Business Today

How to get an offer you can't refuse

Peer comparison is the biggest mistake executives make when negotiating pay packets with potential employers.

Saumya Bhattacharya | Print Edition: October 3, 2010

How does one negotiate salary in a new job? Asim Handa, Country Manager of Futurestep, a firm that specialises in mid-level executive search, is often asked this question. Candidates sail through interviews but flounder when organisations begin discussing the compensation expectations with them. "I have seen people messing it up right at the end. Negotiating salary is an art and not everyone has it," says Handa. True, while everyone wants to earn more, very few have the knack for walking away with a good bargain.

HR experts will tell you that it is about demand and supply. Your negotiating powers go up if companies are looking for talent with the specific skillsets you have and if there's a shortage of that skillset in the market. But this rule applies to senior-level salary negotiations, and is person- and company-specific. What we are concerned with here are the broad dos and don'ts that one can follow while negotiating a pay packet for a job at the junior and middle levels.

First and foremost, should you at all negotiate the salary? Use your judgment. Some organisations have reasonable salary structures and you may not need to negotiate at all. On the other hand, some organisations may view a candidate with suspicion if he does not negotiate - they may think the candidate has something to hide. "Some organisations look askance at a person who is not negotiating," says Padmaja Alaganandan, India Business Leader, Human Capital, at Mercer.

What is a reasonable hike? "That may depend on a lot of factors in term of the economy and the demand for your profile. But an acceptable hike is 25-30 per cent across most sectors," says Handa. If someone wants a 60-70 per cent hike, he had better have a good reason for it, adds Handa. Also, be very prudent about basing your demand on what your peer group is earning. In most cases, such a yardstick does not work to one's advantage.

Self-esteem and recognising your worth are virtues in today's workplace, but don't measure these only by the compensation you can command. When you are moving jobs, you should be cognizant of your value and what you bring to the organisation, but at the same time you should respect the internal equity (pay structures and designations) that exists in the organisation. Some companies may not want to compromise on internal equity even for outstanding candidates. Get to know the organisation you are going to, says Alaganandan.

Sometimes, putting a high value on what you bring to the organisation can turn out to be counterproductive. A hefty hike can work to your disadvantage, particularly if you take time to settle and start contributing. "You then tend to be an outlier with a lot of pressure to perform," says Alaganandan.


  • Don't reveal your salary expectations. Wait for the company to make an offer
  • Look at the compensation structure closely. If it is reasonable, there is no need to negotiate
  • That said, negotiating a salary package is acceptable across most industries and levels
  • If you are not comfortable with the package, convey that it's probably not up to the mark
  • Gauge your skills and also understand the employer requirement

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