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Salary negotiation is a carefully-mastered art
You either have it or need to cultivate it
Harveen S Bedi
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Illustration: Tanmaya Tyagi |
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ONCE WE had a candidate, let’s call him Sumit Kumar, who’d been finalised by a client, an automotive company, for the position of general manager. The candidate had mentioned in his application that his cost to the company (CTC) could not be less than Rs 40 lakh per annum.
As he reasoned, his current CTC was Rs 32 lakh, so he felt entitled to a jump of Rs 8 lakh minimum in his new CTC. Luckily for him, the expectation was met and the human resource (HR) department issued him an offer letter with a CTC that worked out to Rs 41 lakh, per annum.
Did it make Kumar happy? Nope, far from it.
He came back to us saying that although the net was more than what he had asked for, it included a car lease worth Rs 5 lakh for a particular model that he was not interested in. Could he have cash in lieu of the car?
The HR manager dug his heels in insisting that the car lease was a standard company policy for executives at that level and it could not be converted into cash.
The candidate wrote back with the offer that the prospective employer take over the lease of his existing car (a superior model, he hurried to point out) from his current employer, but the HR refused this as well, saying this was not a correct interpretation of their car lease policy.
This exchange went on for a while and at one point turned so unpleasant that eventually both parties decided to call it quits, after branding each other ‘non-professional.’
This is not an isolated case. I vividly recall the case of a candidate with an FMCG company who even added the staff discount he received annually on the company products as part of his CTC as his family happened to be a regular consumer of those products.
Salary negotiation is undoubtedly among the most crucial, last-mile hurdle in a recruitment process, during which companies that have finalised a candidate for a position want to close the loop and quickly get him/her on board.
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CONFIDENT? SURE? LOCK KAR DO....
In a 2012 international survey by social media platform, LinkedIn, Indian employees were the most confident in the world about their salary negotiating skills, with 47 percent claiming that they felt confident in the process. |
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In the past 10 years of my running Quadrangle, a search and selection division of Info Edge India Ltd, or what is popularly known by its website www.naukri.com, I have come across several instances, wherein companies lost out on excellent talent, and candidates excellent career opportunities, simply because one or both parties goofed up at this stage.
Drawing from my experience, the first bit of advice that I’d like to offer to candidates is, know your exact CTC.
It’s not funny how many candidates flip-flop in negotiating additional CTC components that they had missed out in their discussions, earlier.
The thumb rule in calculating the tangible and intangible components of your CTC is to divide all components under the following heads:
• Fixed Annual income: This is the fixed part of your compensation that you get in a year irrespective of individual or company performance
• Annual Variable Potential or Bonus: This is usually an upper limit set by the management for a position and its payout is dependent on variables such as individual performance, department performance and company performance.
• Retirals: These include statutory as well as voluntary components such as gratuity, provident fund contribution, etc.
• Perks: These include reimbursements, allowances, fringe benefits like car lease, club memberships, medical coverage, paid leaves etc.
• Other intangible organisational benefits: Training cost, exposure provided kind of people you interact with, office location, infrastructure and other hygiene factors.
Once you are clear on these heads, you would be in a position to evaluate the new offer. For freshers, straight out of campus, usually there is no room for negotiation — everything depends upon the college rating in the eyes of the employer. The only negotiation possible here is with respect to location, that too with multi-location companies and the number of vacancies they have at each centre.
In any case, salary negotiation at the entry level is not recommended as the employer has a wide pool of candidates to choose from.
At mid-level, it’s important to understand the bands/levels in the new employer’s company and the methodology used in deciding future promotions and salary hikes.
The salaries at these levels are sometimes flexible to the tune of five to ten percent of the fixed component.
For senior level, there is usually more flexibility depending on the skills that a candidate promises to bring to the table. If you feel that your domain expertise is in demand and in short supply, you may tweak a few terms to suit your ends.
In most of the cases, I advise a candidate not to quote any figure as this limits the discussion to a figure, where there is a lot of variance possible even among business heads employed by the same company. In addition, make sure you don’t overquote or underquote and leave the ball finally in the employer’s court.
In case you feel you are not getting your skills’ worth, you should ask for a last-round meeting to discuss the matter threadbare.
The organisation could be constrained to maintain parity between executives at one level and may not be able to stretch beyond a point.
If that’s the case, you could ask for a Joining Bonus, which is generally paid in two equal installments to make up for your monthly shortfall.
It’s a one-time expense that most employers don’t mind paying and it also takes care of your net take home for a financial year. Additionally, this is an ideal time to seek clarity on reimbursements, perks and relocation, if applicable.
In the final analysis, compensation though important, should never be the only benchmark for selecting a job. If for some reason, the deal doesn’t work out, part with a straight face.
A lot of candidates who are not happy with the compensation, offer lame excuses such as ‘spouse not willing to relocate,’ ‘parents are advising against this position’ — which frankly appear stupid at that level.
This reminds me of Sumit Kumar, again. I am told these days he’s selling auto components for the same ‘non-professional’ company he had spurned earlier.
The author is business Head, Quadrangle.
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