Salary Negotiations

in Asia

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People in Asia are used to negotiating for most things in their lives and usually begin learning the required skills at an early age. They consider it part of their culture and often take pride in their bargaining skills. To people from so-called developed countries, Asian negotiations can seem rather flamboyant, and at times even hostile, but they are usually performed with an undertone of humour.

It should not be a surprise that this is often the manner in which compensation is negotiated by people in the region. Experienced Asian managers usually understand the negative impact that hard-ball negotiations can have on hiring managers from more genteel countries and often soften their behaviour so as not to unduly upset them. However, many do not do so and most naturally wish to improve their personal situation by using strategies they have honed all their lives.

It is important that international managers understand the tactics sometimes used by candidates so as not to be overwhelmed by it all or disillusioned when the going gets tough. A few of the more common tactics employed are discussed below.

Tactic 1:
Low-ball Salary Expectations

REGULARITY: Medium

EXPLANATION:
Early in the recruitment process, some candidates provide current salaries or salary expectations that are lower than the actual. They believe that these low “teaser” rates will help entice the hiring manager to think he is getting a good deal. Then, when the job offer stage is reached and after the hiring manager has invested a lot of time to assess and approve the candidate within his organization, the real salary is presented along with various excuses for not providing accurate information previously: “my earlier salary was just an estimate”; “I didn’t know what my total salary was because I don’t keep close track”; “my compensation has been recently increased.” The result is that the hiring manager is faced with a much higher cost candidate than he was earlier led to believe and is put in an uncomfortable negotiating position.

RESOLUTION:
Gladly, this ploy can be dealt with by pushing for the candidate’s total salary and benefits in the early stages of the process and not excepting estimates. The recruiter and the hiring manager need to work together and ask separately for precise current compensation information. Along with this, it is important to let the candidate know that he may be asked to provide company payslips later one.

Tactic 2:
Sudden External Interest

REGULARITY: Common

EXPLANATION:

At various stages of the recruitment process, candidates will state they are being considered by another employer for position. This is especially common when using contingent (non-retained) recruiters since candidates are sent to many employers simultaneously. It is less common with retained recruiters since they rarely accept overlapping searches at the same time and candidates should not be parallel processed. In any case, it may be true and the person is simply being up-front with the hiring manager. It other cases, a candidate uses the ploy to give the impression of being in high demand and one whose demands should not be questioned.

RESOLUTION:
The situation is best addressed in 2 steps. First, ask the candidate early on whether he is being considered for other positions. Then later if he claims to have received sudden interest from another employer, you are in a better position. When the candidate gives notice of an another opportunity, explain to him that while he is well regarded and a strong contender for the role, he is not the only candidate being considered (as long as there are other candidates, of course) and if he needs to decline the opportunity, there will be no bad feelings.

The purpose of the statement is to determine whether the candidate has genuine enthusiasm for the role. The person should respond by declaring his keen interest and provide compelling reasons. If he doesn’t, then either candidate is not sincere about the opportunity (and may be a manipulative person), or the recruiting process has been flawed and needs improving.


Tactic 3:
Future Pay Increases and Promotions

REGULARITY: Medium

EXPLANATION:
During final salary negotiation, some candidates will abruptly claim to have just received notification of an upcoming increase in compensation and expect this new-and-improved salary to be used as their current income. Such salary increases and/or promotions are difficult to confirm since a candidate can easily state he was given verbal assurance. Hiring managers find it difficult to push for proof since they risk appearing not to trust the candidate after building rapport during the lengthy recruitment process.

RESOLUTION:
The situation is complicated since the candidate may or may not be genuine. It is not uncommon for managers to receive salary increases in high growth Asia. However, it could also indicate an ethics problem if the person is lying. It is important in the early stage of the recruitment process to ask the candidate whether he expects to receive a pay increase in the near future. If he later claims to have received an increase, then it will put onus on the candidate to explain the situation and there will be justification to ask for proof.


Tactic 4:
Claimed Industry Salary Knowledge

REGULARITY: Low

EXPLANATION:

It seems to be genetic within human beings that they generally think themselves underpaid for the services they provide. When people hear about others who supposedly earn more than they do for a similar or lower position, they naturally are distressed by the news. They also seem to forget when other people earn less.

Keeping this in mind, it is reasonable to expect that some candidates will declare an above average knowledge of industry salary levels and state that they are grossly underpaid. They may then call for salary expectations entailing an unreasonably large increase over their current compensation, severely jeopardizing the candidate’s viability.

RESOLUTION:
First of all, the candidate’s earnings may actually be considerably below the market. This is not an uncommon situation in disruptive emerging countries and especially if the candidate is a long-term employee in a locally owned company. The situation is best managed by stating that the employer is a professional organization that wishes high quality relationships with loyal employees and certainly does not want to underpay its people. It should be made clear that income levels are based on the company’s own understanding of what is fair for the industry. In almost all cases, the candidate will agree that this is reasonable and will not push the matter further. If not, then perhaps other candidates need to be given priority.


Tactic 5:
Delaying the Income Discussion

REGULARITY: Medium

EXPLANATION:

Some candidates attempt to postpone providing their current salaries by claiming they are “not overly money motivated” or they are “only looking for what is fair.” In some instance, these statements may be sincere. In others, the candidate may be trying to improve his negotiating position by having the employer invest a lot with him up-front and then be less able refuse demands for high compensation and other benefits later on. In either case, postpone the income discussion has strong potential to harm the overall process and needs resolving.

RESOLUTION:
As above, the candidate’s total salary and main benefits should be acquired early in the recruitment process and estimates should not be accepted.

Tactic 6:
Add-on Extra Benefits

REGULARITY: Medium

EXPLANATION:

After much time has been spent back-and-forth to arrive at an agreement for base salary and a few other significant compensation items, a hiring manager may be under the impression that bargaining is completed and hopes that it is. However, certain individuals will use “negotiation fatigue” to squeeze out a few more benefits from reticent hiring managers. These characters often provide a long list of supposedly “standard benefits and allowances” to the hiring manager in a manner that indicates they are of “minor consequence” and there should be “no problem” approving them. Examples of such items include: transportation allowance, food allowance, clothing allowance, special tax benefits, unusual bonus items, first-class travel benefits, elevated per diems, etc.

RESOLUTION:
Experienced hiring managers will recognize the problem immediately. The extras can be small individually but added together, are significant to overall cost. Of greater consequence, such added benefits and allowances for a new employee can soon become the new standard for all employees when they are found out about -- increasing overall costs without any return to the organization. The hiring manager will need to push back on any non-standard benefits.


Tactic 7:
Drawn out Salary Negotiation

REGULARITY: Low

EXPLANATION:

At the final stage and after weeks of meetings and email correspondences, some candidates suddenly seem to be hard to communicate with. This is a cause for concern at any time but particularly during final salary negotiations. In most cases, the candidate will give somewhat plausible reasons for being difficult to reach with – “guests from HQ are in town”, “tied up with overseas clients,” “traveling in remote areas,” might be examples.

In most cases, there are 2 reasons for a candidate who was otherwise responsive to suddenly become out of touch. He may be unsure of the opportunity which is a serious issue and indicates that the hiring company did a poor job selling the opportunity up-front. Alternatively, the candidate is trying to give the impression of being nonchalant about the role because he thinks the offer might be higher if the hiring manager is worried about candidate acceptance.

RESOLUTION:
In either case, it is important to get control of the situation. Try to meet with the candidate in person, if possible, to again describe the opportunity in a compelling manner and ask directly whether he has interest to continue pursuing the role. The candidate should provide a persuasive explanation that he is interested in the position. If not, then he may not be overly motivated for a job change or, worse still, may be a manipulative person and not someone worth hiring.

Counter Offers

A Counter Offer occurs when an employer immediately proposes to increase an employee’s compensation after receiving a notice of resignation. These are more common in Asia than in Europe and North America because of various cultural differences and the nature of personal relationships in the region. This important topic is discussed as a separate topic on this location:

 
 
 

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