If you didn't bag the best compensation in the market when you switched jobs, don't worry. The best of professionals come up short when it comes to discussing salary with a new employer.
Here are some of the common mistakes you can avoid while discussing your salary with a potential employer.
1) Accept initial offer and lose Rs 1 crore
Always, always, always negotiate. Women and first-time job seekers are more prone to accepting the opening offer without questioning it. A 10% salary difference in the first job with a CTC of Rs 4 lakh represents a lifetime loss of over Rs 1 crore, assuming a 15% annual hike over a 40-year career.
So, politely restate your case and provide justification for a revised offer. In over 95% of the cases, the employer has not made his best offer right away and is expecting you to negotiate upwards. As a ballpark, ask for a 10% increase.
2) Do your homework on position & firm
Thoroughly research the market and the firm. In negotiations, as in war, the better prepared side wins. Never approach a new employer without finding out the standard market salary for the position offered based on your experience and qualification.
Start with online research, and then talk to professionals and recruitment consultants. You can also speak to people in the company to have an idea about the latest state of its business, operations and the compensation structure. Use this data to justify your stand.
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Here are some of the common mistakes you can avoid while discussing your salary with a potential employer.
1) Accept initial offer and lose Rs 1 crore
Always, always, always negotiate. Women and first-time job seekers are more prone to accepting the opening offer without questioning it. A 10% salary difference in the first job with a CTC of Rs 4 lakh represents a lifetime loss of over Rs 1 crore, assuming a 15% annual hike over a 40-year career.
So, politely restate your case and provide justification for a revised offer. In over 95% of the cases, the employer has not made his best offer right away and is expecting you to negotiate upwards. As a ballpark, ask for a 10% increase.
2) Do your homework on position & firm
Thoroughly research the market and the firm. In negotiations, as in war, the better prepared side wins. Never approach a new employer without finding out the standard market salary for the position offered based on your experience and qualification.
Start with online research, and then talk to professionals and recruitment consultants. You can also speak to people in the company to have an idea about the latest state of its business, operations and the compensation structure. Use this data to justify your stand.
3) Don't use last salary or financial need as pegs
Focus on the value you will bring to the company. Most professionals are browbeaten by the firm's hiring manager, who will peg the new offer to your last drawn salary. This is usually underselling your competence since it does not give you a fair market correction.
Similarly, do not negotiate on the grounds of how much money you need. Convey the value addition you will provide to the profile and firm, and why you deserve a better deal.
4) Have a back-up plan
Know your options if you choose to walk away from the offer. Only if you have a back-up plan can you negotiate without fear and take a stand on a fair compensation structure. This is the reason it's not advisable to quit a job before you find a new one. In today's challenging job market, a few months of savings or an alternate source of income will do wonders for your confidence during the negotiation process.
5) Let the employer start salary discussion
Let the employer talk about salary first. Most newcomers make the mistake of initiating the compensation discussion early on in the game. This exposes your inexperience and sends a negative signal that you are concerned only about the salary, not the profile. On the other hand, if the employer makes the first move and quotes a figure, it sets the floor for the negotiation and the final salary can only be negotiated upwards from there.
6) Don't be eager to share information
Be miserly about sharing salary details initially. Knowledge is power, more so in a negotiation. So, don't be in a hurry to pass on information about your past compensation, precise expectations about salary, bonus etc.
Focus on discussing your achievements, proposed job profile, and your fit with the position and the company. The more you delay it, the greater is the time that the firm is investing in your hiring. This usually translates into a better job offer.
7) Only accept a verbal offer
Get every commitment in writing. If the hiring manager makes a verbal one—review in six months or a guaranteed 20% bonus—it has no meaning. If the firm is reluctant or slow in making its promises in writing, treat it with suspicion.
The firm is either looking at a stronger candidate or has no intention of following up on its promises. Do not resign from your existing job till you have signed a written offer.
8) Avoid wrong advisers
Trust either your own research or independent consultants. The hiring manager's advice to you about the 'great' offer is a clear conflict of interest. So is the advice of the recruitment consultant who is dealing with you.
The inputs from inexperienced negotiators like your friends often miss the point and focus on power play instead of creating value. So, conduct your own research and seek inputs from consultants not related to the ongoing hiring process.
9) Refuse instant rewards
Invest in delayed gratification. If the hiring manager throws in a Rs 1.2 lakh joining bonus to sweeten the deal, recognise that it will not be there next year. So, your take-home salary in the second year will be lesser.
Instead, ask for a Rs 10,000 monthly hike. Though there won't be any instant cash, the cumulative benefits will be much more, as also permanent. Similarly, the new job should add long-term, permanent value to your career and not be a fresh start for the sake of compensation.
10) Don't show desperation
Rehearse your lines to avoid showing your need. As in a dating game or a sales process, any hint of desperation swiftly kills your ability to succeed. Even if you urgently need the job, you will have to find a way to stay calm and respond smartly during the selection and negotiation process.
Seek inputs from trusted professionals to rehearse your responses. Don't be in a tearing hurry to reply to e-mails and job offers from the hiring manager. Respond as you would to standard communication.
Don't forget the extras
Sign-on bonus
If the employer's bureaucratic salary band restricts him from paying your worth, ask for a signon bonus to cover the difference. It is the easiest solution for the employer to match your value without upsetting the applecart. The bond for this should not exceed 12 months.
Relocation cost
Most of the employers would be willing to consider covering your relocation expenses if you were to take up the issue. The amount is typically higher for senior positions, so negotiate accordingly. Check if the reimbursement is for actual expenses and whether it is tax-exempt.
Flexitime & flexiplace
How much would you pay for the privilege of flexitime at your workplace? Or for the opportunity to work from home? Both benefits have a tangible value for you. Discuss these options with the firm to make your offer more attractive.
Six-month review
Depending on the firm's annual performance review cycle, the next increment and bonus could be 12-18 months away. Ask for an early review in, say, six months. It is not a risk for the employer, while it gives you an opportunity to prove your worth and earn a quick salary revision and/or bonus.
Leave
Though often bound by rigid policies, many employers are willing to look at special requests for paid leave. You can explore the options for a longer maternity leave, a sabbatical in 3 years' time, a month's furlough after 18 months, or simply an extra week's leave.
(The writer is Director, Executive Search, at Quetzal.)
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