Most of us have to work. So, what do we get in return? A PAY CHECK! But how do companies figure out how much our skills are worth?

Let's look at where companies get information about salaries. Obviously, you can't call your competitor and ask what they're paying their technicians or engineers. So, some bright folks established compensation-consulting firms. These companies are paid by other companies to "survey" their competitors and match salary data for the same job being performed. These standardized positions are called "benchmark jobs". Unique jobs could be paid whatever the company wants. Part of the challenge is to compare responsibility for responsibility, not job titles. An engineer at one firm may be performing similar, slightly similar, or completely different responsibilities for the same titled job at another firm. So, there is a lot of detailed research that has to take place before the consulting firm can compare apples to apples.

Reviews & Salary hikes
To help manage salary expense, more and more companies are going to a "focal point" review system. This differs from the "annual" review system that was in place for many years. The annual system said that you would get your performance evaluation, and any related salary increase, on the day you hired into company. So, as a manager, you will have employee evaluations scattered throughout the year and part of your job is constantly figuring out how good each employee was over the past year and how much of a salary increase, if any, should be given. It was very hard to compare one employee against another because they were all in different stages of their performance cycle.

The focal point review says that all employee evaluations are given at the same time. That is, some date, say April 1 of each year, is the date all evaluations are due with related salary increases. This makes it easier to manage salary budgets because all the salary increases are managed to one date rather that scattered throughout the year.

This process is easier for them because they are looking at performance data for all of their employees at one time. Now they can assess performance of employees doing the same job over the same period of time, rather than scattered all over the year. This makes finance happier because it can predict and coordinate the budget increases and factor them into the new budget.

The amount given is a very subjective thing, usually controlled by your manager. The company establishes "guidelines" for the managers to follow. It may say, the top 20% are eligible for 6-10% increases, the middle 60% eligible for 3-5% increases and the bottom 20% eligible for 0-2% increases. So, depending on how you are perceived by your manager and how s/he sets up his/her rules for increases, you may get the bottom or top of the eligible range.

Some firms have an average pay program, supplemented by performance bonus programs. These bonus programs are tied to the objectives you are expected to accomplish over the next year. Others use stock options as a bonus.

Negotiating on Compensation
Tips on hitting the best Salary/Benefits Package:
The number one rule to remember in any job interview regarding salary or benefits is to avoid discussing money until the time is right. Premature discussions about money or benefits can be a real deal breaker. Besides, the more enthusiastic an employer becomes about you - the more likely he'll be willing to pay more. So learn how to avoid premature discussion of money.

Sometimes an interviewer will begin with a statement like this: "Ajay, before we get started, I need to know how much money you are looking for. I don't want to waste our time if it is totally out of the ball park." The principle to keep in mind here is that you do not have to answer the question!

For example, "Mr. Anil, frankly, I could talk more intelligently about my circumstances after I know a bit more about the job responsibilities and the growth that's possible in this position. Speaking of that, I noticed that you listed technical experience as one of the requirements for the job. Will this job have line-manufacturing responsibilities?

Or, Anil, I appreciate your being direct. I would not take your time if I did not have a fairly good idea of the range you would be willing to pay. If we can agree that my experience fits your needs, I doubt we will have a problem on compensation. Frankly, my concern is the basic question of whether your needs call for someone with my background. Incidentally, I've heard that you're entering a number of added markets with your new product. Is that where this job fits in?"

It is important to have your thoughts ready and use words you feel comfortable with. Before the interview, figure out how you would handle the situation in your own words. That way, your response will come quite naturally. One excellent way to pleasantly avoid being the first to mention a figure is to use the "U-turn technique."

Here's an example of the U-turn technique:
"For my part, I am most interested in finding a good situation in terms of challenge, growth possibilities and the people I am working with. So far, it seems that this position has it all. The company's commitment, the people and my role in the overall effort all have great appeal. And while the money is important, I'm not locked into a specific figure because these other considerations are important. Now that you have brought the subject up, though, what kind of range did you have in mind?"

Using this approach you remain gracious and friendly while avoiding a direct answer. You will often find that the employer replies by giving you a stated range. If viewer persists about how much you earned or want to earn, you have to exercise judgment. Here is one possible response: "I would rather avoid discussing my compensation until later on. Job content and challenge are most important to me, and I would like to talk money after I know you want me for the job. Is that agreeable to you?"

If all else fails, give a range which surrounds your best estimate of the upper end of what the job might pay.

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