Tips for Negotiation
ghost_007
23072
Compensation

Negotiation Strategy

Introduction

Hi everyone

I come from an engineering background. I graduated in 2019 and switched companies after 2 years.
Once I had undergone the process of lateral hiring, I realized that I had failed reasonably at negotiating my compensation. Even my friends who switched had failed to negotiate well, and I think a major reason was that we never plan for negotiations. All our time is mostly spent either on projects, or on practising Leetcode problems.

So I got tips from seniors and books, and I'm posting them here so that it may help juniors and fellow members who do not have much experience with these (on campus placement compensation is basically fixed and non-negotiable).

General rules of thumb

  1. When the company asks for your current salary, politely deny that. Do not share your compensation details. Big companies don't usually ask for current compensation, but startups do. There are multiple polite responses:

    • I'm not comfortable in sharing my current salary, as it doesn't correctly reflect my responsibilities and capabilities (and this is the reason why I'm looking for a switch)

    • As I am sure you understand, my employer considers employee salaries to be confidential, and access to this information is limited to management inside our organization. So, I am unable to share it with you. However, if you share the salary level and range for this position, I can confirm that my salary is within that range or not.

    • (If you work in a startup) Since the company has not yet gone public, it would be very difficult for me to disclose the compensation details. Moreover, I can't share half the information as that would portray very wrong numbers.

    The above two/three should probably be enough. If not, a very strong answer (the last resort):

    • I don’t think that my current salary is relevant, but if you must have that information, I will provide it after you share the salary level and range for this job.

    If the recruiter still persists for an answer, you should ask yourself if the company is even worth joining. The culture doesn't look good.

  2. Another common question -- What are your salary expectations?. NEVER share a number.
    The reason for not sharing a number is as follows:

    • You have no clue what the budget of the company is. Has the company been in profits? Are they willing to pay more to hire talent? Supposedly you say 40L (which is well above your current pay, say 20L), but the company was willing to pay 60L for the role, they'll offer you 45L. You'll be happy, but you'd have lost on a potential 15L.

    • To avoid being undervalued, you ask for way above their budget (same example as above, but you ask for 80L). In such a case, the company might think you're being way greedy and would look for potential other candidates who have performed on similar levels in the interview.

    What to say???

    • Right now, finding the right position for me is more important than salary. I’d love to learn more about the job, the company, and the entire benefits package before we talk about numbers (seemingly helpful when you're uncertain if you'd be offered, say SDE or SDE-2, and similar cases).

    • It would be helpful if you could share what the range is for this role, and I'd be more than happy to state if my expectations lie within the range.

  3. Given all these, let's say you get the first offer. Now negotiations would depend a lot on how your interviews went, and what the initial offer was. If either the initial offer was very low or the interviews went very well, you can go for a strong negotiation. However, if the inteviews were okayish, you can push for a bit more. The reason is that the initial offer would mostly be a lower offer (than they are willing to pay).

I've seen that most people (myself included) fail in the above two questions itself. We eagerly answer the above two questions and thus expose the cards in our hand.

Having stated all these, you've got an offer. Now what do you negotiate on? This would vary:

Startups

For startups, you'd want to push on the base. Remember, stocks mean nothing till they are public. Also, in the present bull market, most of the stocks would be overvalued. So even if the company does go IPO, there's a high chance that the stocks would dip in some time (see for instance, Nutanix, Paytm and Zomato).

So ESOPs do not carry value till public. You'd have to believe whatever price the HR is quoting, and there would be no public documents for referral. Push for higher base, and if required, for a higher role.

Public Companies (Product based)

Since there are internal slabs and salary ranges, it would be very difficult to push on the base. You'd need to do a bit of research to know if you've gotten a strong base or there's scope for more.

However, you can push a lot on the equity front (stocks). Since these companies are publicly traded, equity is as good as cash. So you can comfortably settle for stocks as well.

Getting the initial job offer

So you've got the initial offer (be it startup or public). Mostly, it'd be a conversation on phone. Try to sound neutral (neither happy nor sad), and ask for some time to go over the offer. This will give you time to consider all options and where you can negotiate.

Next, REPLY USING AN EMAIL. If not, jot down all your points before calling. Reason being, you'll be able to clearly articulate your case.

Competing job offers

You'd see, I haven't yet involved competing job offers. This is because a competing offer does the same thing -- sets an expected number in the mind of the company. So use this AS A LAST RESORT/ IN THE LAST STEP.

Go for all the negotiations without disclosing any competing offer that you have. So two things can happen:

  • Either you get a better offer
  • You get a worse offer (than the competing one). As a last resort now, disclose your competing offer (orally, I don't think sharing the offer is good ethically). If the company persists (which I don't think they should), you can go for a screen share and show your offer (that's agin prone to screenshots, but well, what else can we do?). Mostly you would get some buffer over the current offer, and then you can decide what to do.

Closing Statements

Remember, recruiters are not your enemy (and I'm not a recruiter). Recruiters main job is to hire maximum talent for the company in the minimum cost possible. So, NEVER BE IMPOLITE. No matter how strong you want to negotiate or how lowball the offer is, NEVER BE RUDE. You can state your disappointment if it is a lowball offer and/or you've wasted your time in the interviews, but there are polite ways to do that.

Let me know in the comments if there's anything more you'd like to know, and if I'd try my best to answer.

Also, people visit the Compensation section a lot more than General Discussion when they have an offer. So I'm adding this post in Compensation section rather than on General Discussion.

PS: I am a regular on Leetcode, and recently I've seen a lot of toxic behavior. People are trying to either propagate their beliefs (whether to join startup or companies) or ranting on companies they didn't get an offer from, without even paying attention to the offer or what the candidate's actual wish is. This post is an effort to try and establish a culture where we help each other.

PPS: Since there were multiple queries related to region, I'm from India (proudly so :) ). And yes, it feels like it's difficult in India to avoid such questions.

Why I am asking to refrain from telling CTC is as follows:

My Experience

I was looking for a switch, and a recruiter reached out to me (this recruiter did not directly work in the company, but worked in a recruiting company which was outsourced for hiring). She asked me for my CTC (I was up for a promotion, so I told her my numbers and that I'll be back with the exact numbers after my promotion).
I got a decent 30% hike in my promotion, and I informed her the same. She used that as a tactic for negotiation (she was offering me just 10% over my new salary, saying that I had already gotten a 30% raise). I was desperately looking out for a job, but thankfully, I passed on the offer. I got a decent 70% hike (90% if you include joining bonus) when I switched about a couple of months later (I had not shared my compensation details this time).

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