EXACTLY How To Negotiate Your Salary: Watch and Learn

Summary

The video captures a negotiation between a recruiter and a candidate for a product analyst role at a startup. The recruiter offers a 25 LPA package, including salary, bonuses, and ESOPs, while trying to maintain a budget-friendly structure. The candidate negotiates for a better balance between cash salary and ESOPs, emphasizing his financial stability. After back-and-forth discussions, both parties reach an agreement, highlighting the challenges of salary negotiation, company constraints, and the importance of knowing one's value. The video also emphasizes wealth creation and financial management through platforms like Zerodha Varsity.

Takeaways

• 🤑 Salary negotiation is compared to a chess match where both sides aim to achieve their goals.
• 🎯 The recruiter’s goal is to stick to the company’s budget while the candidate tries to maximize their offer.
• 📝 A good negotiation ends in a stalemate where both parties feel satisfied with the outcome.
• 💼 The recruiter’s company offers a CTC of 25 LPA, which includes ESOPs, bonuses, and in-hand salary, but the candidate questions the ESOP-heavy structure.
• 📊 The candidate is concerned about the long-term financial benefit of ESOPs and seeks a balance between in-hand salary and equity.
• 📅 The recruiter reveals that part of the joining bonus will only be given after a year and explains the vesting period for ESOPs.
• 💡 The candidate analyzes the structure of the offer and considers whether the long-term rewards are worth the initial lower salary.
• 💬 The recruiter tries to justify the offer by discussing the potential growth of ESOPs and the possibility of becoming a product manager in six months.
• 💰 The candidate negotiates for a better balance between ESOPs and salary but is met with resistance due to budget constraints.
• ✅ In the end, the candidate decides to accept the offer after weighing the options, recognizing the growth potential and trusting the opportunity.

Q & A

What is the recruiter's main responsibility during salary negotiations?

The recruiter's main responsibility is to stick to the budget provided by the company while hiring talent, aiming for a win-win negotiation.

What is the candidate's initial approach to salary negotiation?

The candidate does not state a specific number and instead asks for full disclosure from the company's side to check if they are in the same salary range.

How does the recruiter try to frame the offer to make it more attractive?

The recruiter includes components like joining bonuses, performance bonuses, and ESOPs (Employee Stock Ownership Plans) to make the total CTC seem higher, despite the immediate monthly salary being lower.

What is the candidate's reaction to the initial CTC breakdown of 25 LPA?

The candidate asks for a breakdown of the CTC to clarify the monthly in-hand salary, which reveals that the in-hand salary is 10 LPA, significantly lower than the 25 LPA total.

What negotiation strategy does the candidate employ after learning about the CTC breakdown?

The candidate asks if the ESOP component can be reduced in favor of a higher in-hand salary, seeking a better balance between ESOPs and the monthly salary.

Why is the recruiter reluctant to increase the monthly salary in favor of reducing ESOPs?

The recruiter explains that keeping the monthly salary low helps the company stay lean and encourages early-stage team members to stay longer by offering ESOPs as an incentive.

How does the recruiter try to compromise after the candidate asks for a better balance between ESOPs and salary?

The recruiter offers to keep the salary at 12 LPA for the first six months, with the possibility of increasing it to 18 LPA if the candidate performs well and becomes a product manager.

What concerns does the candidate raise about the ESOPs offered as part of the package?

The candidate is concerned that the ESOPs may not materialize and that there is no guarantee they will benefit from them, which is why they prefer a higher salary upfront.

What is the candidate's decision regarding the offer after the negotiations?

The candidate decides to accept the offer, reasoning that it provides a balance of earning, learning, and opportunities for career advancement.

What does the recruiter reveal about having a backup plan during the negotiation process?

The recruiter mentions that they have extended an offer to another candidate as a backup in case the current candidate does not accept the offer.

Outlines

00:00

♟️ Salary Negotiation Tactics in a Startup

The HR discusses salary negotiation strategies, likening it to a chess match where both sides aim to outplay the other. The candidate is applying for a product analyst position with a startup, where the HR must adhere to a 12 LPA budget, despite the candidate currently earning 6.5 LPA. The candidate expects transparency, and the HR acknowledges that both sides aim for a favorable outcome, setting up a negotiation over responsibilities and compensation.

05:02

💼 Offer Breakdown and Negotiation Strategies

The HR presents a compensation package of 25 LPA, including bonuses and ESOPs. However, the in-hand salary is significantly lower at 10 LPA. The candidate carefully examines the offer, focusing on the detailed breakdown of salary components such as bonuses and stock options. The HR uses this structured breakdown to maintain the monthly cost low for the company, while the candidate navigates the negotiation to secure a better deal upfront, reflecting his awareness of the workload and expectations at a startup.

10:03

📈 ESOPs, Appraisals, and Long-term Incentives

The candidate expresses concerns about the long vesting period for the ESOPs and inquires about the potential appraisal structure. The HR guarantees a 15% yearly appraisal, which the candidate finds too low given the risks and demands of the position. The conversation shifts to balancing short-term financial needs and long-term incentives, with the candidate aiming to convert the offer into a more immediate payout, reflecting the delicate balance of risk and reward in early-stage startups.

Keywords

💡Salary Negotiation

Salary negotiation refers to the process where a candidate and the employer discuss and settle on a fair compensation package. In the script, it is portrayed as a strategic conversation, almost like a 'chess match,' where both sides are trying to balance their needs: the candidate wants to maximize their earnings, while the employer must stick to a budget.

💡CTC (Cost to Company)

CTC stands for 'Cost to Company,' which represents the total salary package a company offers an employee, including basic salary, bonuses, and benefits. In the video, the recruiter offers a CTC of 25 LPA, which includes components like joining bonus, performance bonus, and ESOPs (Employee Stock Ownership Plans). However, the candidate is concerned about the actual 'in-hand' monthly salary, which is less than the total CTC.

💡ESOPs (Employee Stock Ownership Plans)

ESOPs are shares or stock options that a company offers to employees as part of their compensation, typically with a vesting period. In the script, ESOPs worth 12 lakhs are offered to the candidate, but they are vested over a four-year period. The candidate is skeptical because these stocks only materialize value if the company goes public or reaches certain financial milestones.

💡In-Hand Salary

In-hand salary refers to the actual amount an employee receives each month after all deductions like taxes and provident fund contributions. The candidate is particularly focused on this, realizing that although the CTC is 25 LPA, the in-hand salary is only around 10 lakhs per annum, significantly lower than the headline figure.

💡Startups

A startup is a newly established business that is typically in the early stages of its operations. The recruiter emphasizes that working in a startup requires handling multiple responsibilities and working longer hours, including weekends. This context is crucial in the candidate's decision-making process, as the role offers potential for growth but demands significant personal and professional investment.

💡Workload

Workload refers to the amount of work an employee is expected to handle. In this script, the recruiter openly mentions the increased workload that comes with the startup environment, including ownership of multiple tasks and the expectation to work beyond regular hours. This increased responsibility is used to justify the compensation offer.

💡KPI (Key Performance Indicators)

KPIs are measurable values that demonstrate how effectively an employee is achieving key business objectives. The candidate insists on understanding the KPIs that will define 'all going well' in their role, especially since the future salary increments are tied to performance. This request reflects the importance of clear metrics in ensuring fair compensation.

💡Performance Bonus

A performance bonus is additional compensation awarded to employees based on their achievement of specific targets or performance metrics. In the script, the candidate is offered a performance bonus of 1-2 lakhs depending on the achievement of set goals. The uncertainty of receiving the full bonus becomes a concern for the candidate.

💡Appraisal

An appraisal is the evaluation of an employee's performance, often leading to a salary increase. The candidate discusses the possibility of a 15% appraisal, which is guaranteed, but expresses concerns about the long-term growth potential, given the relatively modest increase compared to other forms of compensation like ESOPs.

💡Compensation Structure

The compensation structure refers to the various components that make up an employee's total earnings, including salary, bonuses, and other benefits. In the script, the recruiter and candidate discuss the breakdown of the 25 LPA CTC, highlighting how much is made up of immediate salary versus deferred components like ESOPs and performance bonuses. The candidate is concerned about the balance between these elements.

Highlights

A good negotiation is like a chess match where both the candidate and HR try to outplay each other.

The recruiter’s job is to stick to the company's budget while the candidate aims to maximize their return.

The candidate, applying for a product analyst role, earns 6.5 LPA, while the company’s budget is 12 LPA.

The company offers a growth opportunity to become a product manager within 6 months, with an expectation of increased workload.

The recruiter offers a CTC of 25 LPA, but includes ESOPs, joining bonus, and performance bonus to keep the monthly cost low.

The candidate strategically asks for a detailed breakdown of the CTC, indicating strong negotiation tactics.

The offer includes ESOPs worth 12 lakhs, but the candidate is cautious as ESOPs are not guaranteed unless the company goes public.

The candidate expresses concern over the high ESOP component and suggests a better balance with more in-hand salary.

The recruiter aims to keep the monthly cost low and incentivize the candidate to stay long-term through ESOPs.

The recruiter emphasizes that the company is early-stage and wants team members to grow with the company.

The candidate attempts to negotiate further, requesting an increased salary of 14 LPA but is met with a firm response from the recruiter.

The final offer is 12 LPA with the possibility of a raise to 18 LPA or 15 LPA based on performance after 6 months.

The candidate considers the offer carefully, focusing on gaining trust and clarity on KPIs and responsibilities.

Ultimately, the candidate accepts the offer, recognizing that the job offers opportunities to earn, learn, and progress.

The candidate plans to use the offer letter as leverage to negotiate a better offer with their current or another company.

Transcripts

[Music]

[Music]

so let's discuss your salary

expectations a good negotiation is a

win-win for both the parties involved

but it's also like a chess match where

both the candidate and the HR are trying

to outplay the other as a recruiter my

job is to stick to the budget provided

by the company while hiring the talent

and the candidate would obviously want

to maximize his returns from this offer

a good negotiation ends in a stalemate

the guy I'm interviewing right now he's

applying to be a product analyst with

our startup his current salary is 6.5

LPA and the budget given to me is 12 LPA

the found Rohit was looking for someone

to lead the product team and unmo seemed

like the perfect fit Rohit was very

insistent on getting him on board so I

might have to spend a little extra time

and money to get him but let's see what

number he's thinking sure I do have a

number in mind but since you're a

startup and I may be expected to perform

multiple responsibilities I was hoping

to get a full disclosure from your end

first to you know like check if we're in

the same range

h of course I wasn't going to say my

number number first it makes me look

weak and the weaker you seem the Lesser

negotiating power you

hold plus I've checked with their other

employees and I know the pay parity

within the company they're paying around

10 to 12 lakhs perom to product analysts

here so I expect to hear a similar

number from her as well okay so the

expectations will be the same as what

Rohit told you in the previous round but

of course you'll be expected to handle

slightly more than the average 95

welcome to a startup I guess so like you

must have been told in the previous

rounds as well the plan is to equip you

to handle product end to end you'll have

to take full ownership because the

outcome will depend on you and if

everything goes right you'll be our

product manager in the next 6 months of

course we're still building out our team

you will be the first to join and we'll

build a team with you in the center

typically we work 10: to 7: but of

course there are days where we all

stretch beyond our work schedule and

Saturdays yes we work Saturdays where a

startup we can't not afford to

fair whatever she said just now was not

new information I already anticipate an

increased workload here but it's just

good to have it become part of the

conversation early on especially cuz

then I could play to the context of

since you expect more work from me I

expect more money from you so so I'm

waiting to hear your

range okay I can offer you a CTC of 25

LPA the CTC I've shared includes many

different components like joining bonus

performance bonus and majorly esops he

won't receive them immediately or every

year the bonuses are just onetime cost

to the company and esops are mostly

paper till they fructify there's nothing

wrong or unethical about this and it's a

standard practice but it makes the

candidate more excited and proud about

the compensation they would be drawing

they can say their CTC is 25 lakhs among

friends and relatives and feel good

about themselves most won't ask to check

the breakup once they hear such a high

number and I can keep the monthly cost

down but I'm sure he ask for the

breakdown and what's the breakup of

[Music]

this like what's the monthly in hand so

12 lakhs we'll be giving you in esops m

1 lakh would be your joining bonus okay

and 2 lakhs would be your performance

bonus got it and the rest would be your

inhan salary every month H so 10 lakh

perim essentially not 25 L per

an yes that's more than a 50% hike from

your current monthly Sal and the esops

alone can build you so much wealth

they're worth 12 lakhs today but they'll

be worth crores in a few

years there are three types of

negotiators collaborative who try to

create a win-win situation for both

sides competitive who try to maximize

only their outcome and accommodating who

put the other side's concerns first I'm

usually collaborative but depending on

the candidate I sometimes have to switch

to one of the other methods what ano

says next would tell me his negotiating

style can you tell me what is the

breakup again collaborative so joining

bonus of 1 L mhm that I receive when

25,000 immediately and the rest once you

complete a year here joining bonus a

year after I join industry

practice okay and the performance bonus

varies from 10 to 20% so you will

definitely get 1 lakh and you can go up

to 2 lakhs got it any other condition on

this bonus or you're guaranteed to

receive a lak okay and esops worth 12

lakhs uh what is the vesting period and

buyback options the stocks will be

wested over four years in an increasing

manner so first year 10% then 20 then 30

40% in the last year you can choose to

encash the esops anytime when we go

public mhm if we go

public it's okay to take time to do this

during a negotiation it's not rude and

it is very necessary for you to know EX

exactly what you're signing up for and

exactly how much you're getting each

month andol we want you here for the

long run and grow this company and if

you do so you should receive the

dividends of the growth story

competitive no that is fair and I also

want to be here long-term it's just that

my salary structured in a way that it's

still 10 lakhs perom um what can I

expect my yearly appraisal to be you're

guaranteed a 15% appraisal and we've

mentioned a clause in the agreement

where if your performance exceeds our

expectations then we will reward you

fairly the yearly growth seems too less

if I keep esops out of the picture and

take minimum appraisal and

bonus I'm still pretty early in my

career I have both an appetite for risk

and a hunger to explore different

opportunities but this offer seems like

it will tie me down with the company for

a very long period an offer that

presents its rewards on the condition

that I stay for multiple years might

become a negative incentive for me to

stay here Beyond ideal any job should

either help you learn earn or upt to a

better position I know I learn a lot and

I'll earn decent so I need to make this

work for me I need to convert this offer

such that it allows me to encash most of

it upfront and if it makes sense to

continue here long term I can always

negotiate a new

contract could you maybe reduce the ESOP

component a bit and balance that with my

enhanced salary you don't want the esops

I do but I just want a better balance

between my esops and my enhan sality

right now it's like 50% of my CTC

Okay the reason I present such a breakup

of salary is for two reasons number one

it keeps the monthly cost in check for

the company I'm only giving a monthly

salary and the rest of the competents

are either just onetime payments or on

paper for some time number two the

larger number sounds lucrative to most

candidates and since it's to be released

gradually it incentivizes them to stay

for longer but now since he's asking me

to balance this better and I've already

set 25 LPA I might have to turn out a

higher salary and go over budget

what do you think is a better balance

I'm thinking 6 lakhs as esops and the

rest can remain as is which means 16

lakhs per that won't make sense for us I

need to keep this company lean and

monthly cost to a minimum we're looking

for early stage team members like I told

you not just employees and for that it's

important that we entrust you with the

growth of the company for that you need

to be incentivized to stay here for

longer that's fair and as much as I want

to stay here and ensure that outcome for

me and for you there's never really a

guarantee that the esops will

materialize I mean I want it to happen

but what if it doesn't I also have to

look after my finances right salary

negotiations are tricky one misstep and

you can end up with losses of lacks and

crores over the course of multiple years

those losses do compound drastically but

what can hurt even more in the long run

is not knowing how to manage the money

you make wealth creation is really a

two-step process it's important that you

try to negotiate as high an offer as you

can but it's equally important to know

how to manage that money and most of

them don't know how to do the second

part they listen to financial gurus

online and invest into one stock that

eats away all their savings or they

would never bother to learn where to

invest their money so that their money

can make money for them while they sleep

that is where zeroda Varsity comes in

Varsity offers free courses that help

you manage your money better it's a free

to use platform with weekly live classes

where experts teach you on how how to

grow and build long-term wealth I urge

you all to check out the link in the

description join a free class and start

your journey to managing your money

better your financial condition depends

on the company's Financial condition and

let me tell you something the health of

the company's finances is not something

you have to worry about we're raising

our next round very shortly so that's

even better right like if the company is

poised to make money then the teammates

can be compensated better plus you know

my role is going to be a revenue Center

not like a backend support function

until the time we are aita positive it

can get tricky for us we need to have a

Runway this is getting tough she

definitely won't go over her budget 12

lakhs maybe

13 I understand you want to keep the

monthly cost

low can we look at an incentive

structure where I get the get a

percentage of the no we can't do that

it's not a good look for the company on

moal and we want to maintain internal

pay parity I can't be treating you

differently definitely won't go over the

budget 12 LS it is let's look at it this

way for the first for 6 months we keep

your pay at 12 LPA this gives us enough

time to see if you can lead the team

effectively or not then if all goes well

you can become product manager and we

bump your pay to 18 LPA everything else

Remains the Same but if you're just

decent we take your pay to 15 LPA and

the next appraisal will happen a year

after that point Fair tempting but I've

learned never to accept before having a

full disclosure on the kpis

responsibilities and terms cuz a lot of

it won't ever be written on the contract

it'll just be a verbal agreement

moreover for me at the moment it is more

more about gaining trust than salary how

would you define all going well what

would the kpis and benchmarks be for the

next 6 months too soon to say that but

you'll know as we know we're still in

the early stages where we've defined a

path but we could have to Pivot and the

kpis could change

accordingly 12 lakhs it is going to be

but let me just give her one quick win

can we still look at 14 lakhs perom when

I join 12 LPA unmo I'm already

stretching

it should I accept the offer should I

ask for some time to consider this

should I negotiate a little more should

I walk

away H earn learn up turn if you get

just one of the three in a job it is a

compromise two is the goal three is

fantastic here I can get all three so no

point negotiating more yes let's do it

great I'll mail you the offer letter in

a

while and PA was a bit sneaky with his

negotiation I got the offer that I

wanted more or less anyways I just

wanted the offer letter I have however

extended an offer to one more candidate

before him is backup I'll use this offer

letter to get a hike in my current

company or maybe I'll leverage it with

some other company I'll wait for her to

reply first and then send the offer to

him it's just good to have a backup

while negotiating it's just good to have

a offer letter in hand while you're

negotiating

um what can I expect my yearly appraisal

to

be whatever you want 200% we have we

have it on camera