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Negotiating SalaryMs Hemamalini

When it comes to negotiating a salary, most candidates are struck dumb at the amount of jargon floating around. As a result, they are awed by the sum mentioned by the prospective employers, and accept it with little or no discussion. Only when the first paycheck comes in do they realise that they are victims of the great salary scam! Here, Ms Hemamalini, an HR practitioner, advises candidates on what to look for when negotiating salaries, and the possible potholes they may encounter.

  • MNC style

If a candidate is moving into an MNC, he/she is likely to be taken in when the prospective employer assures him/her that the basicsalary will be 60% higher. The basic salary will certainly sound immense, but the candidate should ask for more details.

There is a tremendous difference in the compensation policies of an MNC as opposed to an Indian company. Welfare components figure largely in the salary break-up of Indian companies, while such components are rare in an MNC. Often, these welfare components will be on actuals. As a result, the actual jump in take home may be only around 10% in comparison to the previous package.

  • Beware of `company policy'

If a candidate is brave enough to ask for details regarding salary break-up etc, he/she is most likely to be fobbed off with standard replies. Phrases like `company policy', `standard procedure' and `industry norms' normally stop candidates cold. But to avoid a rude shock later, persevere. Get the details.

  • First aid!

A major stumbling block is when medical benefits are mentioned. Remember to ask exactly who all are covered by such benefits.Often, candidates are told that medical benefits cover `family' but are later told that `family' does not cover certain members. For instance, `family' may exclude parents, and so, if you are unmarried, you cannot share the medical benefits with your parents. Also, check if hospitalisation costs are covered. Seek a definition of terms that seem misleading.

  • Whose performance is it anyway…?

Find out exactly how performance incentives are calculated. Don't blindly accept the employer's assurance that these incentives can `go up to' a certain amount! Also check what percentage of the incentive is governed by the performance of the organisation - at the global level and at the domestic level etc and how it affects the percentage based on your individual performance.

  • Annual or monthly

Remember that the salary always sounds more hefty when spoken of in annual terms. Employers tend to talk of annual gross salaries, while candidates think in terms of monthly take-home. To avoid any confusion, ask for a detailed break-up and ensure that both of you are referring to monthly take home.

  • Check out the sub components.

Employers normally include the PF component while discussing salaries. As a candidate, ask for exact percentages paid as PF, and when you will be due for the PF benefits. Also, while gratuity and superannuation amounts are often covered in the initial salary break-up, remember to ask when exactly you will receive the benefits. Normally, an employee needs to have worked for five years in an organisation to be eligible for gratuity. Superannuation benefits, on the other hand, may vary, as they are governed by company policy. Make sure by asking for details.

  • Is reimbursement worth it?

While employers promise many benefits - leave encashment, transport allowance, superannuation benefits etc - remember to ask when you can avail of these, how payment will be made (as a lump-sum or on a reimbursement basis on production of bills), and how long you will need to work to take advantage of these benefits.

  • The ESOP myth

These days, employers use stock options to dazzle prospective candidates. Often, two options are offered - a high salary with no stock options, and a somewhat lower amount with stock options. Stock options may be the in thing, but check if the shares of the company are worth owning. Also, remember that these options will be valid only if you work in the company for a certain period. Again, ask for details.

  • Hidden costs and extras

Ask for details regarding relocation costs - will you be reimbursed and how much will you get? For instance, if you are working in Chennai, and get a job offer from a company in Mumbai, your salary may sound much higher due to the change in cost of living. But check if your relocation cost (freight, moving charges etc) will be borne by the new company. Seek clarifications regarding cost to company.

And last, but definitely not the least, get it all in writing.

Also Checkout

Guidelines for negotiating a salary


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