How much money is good money?

How much money is good money?

It is important to understand how HR managers in the organisations decide about the compensation matters From juniors to seniors, at some stage of...

It is important to understand how HR managers in the organisations decide about the compensation matters money1From juniors to seniors, at some stage of the selection process, everyone faces a situation where they need to answer the HR manager's intriguing question � "what is the compensation that you are expecting?" It is always a tricky to question to answer. Raghu once prepared himself for the interview and stated his expectation as six lakhs per annum. HR manager said yes and released the offer. Even today, Raghu carries the doubt if he should have asked for more salary and why the HR manager accepted without any negotiation. On the other hand, Sanjay stated a figure after which the HR manager stopped taking his calls nor responding to mails. Sanjay carries the regret that he was too greedy and perhaps asked for too high a salary. He feels that he should have been more reasonable. These examples left us to think � "how much money is good money" to ask during salary negotiation. While it is true that the monetary requirements or expectations are purely personal and others cannot decide how much one should expect, it is important to understand how the HR managers in the organisations decide about the compensation matters. Such understanding should help every aspiring candidate with a framework to assess an optimum compensation and state expectations more realistically. Let us go over the list of factors that organisations consider while deciding the compensation. Supply-Demand Scenario: If there is a shortage of talent in the industry, then you will command a premium. On the other hand, if there is a slowdown in the industry and therefore there are more people available, then it will be a challenge to demand more compensation. Assess what is the present demand and supply for your skill set. Uniqueness of competence: Is there any specific skill or competence that you possess and which is of great value to the organisation? If so, then you can factor the same during compensation discussion. By offering a higher or unique competence, you will be able to negotiate a higher compensation.
Criticality and urgency of the role: There are certain roles like a sales manager which are critical for the revenue generation. Longer the position is kept vacant higher the loss for the company. In such cases, if the candidate is willing to join immediately, organisations do not mind offering a little extra on the compensation. By addressing their urgency factor, you can command a higher salary. Internal Parity: This is the most vital factor that HR managers consider while deciding on the compensation. They would not like to have too much of disparity between compensation of the new candidate and those who are already working at the same level in the organisation. Through your informal networks, you can understand the existing pay of the existing employees at the same level (preferably same department or function). It will surely offer you a realistic benchmark. Existing Pay of the potential candidate: It is possible that you are currently getting less than the minimum salary that the organisation may offer (as per their internal compensation norms) for that position. If the organisation is fair in its practices, they do not try to exploit, just because you are at a lower salary. They will consider for a minimum salary as per their internal benchmark. The challenge comes when HR manager faces a candidate who is having a very low salary for historical reasons and the candidate now wants to bridge the entire gap and meet the market standards. Such expectations usually are turned down. For some historical 'injustice' done, one company cannot become the savior and bring you up to market standards. You need to be more patient! And finally, it is important to be in a job at present with no immediate threat of losing it. If you are on loose soil, that is not a position of strength to negotiate your compensation!
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