One of the most important parts of any interview process involves a discussion with HR regarding the finalization of salary. Employees normally find this part of the interview a bit awkward and hesitate to negotiate the salary that they are offered by the employers.
But no matter how uncomfortable it feels, you must negotiate your way to a salary that justifies your worth. Also, salary negotiation is not just a one-time process, it will continue to be a part of your professional career. It’ll come up every time you change jobs or get promoted in the current company. It will keep coming up during appraisals every year, too! That is why you must learn how to negotiate the salary you deserve.
In this article, we will discuss the following:
- What is Salary Negotiation?
- Need for Salary Negotiation
- When to Negotiate Salary
- CTC vs. In-Hand Salary
- Evaluate Your Value
- Things to Follow While Negotiating Salary
Let’s begin the discussion!
What is Salary Negotiation?
Salary negotiation is a process by which you carry out discussions with your prospective employer in case of a new job and current employer in case of an existing job about the salary compensation that you wish to draw from the company.
You must not make negotiations based on unreasonable expectations as it would not be possible to justify it in the process of negotiation. Rather, you should focus on a salary that matches the industry standards and your level of experience. It may be difficult for anyone to do that amount of research to conclude as to what should be the level of salary on which you may focus. Monster is an excellent website that lets you browse through the industries as well as job profiles to arrive at ideal salary expectations.
Need for Salary Negotiation
You might wonder why you would ever want to negotiate for a salary. Being an employee, you deserve to get a salary package that reflects the efforts and the hard work that you put into your work. But you may not always get what you deserve. That’s one reason why you should negotiate your salary. Another reason is that getting the right salary package is an important stepping stone in your career advancement.
It is also important to realize that salary negotiation is a completely normal thing to do. It should not be thought of as rude behaviour. To feel confident during the salary negotiation procedure, make sure you do your homework by the way of thorough research. You can use Monster as a tool to do the research work.
When to Negotiate Salary?
You may want to negotiate salary in the following two scenarios:
- You might be expecting an offer letter from the new company. At the time of salary negotiation, present your views about your expected salary.
- During the time of salary raise, it may happen that you are not satisfied with the raise that you got. If you feel that the raise is not per your experience level, you might consider negotiating the same.
CTC vs. In-Hand Salary
Usually, companies mention the term CTC in the offer letters. However, CTC is not the amount of salary that you are going to get into your bank account. Let us have a look at how these two terms are different.
- CTC or Cost to the Company means the total amount of expenditure that a company incurs in respect of employment during a year. It includes all the components that are compensated to an employee such as basic salary, house rent allowance, transport allowance, medical allowances, other allowances, and employer’s contribution to defined contribution plans (such as a pension plan).
- Net take-home salary represents that portion of CTC that is remitted to the account of the employee after all deductions. Certain deductions are made from the CTC such as employee and employer’s contributions to defined contribution plans, and income tax withheld on salary.
Another term that is used in salary calculations is Gross Pay. It is calculated after reducing the employer’s contribution to the defined contribution plans from the CTC. You must get details concerning net take-home salary also to know the actual amount of funds that you will be drawing from the company.
The basic point is that the tax system in the US is complex and vast. So, the Cost to Company (CTC) written in your employment contract isn’t going to be what you take home every month. Find out exactly what you can expect to take home before making up your mind about negotiating the salary you deserve.
Evaluate Your Value
As we earlier stated, the salary that you negotiate must be based on reasonable grounds and should not be out of blue. Several factors impact the income that you can expect from your employer. These include the employer’s industry, its size, its geographical location, your skills and qualifications, your experience as well as the type of responsibility that is allotted to you.
Regarding location, it generally follows that employees in super-cities like New York City, Los Angeles, San Francisco, etc. are able to earn significantly higher salaries than employees in second- or third-tier cities like Boston, Seattle, Detroit, etc. The income gap between highly developed cities and other cities is massive. So, you need to understand the average income near you and adjust your expectations accordingly.
To research the best salary match for you, you can use Monster’s Salary Tools. It will let you have an overview of the salaries that are prevalent in your preferred industry, based on your years of experience and your city preference.
Things to Follow While Negotiating Salary
Keep in mind the following things when planning to negotiate a salary the next time.
- Set a range for your expected salary. Do not suggest any single salary figure and instead present a reasonable range of salary that you are comfortable with.
- You must keep in mind a minimum salary level beyond which you would not like to accept the offer. While negotiating for salary, make sure no matter what, you do not settle for an amount less than the minimum level.
- Demonstrate confidence as your personality trait while negotiating salary. Only if you are confident you will be able to get the best deal.
- If you are not much aware of the job responsibilities that you will be entrusted with, don’t be too quick in disclosing your salary expectations. Instead, ask the recruiter about the roles and responsibilities that will form part of the job profile and ask for the salary that the company can offer. Based on the input, you can draft your salary expectations.
- It is okay to take time in accepting the employment offer. Just be courteous and say that you need some time to evaluate the offer and will confirm your decision at the earliest.
- If the company’s budget doesn’t match your salary expectations, you may decline the offer. Make sure to maintain professionalism in your tone and thank the recruiter for the opportunity that they provided you with in the first place.
- Evaluate other options and your urgency for the job. If you are in a condition that you need the job urgently, you may not stress too much about salary negotiations.
Salary negotiation is an art and every art needs practice for perfection. If you feel nervous about the salary negotiation process, you may practice your pitch beforehand a few times so that you gain a level of confidence when you do the negotiations. Make use of these tips the next time you have to negotiate for salary.