Job Interview - What is your expected Compensation [CTC] for this role?

After having worked for Central Research and Development Company [CRDC] for over FOUR years, Natasha Suri wants to explore challenging job responsibilities. She has been working with CRDC as Assistant Manager – Marketing and her total work experience is over seven years. One of her interview was with Market Analysis India Private Ltd. [MAIPL]. She has cleared her technical interview. Her pre-hire assessment report shows that she is a right fit for the role and now she is in the final interview to discuss about joining dates, location of work, etc.

“Natasha, Congratulations for reaching this far in the selection process”, said the HR Head.

“Thank you, Sir”, responded Natasha.

“So Natasha, please tell me about your compensation”, asked HR Head.

“Sir, my current compensation is 800,000 INR per year. I am also eligible for annual performance bonus which is equivalent to 20% of my compensation. Company is providing free health insurance for me and my family with insurance cover of 400,000 INR. We have free cafeteria wherein we can go any number of times and eat or drink anything available in cafeteria. Company is also giving us retirement benefits such as Provident Fund, Gratuity, etc.”, explained Natasha.

“What are your expectations from this role in terms of compensation and benefits?”, further inquired HR Head.

This question made Natasha smile sarcastically. Probably, she noticed something funny or nonsensical in this question.

She replied, “Sir, I am expecting my compensation to be 5,000,000 INR. I am also expecting yearly bonus of 100% of my compensation, however, it should not be linked with my performance. I need health insurance for life for me and my entire family. I am expecting”; before she could complete, HR Head interrupted, what nonsense are you talking about?

“Am I talking nonsense? Who started this? You asked me my expectations and I am listing them”, Natasha replied furiously.

All of us have been through similar type of situation, at least once in our career and many of us have been through this several times. Asking right question at right time is very critical.

Whenever we hire, we allocate budget for that role and position. Hence, asking a candidate for his or her expectations of compensation and benefits is a kind of silly question. It is unnecessary.

Hence, when you know what compensation and benefits the candidate is currently getting and you know your budget for the role and you know the benefits offered by your company plus you know that the candidate is right fit for the role; hence, the best thing to do is to spell out your offer. Hence, in this case, HR Head should have listed what the company is going to offer to Natasha, of course, with a margin for negotiation. If she will like the offer in comparison to what is currently getting, she will accept or else she will reject.

What do you think? Why do companies ask candidates to list down their expectations of compensation and benefits? Can they meet those expectations? What if the candidate is willing to come for lesser than his or her current salary? When you offer to candidates based on their current compensation and benefits and not as per your budget and company policies then you are likely to unsettle internal equity, which will result in employee dissatisfaction and ultimate attrition.

Do you think HR Head could have handled this situation differently?

Composed By: Sanjeev Himachali