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About

This blog is about navigating the appraisal season and salary negotiations, deciding the terms of the negotiation and coming out on the other side with the best “possible” outcome.

Pre-requisites

I don’t think there are any pre-requisites to understand this write-up as it deals with real life situations. While writing this post, I don’t think this knowledge might be “applicable” for a fresh graduate who is just entering the workforce, however, if you are one, keep reading. You might find it useful at some point ahead!

Setting up the premise

Appraisal seasons are a tense affair. Especially where I come from, even having a job is luxury while I’m writing this. It is all we strive for, having an income source which allows us to have a decent lifestyle, save some for the future and still be left over with something to splurge on our hobbies and entertainment. It becomes critical to come out of the negotiation with favorable outcomes or at least not lose completely.

At this point you might be pondering what makes me qualified to write this piece. To answer that, I have not worked in the industry for long (just above 6 years while writing this), but I have been at the negotiation tables 6 times, and every single time I’ve come out with what I’ve desired for or something even better. If you think that’s not enough, feel free to jump off.

Preparing for the main event

Deciding what you want

While going to the table, you need to be fully aware of what you want. This helps you build expectations and not get disappointed if things don’t go your way. I have a few questions outlined below to gauge this:

Do you need to switch jobs or stay at your current workplace?

Toxic workplaces are discussed everywhere, from coffee shops & gyms to your social media filled with corporate memes, and it is highly possible that yours is one. Do you like your team and coworkers, people who you share your mental & physical space with 8 to 10 hours on a daily basis? Do you like the work that you do? Are you progressing towards your long terms goals and getting the correct career path & growth? You might be overwhelmed with the bombardment of questions, but you have to think this through. After all, it might be another 1 or 2 full years before you get the next opportunity to be at the negotiation table.

How much more money do I need?

Of course you’d say “I want 12CrPA”, but we cannot say that out loud to the person in front🙂🙂. Let’s be reasonable. Now, for someone earning 1 lakh INR per month (before taxes, of course) or 12LPA and living in a Tier-1 city like Mumbai or Bengaluru, you might be left over with just 5-10k after all expenses and tax deductions and monthly savings. This amount is barely enough to sustain a decent lifestyle. An increment to 18LPA would give you another 30-35k extra after taxes and would allow you to increase your monthly savings, which includes your Mutual Fund or Equity investments, Recurring deposits etc., or even pursue a childhood dream purchase like a gaming console or a motorcycle, up to you. You also need to look at the percentage increase from your current compensation, a jump to 18LPA would amount to a staggering 50% increase, which is only possible if you are switching jobs. The most an existing workplace would be willing to give is 30-35% as per the market standards.

My suggestion is to determine 3 benchmark numbers:

  • My big celebration win number
  • My minimum win number
  • My not winning but not losing either number

The first term is slightly unrealistic number, where you’ve superseded your current compensation by a huge margin and anything above this number is a bonus. This number is what will give you the most happiness and ensure your productivity even after the appraisals until the next one! Considering the existing example of 12 LPA Current TC, the celebration number would be 20 LPA. That’s a near 67% increment!

The second number is your minimum expectation and you’ve to ensure that the negotiation stays above this number. For a 12LPA Current TC, I’d set this to 16 LPA, a just ~34% increment for a “Meets expectations” performer.

The third number is you determining backwards from the minimum win number of how far you are willing to accept your losses. An outcome below this number is your loss and should be the absolute trigger for your next move. I’d set this number to 15 LPA, a minimum fair 25% increment for a “Meets expectations” performer.

There’s a lot to ponder over in this specific question as it might prove to be the cornerstone of the entire negotiation. Before determining these numbers, also consider how the business has performed in terms of profitability and growth and what’s the existing norm for increments, how was your own performance over the evaluation period, how was your performance when compared with your peers, do you stand out in your team or vertical?

Do I want a promotion?

It’s time to come back to the work you are doing after looking at your wallet numbers. Have you been doing this long enough? Do you want a change and get promoted to higher up the order? If yes, what designation? Now’s the time go and read on the Internet about the job responsibilities of the role you desire for. Once you come back here after the reading, it’s time to determine whether you ACTUALLY want it? Or what I’m doing right now is better? Don’t feel inferior or get disappointed if you determine that you’d like to stay at the current position for some more time and would consider the promotion next cycle.

If you feel that you’d like to take the jump upwards, speak to your manager if you are on good terms with them or invite their peer to a lunch or coffee and talk it over with them. Ask them about the day-to-day responsibilities, and evaluate if it is something you’d like to do. Make sure you discuss compensation at sometime later in the conversation as not everyone is comfortable in talking about it. At this point in the conversation, you’d also have a gauge on whether the person in front is comfortable talking about it or not. Since this is a purely salary negotiation piece, I’d not like to sidetrack on to the various Software engineering career paths and pathways.

After you have answered these 3 questions, you have pretty much evaluated yourself and are now ready with your expectations. If you think the numbers don’t do justice or are too much, they probably might be. It is of utmost importance to be practical and reasonable. Have satisfying reasons to come up with the numbers and the answers. After all, you cannot lie to yourself.

Understanding the negotiation parties

If you have access to some gossips in the office, it is now when you make the most use of it. Determine who is going to negotiate the appraisals for you or your team. See if you are on good terms with them. If they are someone new in the system, it is unlikely they’d go out on a limb to get you something that they have to fight very hard for. If they do, you’ve won, but now you also owe them some loyalty!

But if you know them, it’d be easier to talk to them about your compensatory & promotion expectations. This is another avenue where things might not go your way, and hence, prepare mentally. Note that the negotiator might be under immense pressure from the higher management or might have stringent budgets to give the increments. You have to be on the lookout for those hints and make conscious attempts to steer the dialog towards something that still gives you a win, even if a small one. This is where having clear & set expectations benefits you.

I’m unfortunately familiar with situations where the upper management had hired good people who report them and were put in charge of the engineering teams just a few months before the appraisals. They’d be under immense pressure and most the engineers being wronged?

Reading the room

This does not literally mean to know about the meeting room where the appraisals are scheduled to happen. You need to understand what’s going on around you. Once you know who you’ll be negotiating with, try to understand the background they might be coming from. If the business itself is not doing well, the CFO will be unwilling to give a generous budget for payroll, and is surely going to affect you. If it’s a publicly listed company, the upper management will be busy pursuing shareholder value and the payroll budgets would be even tighter. The company itself would be big enough to have pre-determined increment slabs. During the goal setting season, appraisal policies and increment slabs too are determined for the next cycle in some organizations. Try and get your hands on this information if possible.

The entire goal of this exercise understand the situation and what cards you have to play in the negotiation. Moving on to the negotiation.

The negotiation table

Usually the conversations start with greetings and “How are you?” kind of questions, something informal to get both the parties comfortable for the what’s to come ahead. It is important to pay full attention on what’s going on and continuously evaluate where the things are headed.

Your manager or the appraiser will usually start by summarizing your accomplishments or executions during the past year/quarter or whatever the evaluation period has been. And then come to a conclusion that encompasses everything. It might end with a scenario like this:

  1. We are happy with your performance for the past year and value your contributions to the team as well as the org. overall.
  2. We have seen your efforts over the past year/quarter and think that things could have been better.
  3. Your performance has not been up to expectations and have to let you go. (If they want to fire you, this is where it begins)

Let’s start with the worst case, number 3. There’s not much to do here and exit gracefully. Even if you fight your way to get retained, things won’t remain the way they are. And your Reporting Managers always know if you are going to get laid off. Make sure that you get compensated fully for your notice period and only resign voluntarily if it is on the table.

Before your exit, make sure you exchange contact information with people you’d want to stay in touch and end the interactions on a good note. The world is a small place and you don’t know where your paths might cross again. Ask your senior colleagues for a favor to write you recommendations on your LinkedIn profile. Make sure you download all your taxation and payroll documents/statements before your HRMS account gets disabled. If the account is already disabled, ask the payroll manager to assist you with this.

Moving on to case number 1, if you want to keep working here, this statement will immediately be followed by any revisions to your compensation numbers. Ask what the average/median increment being offered is if it is not something you are satisfied with. If you are still not satisfied with the numbers, now is the time to present your case about your exceptional performance over the past year. If you missed out on a good hike last year, say that too. Your manager might respond that he’s restricted on budgets or you already have been given the highest band that they have decided for this year. You can revert with the compensation numbers being offered in the market towards this. This is usually a hard situation to win.

Try to make a case on how you are moving ahead in life, have more responsibilities now and how a good salary should help sort things out. This is the point if the appraiser has any headroom, they will accommodate your request. Don’t expect too much. If you have beaten your 2nd benchmark number or are in the top band, it is a win. But, there’s no better increment than a job change. If the appraiser happens to offer a number that beats your 1st benchmark number, just make a small playful attempt to get some more. But remember to not ruin it. You have already won.

If you are negotiating a promotion, make sure you are prepared what responsibilities it will entail. In a lot of cultures, the responsibilities come first and once you spread your wings, then comes the pay hike and the new title. If the management is interested in someone filling up the role, they will be more than happy to get someone to do it internally and will offer all the help and guidance necessary.

Next is number 2, where the appraiser does not have an intention of kicking you out but just wants you to do better in the next cycle. The conversation might move in a direction where you explore what has been going on in your personal life that might have impacted your performance. Death of a loved one, constant illnesses or new mental health issues usually come into the picture. The appraiser will try to put you in a lower band based on the just-average or below-average performance. But you could ask for a higher band or a better number to keep you motivated. Again, you have to keep the expectation low here. Things might go your way if you already have a rapport with the appraiser. This is where you need the 3 benchmark numbers. It helps to determine how hard you need to fight to take a win home.

Coming to terms with the outcome

If things went your way or even better than what you imagined, it’s time to celebrate with people who are very close to you. However, don’t make it a news unless you have the written letter.

If things have not gone your way, you already know where things went wrong. Performance issues can be rectified in the next cycle. If your ask for a better increment has been ignored in at least 2 cycles, it’s time to look for a new opportunity. Keep the market conditions in context. While I write this post, there’s a layoff news every other day, which is not the right time to take a switch.

If your current life situation demands stability and compensation is the only problem, don’t take the risk. It is possible that you have good coworkers and org. culture overall. If you do decide to take a leap outside and it has been more than 2 years at the current workplace, start studying and prepare well for the interviews coming ahead. Treat job search like a full time job, only then you’ll have a result that you desire. My recommendation is to usually not resign unless there’s an offer in hand. Recruiters frown upon longer notice period in some countries and you might lose on those opportunities. However, there might come an interview where you perform exceptionally well and they are willing to wait that long for you to join them. In that case, get the offer letter and resign immediately.

One more important thing in all this is to time your actions well. There might be logistical problems, like leaving the current rental and moving to a new place/city or something going on in your personal life that needs to be settled. Take these factors into consideration too.

Conclusion

The idea here is to face the appraisals head-on and minimize the disappointment when you come out on the other side. Being reasonable, practical and having full context of the situation is the key. Knowing all possible outcomes or at least having a hint about them helps us to come to terms with things faster and clears our head for the next move. Anyways, if you win, you win alright! And a loss that you are okay with is still a win.