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Negotiating a new salary

No two compensation structures, even in the same industry, are always similar. Comparing apples with oranges, as one typically does, is not a useful exercise.

Prabir Jha        Print Edition: September 4, 2008

Prabir Jha
Prabir Jha
Times are surely changing. From standard, dogmatic and, at times, insensitive compensation structures, organisations are increasingly becoming more flexible. Employees are given a greater choice and ownership of these decisions. The logic is quite simple. Offer the employee what makes sense to him, having pegged the outflow from the company. Tax demands may vary, as do family circumstances and individual lifestyle preferences.

Increasingly, companies are opting for a higher variable pay. But many candidates feel uncomfortable with the variable pay plan. These people may not be the best ‘fit’ with the company because there is a philosophical disconnect. Candidates too will need to understand a different compensation philosophy and introspect their self-belief and risk appetite.

No two compensation structures, even in the same industry, are similar. Comparing apples with oranges, as one typically does, is not a useful exercise. It is important to appreciate the tax liabilities, including FBT implications. Inter-city differences impact the cost of living.

Likewise, it is important to understand what services are provided by the employing organisation, either free or at a discount. Some of these may be worth being tempted with, while others may not be relevant to one’s needs.

Perquisites, benefits and freebies are very individual-specific and this must be factored in while looking at the complete offer. Many statutory payouts like gratuity are not genuine differentiators. These are legal dues and come into play only after a specific tenure with a company.

While these elements run across levels, they become more critical at senior levels. Organisations typically have greater flexibility to make individual concessions at senior levels. The willingness to do so will depend, of course, not just on the perceived value of the individual but also how the compensation conversations pan out.

Prabir Jha is Sr Vice-President & Global Head-HR, Dr Reddy’s Labs
(These views are personal and may not represent the views of his company)

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