B SaaS startup hiring a senior software engineer.
Company A offers an annual base salary of €90,000. The candidate has another offer worth €100,000.
The difference is €10,000 annually, or approximately 11.1% of Company A's offer.
Does Company A need to match €100,000?
Not necessarily.
The candidate may have a firm salary minimum. They may prefer Company A but need to justify the financial trade-off. Or they may value the role but want to understand whether the initial offer is flexible.
Before changing the package, clarify three things:
- What specific difference between the offers matters most to the candidate?
- Is that difference a firm requirement or a negotiable preference?
- Would addressing it resolve the main concern, or are other factors still influencing the decision?
A useful question is:
“Which difference between the two offers has the biggest impact on your decision?”
The answer may reveal that the issue is guaranteed income, a bonus, working arrangements or the scope of the role.
The recruiter should give the candidate room to explain their priorities rather than assume that salary is the only deciding factor.
The principle: understand the problem before paying to solve it.
3. Calculate the cost of improving the offer
A counteroffer should be evaluated against the company's alternatives over a consistent period.
Returning to our example, suppose the founder is considering three options:
These figures assume an unchanged salary over two years and exclude employer contributions, bonuses, raises and other compensation components. They are illustrative, not actual HireForYou.Pro client data.
Now consider the alternative: the company does not hire the candidate, and the position remains vacant.
Suppose the founder estimates the monthly business impact of the vacancy at €4,000. This could include measurable contractor expenses, delayed delivery or other operational costs attributable to the unfilled role.
These figures are hypothetical and should be replaced with estimates relevant to the actual role.
If the company increases the base salary to €95,000, the additional cost over two years is €10,000. If the alternative is a three-month vacancy costing €12,000, the salary increase may be economically justified.
However, this is not a direct like-for-like comparison: the salary increase recurs over two years, while the vacancy cost is a one-time estimate. The company must also consider employer costs, the expected employment period, the candidate's contribution and the likelihood that the revised offer will secure the hire.
A founder should therefore ask:
- What is the realistic cost of leaving this specific position vacant?
- How much additional compensation is needed to make the offer competitive?
- How likely is the candidate to accept the revised package?
- Does the resulting compensation remain fair and sustainable within the team?
The objective is not to minimize salary at any cost. It is to make a hiring decision that the business can justify financially.
4. Match the compensation package to the candidate's priorities
If the company cannot match €100,000 in base salary, it may still have alternatives. The right option depends on what the candidate values and what the company can credibly offer.
For example, a recruitment partner can use a simple decision matrix during discussions with the founder.
This is an example of a practical working tool, not a record of a specific client engagement. Its purpose is to help the recruiter and founder compare realistic options instead of negotiating through a series of improvised concessions.
Consider an alternative package:
- €95,000 annual base salary;
- €5,000 signing bonus;
- a documented compensation review after six months.
Assuming the bonus is paid in the first year, the first-year cash compensation totals €100,000 before taxes. The recurring base salary remains €95,000.
That distinction matters. A signing bonus may compensate for a one-time financial loss, but it does not resolve a candidate's requirement for a higher recurring salary.
Similarly, a compensation review is not a guaranteed raise unless the agreement explicitly provides for one.
The right package addresses the candidate's actual priorities while respecting the company's budget and compensation policy.
5. How a recruitment partner helps founders make the decision
A recruitment partner should do more than communicate salary expectations. It should help structure the decision and prepare realistic alternatives.
At HireForYou.Pro, this is the approach we recommend.
Step 1. Define the compensation range before making the offer.
Establish the target salary, the maximum approved amount and the components that can be negotiated. Agree on who has authority to approve exceptions.
If the maximum is €95,000, the recruiter needs to know that before negotiations begin.
Step 2. Clarify the candidate's priorities.
Understand what matters most to the candidate and whether the competing offer changes their decision. There is no need to demand confidential documents from another employer.
Step 3. Assess the business case.
Compare the proposed compensation with the role's responsibilities, internal salary levels, relevant market benchmarks and the estimated cost of leaving the position vacant.
Step 4. Prepare realistic alternatives.
Discuss two or three feasible packages with the founder before returning to the candidate. Each option should have a clear cost, approval path and rationale.
Step 5. Check whether the revised package addresses the main concern.
Explain the proposed terms and invite the candidate to assess them. Even when the package addresses the main concern, the candidate may need time to consider the offer or review it in writing.
The goal is to understand whether the revised package resolves the main obstacle, not to pressure the candidate into an immediate commitment.
Step 6. Document the final agreement.
Confirm the base salary, bonuses, relevant conditions and any agreed review process in writing.
This approach gives founders a clearer basis for making decisions and reduces the risk of negotiating under time pressure without understanding the company's limits.
6. When should a founder refuse to increase the offer?
A competing offer does not automatically justify a higher salary.
An increase may be inappropriate when:
- The requested salary exceeds the approved range and the business case does not justify an exception.
- The package would create an unjustified pay gap with existing employees in comparable roles.
- The candidate's expectations are materially misaligned with the company's compensation policy.
- The candidate's concerns extend beyond compensation, so an increase alone is unlikely to resolve the decision.
- The company cannot make the proposed commitments without creating financial or operational problems.
There is also a difference between negotiating and bluffing.
Candidates should not invent competing offers, and companies should not promise future raises or equity outcomes they cannot substantiate.
Founders should understand their best alternative if the negotiation fails. That may mean progressing another finalist, continuing the search or temporarily redistributing responsibilities.
Knowing these alternatives makes it easier to negotiate from a position of informed choice rather than treating every candidate as irreplaceable.
The takeaway
When a candidate has a higher offer, the founder's first decision should not be whether to match the number.
It should be whether the difference can be resolved in a way that reflects the candidate's priorities, the value of the role and the company's financial limits.
A successful salary negotiation is not about making the highest offer. It is about reaching an agreement that both the candidate and the company can justify.
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