No research, no proper salary negotiation

PHOTO | FILE A jobseeker being interviewed.

What you need to know:

  • Salary negotiation is important. Many people, especially first entrants into employment, ignore this fact.
  • Essentially, an organisation will factor in the cost of living and performance in making salary decisions.
  • If you have already taken up a job or you have been employed for some time and are unhappy with the compensation and benefits, you may begin negotiating for better terms by stating the obvious, such as the current cost of living, the inflation rate, and the increased responsibilities you may have assumed at work.

I remember my first salary. In today’s economy, you would not even pay rent with the entire amount.

I did not negotiate my salary. Rather, I went along with whatever my employer decided. The organisation was a startup and had not broken even yet. Still, it could have afforded to pay me better if only I had negotiated.

Salary negotiation is important. Many people, especially first entrants into employment, ignore this fact. They simply take the first package a company offers, assuming that a higher salary will come once they have proven themselves. This will only work if you are indispensable and probably if you threaten to leave.

Usually, the salary you accept at entry might be reviewed after a year or two. In organisations that do not have a policy for annual salary review, it could take ages for an increment to come.

Thus, in negotiating a salary, it is important to establish the frequency of the reward system in the organisation you are seeking to join. You must also factor in the cost of living and the rate at which you assume it will increase. Consider your increased performance as well.

COST OF LIVING

Essentially, an organisation will factor in the cost of living and performance in making salary decisions.

This means that ordinarily, a salary offer should be pegged on perceived performance of the recruit and the cost of living. In case of a raise, it should be pegged on actual performance as well as the cost of living.

Typically, therefore, and in stable economies, a salary raise would be higher than the rate of inflation if both cost of living and performance are considered.

To ensure that your salary offer is reasonable, it is first important to know how much the market is paying. Understand how the organisation is run and its operations.

Ask about the salary policies and when the raises are effected. Does the organisation reward performance and is there an opportunity for a salary increase before the set time? It is also good to ask about bonuses and other incentives.

Always ask these questions at the end of the overall interview. This should only be done after you have stressed your value. Asking the relevant questions will help you avoid taking up a job that you will be uncomfortable with.

COMPENSATION AND BENEFITS

If you have already taken up a job or you have been employed for some time and are unhappy with the compensation and benefits, you may begin negotiating for better terms by stating the obvious, such as the current cost of living, the inflation rate, and the increased responsibilities you may have assumed at work.

The best weapon is always the performance reviews. If you have been performing well, that should help you demand what you want.

Still, research and planning is central. Always make your case with concrete examples and documentation of all the necessary factors, including market research.

Be alive to the fact that compensation is not only monetary, but also includes benefits such as medical insurance, house and travel allowances, among others.

Consider Jane, who earns Sh100,000 a month but gets no other benefits, and Kamau, who gets Sh70,000 a month as basic salary plus medical insurance for himself and his family, and house allowance in addition to an education allowance should he want to go back to school.

In real terms, Kamau’s package is more attractive than Jane’s.