How to Negotiate Salary with Candidates During Interviews

Salary negotiation, is not just a discussion—it’s an opportunity to establish trust and ensure mutual alignment. For Indian companies, where talent retention is as critical as talent acquisition, effective salary negotiation can lead to long-term employee satisfaction.

This article explores strategies to navigate salary discussions during interviews while ensuring a fair outcome for both parties.

‍

Why Salary Negotiation Matters

Salary negotiation is more than agreeing on a number. It reflects:

• Fair Market Value: A competitive salary ensures you attract and retain top talent.
• Employee Satisfaction: Fair compensation fosters motivation and loyalty.
• Company Brand: Transparent and respectful negotiations enhance employer branding.

‍

Preparation Before Negotiation

1. Understand the Market Standards

Research the average salaries for the role in your industry and location. Websites like Naukri, Glassdoor, and Payscale provide benchmarks tailored to the Indian market.

Example: For a software engineer in Bengaluru, the average salary might range from ₹8-15 lakhs per annum, depending on experience.

2. Know Your Budget

Determine the upper and lower limits for the role. Be clear on how much flexibility you have for exceptional candidates.

3. Assess the Candidate’s Expectations

Many candidates share their current salary and expectations during the application process. Use this as a reference point but verify the validity during the interview.

4. Highlight the Perks Beyond Salary

In India, candidates often value perks like flexible work hours, health insurance, professional development opportunities, and ESOPs. Be prepared to emphasize these benefits during discussions.

‍

Strategies for Effective Salary Negotiation

1. Start the Conversation at the Right Time

Discuss salary only after understanding the candidate’s skills, experience, and fit for the role. Early discussions may divert focus from evaluating the candidate’s capabilities.

2. Be Transparent and Respectful

Communicate your company’s compensation philosophy clearly. Candidates value honesty, especially in India’s rapidly evolving job market, where salary discrepancies often lead to mistrust.

3. Ask, Don’t Assume

Instead of guessing a candidate’s expectations, ask open-ended questions like:

• “What are your compensation expectations for this role?”
• “What other factors are important to you besides salary?”

This approach not only avoids miscommunication but also shows that you value their perspective.

4. Discuss Total Compensation

Break down the offer into fixed salary, variable pay, bonuses, and non-monetary benefits. For example:

• Fixed Salary: ₹10,00,000 per annum
• Performance Bonus: ₹1,50,000
• Health Insurance, Gym Membership, Learning Programs, etc.

5. Justify Your Offer

If your offer is below the candidate’s expectations, provide context. For instance, emphasize the career growth opportunities, learning environment, or other benefits.

‍

Also Read: What are the top metrics that interview intelligence can impact for your organization?

‍

Tackling Common Scenarios in Indian Context

Scenario 1: The Candidate Demands a Significantly Higher Salary

Solution:

• Acknowledge their request: “I understand you’re seeking ₹15 lakhs per annum.”
• Explain your budget: “For this role, our budget is ₹12-14 lakhs, but we offer extensive learning opportunities and ESOPs that can enhance long-term value.”
• Explore middle ground: “Can we discuss a performance-based increment after six months?”

Scenario 2: The Candidate is Earning a Lower Salary than Market Standards

Solution:

• Offer a fair hike: In India, a 30-40% hike is common during job switches.
• Avoid lowballing: Candidates aware of their worth may reject unfair offers outright.

Scenario 3: The Candidate is Relocating to a Metro City

Solution:

• Highlight cost-of-living adjustments: Candidates moving from Tier-2 cities to metros like Mumbai or Delhi often seek higher compensation to manage expenses.

Scenario 4: The Candidate is Hesitant to Share Their Expectations

Solution:

• Provide a range: “For this role, we’re looking at ₹10-13 lakhs. Does that align with your expectations?”
• Build trust: Ensure candidates feel safe sharing their expectations without fear of judgment.

‍

Dos and Don’ts of Salary Negotiation

Dos

• Research thoroughly: Be aware of market trends and industry standards.
• Practice empathy: Understand the candidate’s perspective and needs.
• Document offers: Clearly outline the offer in writing for transparency.
• Stay flexible: Exceptional candidates may warrant a re-evaluation of budgets.

Don’ts

• Don’t lowball: It damages trust and your employer brand.
• Don’t rush: Give candidates time to consider the offer.
• Don’t overlook perks: Highlight non-monetary benefits that add value.

‍

Post-Negotiation Steps

1. Confirm the Agreement
   Once you reach a consensus, reiterate the offer verbally and in writing to avoid misunderstandings.
2. Be Open to Counteroffers
   Candidates may come back with counteroffers. Evaluate them based on your budget and the role’s value.
3. Build a Long-Term Relationship
   Salary negotiations set the tone for the candidate’s relationship with your company. A respectful process can foster long-term loyalty.

‍

Why Salary Negotiation is Crucial for Indian Companies

India’s job market is unique, with regional disparities, high competition for talent in metros, and evolving employee priorities post-pandemic. Transparent and empathetic salary negotiations not only attract the best talent but also enhance your company’s reputation in a highly networked job market.

For instance, startups in Bengaluru and Gurugram often face stiff competition from MNCs. In such cases, flexible work policies, fast-tracked career growth, and ESOPs can be strong negotiation tools.

‍

Conclusion

Salary negotiation is both an art and a science. By understanding market trends, aligning expectations, and emphasizing value beyond pay, Indian companies can navigate these discussions effectively. Remember, the goal isn’t just to fill a position—it’s to create a partnership that benefits both the employee and the organization in the long run.

‍