True Story: Compensation Negotiation at an MNC R&D Center

negotiations

The Candidate

My friend has a strong technical background. He complete his B.Tech. from an NIT, worked for 7 years in different IT services firms, spent 3 years in the US, and then returned to do his MBA at an IIM. Being a savvy person, he opted for the 1 year PGP program for senior executives, where he got in because of his engineering undergrad, his overseas experience and good GMAT scores. Post MBA, he joined a firm in Hyderabad as a product manager.

The Interview and Subsequent Discussion

In 2008, he was working in an offshore enterprise product management role in a large R&D center focusing on enterprise IT. Around 2008, he was approached by another enterprise software firm, that was looking to hire senior product managers for their center in Bangalore. [They are big on telecom, and he has a strong background in that domain.] He went through multiple rounds of interviews (one of them was an overseas phone interview) and the HR indicated that they were ready to roll out an offer.

The HR manager asked about his current compensation and breakup. At that time, he used to get 18 fixed + 2.5 variable + 1.5 signing bonus + 1.5 worth of stock every year for a total package of Rs. 23.5 lakhs per annum. They asked about his salary expectation, he indicated that he was expecting a cash package of Rs. 30 lakhs and other benefits on top.

Obviously, the HR team did not wish to give a 30% increment to him, so they offered 25 cash + 2 lakhs signing bonus. Now, this happened during the last IT boom in Bangalore, and a sign-on bonus was commonplace. He refused to budge from his demand. After 2 conversations, they finally offered him 27 lakhs and a 2 lakhs signing bonus (apparently, stocks were only offered on performance after joining). He refused and continued with his current firm.

In early 2009, he was again approached by the same firm for another product management role. By this time, he had completed a year in his current firm, and gotten a 15% salary increment due to his strong performance. He went through 2 rounds of interviews and was then offered a salary of 35 lakhs but no signing bonus. He accepted the offer and happily joined the firm.

What this means for PM candidates

Several things become very obvious after learning about this. First, if you are a strong candidate, have a good background and a stable job, it is easy to demand your own salary. Second, if you are not fully satisfied with the compensation offered, then you can always say no without any risk. Third, he never told his existing firm about the first offer he got, thereby ensuring that he was not sidelined during performance evaluation. So the complete discussion could be held again without putting his existing job at risk.

One last thing to note, the new firm had asked for a reference from his earlier managers. He offered a fellow manager as a contact and not his direct supervisor to avoid any problems in the reference check after he had resigned and before the offer was finalized.

Note: salary figures are accurate, as are the technology domains

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