How to negotiate your salary

So you have cleared the previous interview rounds and now it’s between you and the HR. By now, all other aspects of your new job would most likely have been taken care of, except maybe the salary.

We spoke to a senior HR executive on how to discuss the matter delicately and still get a good deal.

1. As always, do your homework first: Find out the industry standard as well as the company’s salary bracket for the position you are applying for. This will give you an idea of what you are likely to be offered. The salary hike in percentage terms one can expect while changing jobs is anywhere between 20 per cent and 40 per cent, depending on the industry you are working in. Therefore, your new salary expectation should be based on the hike in percentage terms as well as the industry benchmark.

This 20-40 per cent standard may not apply to very young or very experienced people. Youngsters who change their jobs quite frequently are less likely get a good hike, while people with 15-20 years of experience—who may already be earning well—are also less likely to get a huge jump.

2. Don’t bring it up yourself: It is quite natural for a prospective employee to become anxious about his pay packet, but one should refrain from bringing up the topic himself. It is always better to wait for the employer or the HR representative to take the initiative. Bringing the issue up yourself may cause salary to become the central point of the discussion, and may even result in the discussion breaking down if your expectations are not met.

There may even be instances when you may not be asked about your salary expectations at all. Maybe you should wait for a break up. Your new package will be a part of your offer letter, which will also have details of other perks that you may be entitled to. So it’s best to wait. In case they do ask you about your expectations, tell them your current salary and the percentage hike you expect. Do a mental calculation of where the hike will place you compared to the rest of the industry.

3. Flexible or firm? Be both! Salary negotiations can be tricky. No matter what you ask for, the HR will convince you to lower your figure, by telling you the numerous “career-building” opportunities the new job offers, the perks your previous employment didn’t give, and even how you may cut down on expenses in case your new office is close to your residence. While their argument may be correct, it is not advisable to drastically lower your expectations. The best way to go about this is to keep a 5 per cent margin that you may be willing to let go. So, for example, if you want to end up with a 30 per cent hike, tell them you are expecting 35 per cent, and then negotiate. You should not appear too rigid with your expectations. It won’t send out a very positive image.

4. Don’t compare: While comparisons are natural, you may end up in heartache. Salaries often depend on the negotiation skills of the job seeker. Since you know what the standard is, be firm about insuring that you are near the top of the band and not in the lower half. Comparing your salary with that of your colleagues in your current employment or with colleagues-to-be in the new office should be avoided. So the only comparison you should be doing is with your previous salary.

Most HR departments usually will not hire anybody either above or below the allotted budget bracket for a particular position. Salary mismatches—especially if the new recruit has a higher pay scale—may lead to differences with colleagues and affect output. A low salary, instead, will end up hurting your own morale once you join the company. So be assured, even if the company’s standards necessitate a 50 per cent jump, you will most likely get it.

5. Don’t haggle over pennies: Too much back and forth over money can put off the prospective employer. You should look at an improvement in pay over the previous job, clarity on roles and responsibilities in case you are being hired for a senior position and the overall work environment prospects while considering the offer on table. Find out ways of structuring the salary in such a way that tax incidence could be lower and ensure that the HR is upfront about the options it can offer. Payments towards home loan EMIs, provident funds and life insurance policies are not taxable. So base your calculations on these to keep your income tax to the minimum. Tell the HR how you have fared in your previous company and the annual hikes you have received. Tell them how you intend to take things forward when you join, the plans you have thought of, the goals you have set. These will reflect your seriousness for the job.

Source: Business Magazine.