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Is it feasible to consider market rate during salary negotiations?
When changing jobs, the first thing candidates often seek is a salary increase. We touched on this in an earlier article, “How to increase your salary when making a move in legal”. However, many candidates are not satisfied with just a reasonable increase (which is around 20-30% in the China market). In this article our consultant Li Ji looks at the difficulties around salary negotiations and candidate expectations in the in-house world. 
Usually during the interview process, meeting HR is the first stage for candidate screening. HR will be looking to see whether the candidate is suited to the position. From an HR perspective the candidate should have the right motivation to join the company, have the relevant education and qualifications and work experience and, their salary expectations should be in line with the company’s budget as well as their salary increase policy.
Some candidates challenge why their expectations around the percentage of salary increase has to be raised at the beginning of the interview process rather than at offer stage. They argue that as long as their expectations are within the budget of the role, why is it necessary to tell HR their real expectations. Many argue that if they do this HR may remove them from the process before they get the opportunity to meet the line manager. 
Usually HR ask about the percentage increase expectation because the company needs to be responsible with their spending at the same time as having realistic expectations around the candidates they are interested in.  Candidates however believe that HR only cares about cost rather than talent. In fact, legal departments work very closely with HR and generally both are trying to achieve a balance between talent and cost. It doesn’t make sense for a candidate to hide their expectations but by using a headhunter it does make negotiations throughout the process much easier. 

Some candidates also challenge the concept of reasonable increase, especially when they are currently paid below what they believe to be market rate. Such candidates hope to increase their salary by moving jobs. They often complain that their current package is too low and look for so called market rate in their next role. However, in practice, market rate is not a practical way to try to benchmark salaries.  Market rate and reasonable increase are two totally different concepts and if each party insists on their own ideas it is difficult to come to an agreement.

Salaries are individual

Different individuals each have different situations, with different working capabilities and personal performance. It is not true that in circumstances where education, PQE and firm/company work experience is similar, the highest salary should be regarded as the market rate. We always argue that time leads to variations in income. Over a period of time there are always circumstances for individuals to increase their salary and this also does not mean that the outcome should be regarded as market rate. For example, a particularly attentive manager who pushes for salary increases or a high performing year for a business could both account for a higher than average salary increase for an individual.

When negotiating an offer, a business will have a budget. But this does not mean that they are willing to use all of it on every candidate. It depends on whether the candidate’s level, experience and their salary increase expectation is reasonable to the company. For candidates it is important to remember salary is only part of career development and not the only reason to move roles. Generally we advise in-house counsel to make a long term plan to establish on-going career development and satisfaction.

For more information on salaries across the market or for more help on how to manage these types of negotiations please contact Li Ji.

Li Ji, 14 November 2017 

Recruiter Hot 100 2016.

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