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Business News/ Mint-lounge / It’s not always about the money

It’s not always about the money

It’s not always about the money

Clarity: Before accepting or rejecting an offer, think about the trade-offs like stability and compensation.Premium

Clarity: Before accepting or rejecting an offer, think about the trade-offs like stability and compensation.

On the phone is an old friend, a consumer company professional, based overseas and eager to return to India. After much deliberation, he has accepted an offer from a reputed professional services firm that is eager to hire him in their consulting practice. After many iterations on role and compensation, they shook hands. Then, the formal written break-up of the offer arrived and all hell broke loose.

Clarity: Before accepting or rejecting an offer, think about the trade-offs like stability and compensation.

Ah, the perils of not using a headhunter.

To start with, how do you assess your value in the market place? This is harder than it might seem, particularly if you are moving industry and country. Eventually, you are worth what someone is willing to pay you, and this differs by market, industry, scale and employer. Most importantly, it depends on current supply and demand conditions for your skill set, your experience level in the industry and timing—when you happen to be considering the opportunity. A more practical starting point may be to research how the desirable job on offer is priced; suss out compensation levels in that country, industry, the specific company—and its competitors—at a level above and below the role you are considering.

Level aside, compensation structures also vary considerably. For fixed pay, while corporate India has largely moved to the CTC concept, some tax breaks do still exist. Companies also have different policies or limits for perquisites. So, ask if the car has a tax break? If it is included in the CTC or over and above? Does the company do housing leases? What is the limit on the lease? Is the interest taken out of the CTC? At what rate? What about club memberships? Professional membership fees? Relocation expenses?

Also Read |Sonal Agrawal’s earlier articles

Some industries, particularly banking and professional services, are heavily bonus driven. Bonus or wealth-creation structures can be complex and opaque. For example, in professional service partnerships, the overall take-home is usually derived through a complex formula that involves a partner’s individual billings, the cross-sell he generates, profitability of the firm, tenure of the partner and the number of units he has—and then some. In private equity-funded companies, it may be lower cash, no perquisites and higher equity upsides. If there is Esop (employee stock ownership plan), grant schemes and tax implications differ considerably. And then, there is the carry structure in private equity firms. It is well worth researching the bonus philosophy of the company —quantum, formula, criteria and benchmark amounts previously paid.

Additionally, consider that if you are moving country mid-fiscal, double-taxation incidence or loss of retirement benefits earned in the current country may occur. Think about purchasing power parity. Also, there may be restrictions on stocks you can trade, or on spouse’s earning capacity. Will you be allowed to continue your non-executive board memberships? Are there restrictive covenants in your contract? Are these standard practice?

Your negotiation ability will depend on your need for the job, the market conditions, the other options you have, the value of your experience and what you bring to the table and how many other qualified candidates are in the fray. Negotiate by all means; ask for more if you think it’s justified, but keep in mind, you won’t win every round or every point. Recognize that there are limitations on what a company can or wants to offer. Remember not to take the negotiation losses or wins personally —companies do want the best deal, but they also want motivated employees who are not constantly looking outside for a raise. Do take a firm line, but above all, be graceful.

When asked for your existing compensation details, make sure you include all elements and keep supporting documents at hand—it’s frustrating when a candidate brings up that club membership he forgot about, after the compensation was approved by the board. When you have a mutually acceptable verbal offer, do ask for the break-up of the offer in writing, as well as the compensation and benefits policy. Take time to read the small print and come back with a comprehensive list of clarifications, at one go. Endless rounds of minute negotiations are draining for every one involved.

Take into account that in India, the risk of entering at a lower base may be less detrimental than it may otherwise be, given the practice of annual increments. Make sure you have accurately calculated take-home pay, estimated regional differences in costs of housing and schooling, etc. Get professional legal and tax advice, if necessary.

Before accepting or rejecting an offer, think carefully about the trade-offs—compensation, stability, risk-reward, reputation, timing and country risk—and make your peace with them before you sign up. As is increasingly obvious, the colour of the money is important. Do consider the longer view—this is a marathon, not a sprint—and sense when you are nickel-and-diming. Walk through a three-five-year cash projection. Be reasonable and flexible—your own research and a good adviser will make sure you don’t get taken for a ride. And having accepted an offer in writing, do treat it like a formal engagement—it would now be appropriate to stop playing the field and terminate other employment conversations.

Given that the horse had already bolted in his case, I advised my friend to go back and admit that there had been crossed wires about his original CTC and leave it to the firm to accommodate his requests. He was made a modified offer, which he accepted with good grace.

Eventually, like in a marriage, perhaps both sides need to feel that they got a better deal than they deserved. It’s not always just about the money, honey.

Sonal Agrawal is chief executive, Accord Group, an executive search firm.

Write to Sonal at

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Published: 23 Oct 2011, 08:24 PM IST
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