EXACTLY How To Negotiate Your Salary: Watch and Learn
Summary
TLDRThe 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
♟️ 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.
💼 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.
📈 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.
Mindmap
Keywords
💡Salary Negotiation
💡CTC (Cost to Company)
💡ESOPs (Employee Stock Ownership Plans)
💡In-Hand Salary
💡Startups
💡Workload
💡KPI (Key Performance Indicators)
💡Performance Bonus
💡Appraisal
💡Compensation Structure
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
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