SNH Way
10 modules · Scenarios · Quizzes · Glossary
Module 1
What is CTC? Understanding Cost to Company
Before you can negotiate, you need to understand what CTC actually means — and why it is often very different from what lands in a candidate's bank account.
CTC = Everything the company spends on you
CTC stands for Cost to Company. It is the total amount a company spends on an employee in one year. This includes not just the salary, but also benefits, employer contributions, and any other costs the company incurs.
Key Insight CTC is NOT the money you take home. Candidates are often confused about this. Your job as a recruiter is to help them understand the difference clearly and without making them feel foolish.
The Big Three: CTC vs. Gross vs. Net
These three terms are used interchangeably by candidates — but they mean very different things.
| Term | What it means | Example (₹12 LPA CTC) |
|---|---|---|
| CTC | Total cost to the company per year | ₹12,00,000 |
| Gross Salary | CTC minus employer's PF & Gratuity | ~₹10,80,000 |
| Net / Take-home | Gross minus employee PF, tax (TDS), professional tax | ~₹80,000–85,000/month |
A Real Example — Breaking Down ₹12 LPA
| Component | Annual (₹) | Monthly (₹) |
|---|---|---|
| Basic Salary | 4,80,000 | 40,000 |
| HRA (House Rent Allowance) | 2,40,000 | 20,000 |
| Special Allowance | 2,16,000 | 18,000 |
| LTA (Leave Travel Allowance) | 24,000 | 2,000 |
| Medical Allowance | 15,000 | 1,250 |
| Gross Salary | 9,75,000 | 81,250 |
| Employer PF (12% of Basic) | 57,600 | 4,800 |
| Gratuity (4.81% of Basic) | 23,088 | 1,924 |
| Health Insurance (Employer) | 12,000 | 1,000 |
| CTC Total | 10,67,688 | 88,974 |
Common Mistake Many freshers assume ₹12 LPA means ₹1,00,000 per month in hand. It does not. The actual in-hand is usually 65–75% of CTC after deductions. Always clarify this early.
The Formula
CTC = Gross Salary + Employer PF + Gratuity + Other Employer Benefits
// Gross = Basic + HRA + Allowances
// Net Take-home ≈ Gross − Employee PF − TDS − Professional Tax
Rule of thumb: Net ≈ 65–75% of CTC
// Gross = Basic + HRA + Allowances
// Net Take-home ≈ Gross − Employee PF − TDS − Professional Tax
Rule of thumb: Net ≈ 65–75% of CTC
Why Candidates Get Confused
- Their previous employer quoted CTC; they think that's what they got "paid"
- They confuse monthly salary slips with annual CTC
- Variable pay included in CTC is not guaranteed — they may never see it
- ESOPs / stocks included in CTC have no guaranteed cash value
Recruiter Tip When a candidate says "My current CTC is ₹15 LPA" — always ask: "Is this fixed CTC, or does this include variable?" This one question prevents many surprises later.
Module 2
Fixed Pay Components
Fixed pay is the guaranteed part of compensation. Every component has a purpose — and many are linked to statutory requirements and tax benefits.
What is Fixed Pay?
Fixed pay is the portion of CTC that the employee receives regardless of performance. It does not change month to month (unless there is an increment or promotion). This is what a candidate "counts on" to pay rent, EMIs, and everyday expenses.
The Major Fixed Pay Components
1. Basic Salary
The foundation of the entire salary structure. Usually 40–50% of CTC. Everything else is calculated on top of Basic — HRA, PF, Gratuity — so a higher Basic sounds good but means higher deductions.
Watch Out Some companies keep Basic very low (e.g., ₹8,000/month) to reduce PF contribution. This lowers the candidate's take-home deductions BUT also reduces their long-term PF savings. Be transparent about this when candidates ask.
2. HRA — House Rent Allowance
Usually 40–50% of Basic. The main purpose is tax exemption — if a candidate lives in a rented house, they can claim HRA exemption under Section 10(13A). Metro cities get 50% HRA, non-metros get 40%.
Recruiter Note If a candidate says "I own my house so HRA doesn't matter" — that's partially true. They still get the HRA in their salary, they just cannot claim tax exemption on it. It is still cash in hand.
3. Special Allowance
This is the "leftover" bucket — fully taxable, but it increases take-home. Companies use it to fill the gap between Gross and the sum of all named allowances. No specific rules govern it.
4. LTA — Leave Travel Allowance
Tax-exempt for actual travel costs within India — twice in a 4-year block. But it is part of CTC regardless. Some companies pay it monthly; others pay it only when a leave is taken and bills are submitted.
5. Medical Allowance
₹1,250/month is the common standard. Historically exempt up to ₹15,000/year, now subsumed in the Standard Deduction of ₹50,000 in the new tax regime.
6. Meal / Food Allowance
If given via meal cards (Sodexo, Zeta, etc.), it is exempt up to ₹50/meal x 2 meals/day x working days. Effectively saves ~₹1,200–1,500 in tax per month for someone in the 30% bracket.
Fixed Pay: Summary Table
| Component | Taxable? | Typical % | Benefit |
|---|---|---|---|
| Basic Salary | Yes | 40–50% of CTC | Foundation component |
| HRA | Partially exempt | 40–50% of Basic | Saves tax if on rent |
| Special Allowance | Yes (fully) | Varies | Boosts take-home |
| LTA | Exempt on travel | ~2–3% of CTC | Tax-free travel reimbursement |
| Meal Allowance | Partially exempt | ₹1,250–2,500/mo | Minor tax saving |
Employer-Side Fixed Costs (Part of CTC, Not Your Salary)
| Component | Rate | Who Pays? |
|---|---|---|
| Employer PF Contribution | 12% of Basic | Company (part of CTC) |
| Gratuity | 4.81% of Basic | Company (after 5 years) |
| Group Health Insurance | ₹8,000–25,000/year | Company |
Important Point on Gratuity Gratuity is payable only after 5 years of continuous service. It is part of CTC from Day 1, but the candidate only receives it when they leave after completing 5 years. Communicate this clearly so candidates don't assume they'll receive it if they leave in 2 years.
Module 3
Variable Pay & Bonuses
Variable pay is where most negotiation heat happens. Candidates fear it; companies love it. Your job is to explain it so clearly that the candidate feels confident, not confused.
What is Variable Pay?
Variable pay is the performance-linked portion of the CTC. It is not guaranteed. The candidate only receives it when they — and/or the company — meets certain targets.
The Most Common Complaint "My offer letter said ₹20 LPA but I only received ₹17 LPA." Why? Because ₹3 LPA was variable — and the candidate did not achieve 100% of their target.
How Variable Pay is Structured
| Type | How it Works | Who Gets It? |
|---|---|---|
| Annual Performance Bonus | % of Fixed / CTC paid at year-end based on rating | All employees, especially senior roles |
| Sales Incentive / Commission | % of revenue/deals closed — monthly or quarterly | Sales, BD, Account Management |
| Quarterly Variable | Paid every quarter on hitting KPIs | Mid-level & target-based roles |
| Joining / Sign-on Bonus | One-time payment on joining | Used to bridge notice buyout or lost bonus |
| Retention Bonus | Paid on completing X months in the role | High-retention risk roles |
| Project Bonus | Tied to completion of a specific project | Consulting, Tech, Product |
How to Explain Variable Pay to a Candidate
🎙️ Script: Explaining a 20% Variable Pay Conversation
Candidate
"The offer says ₹20 LPA but 20% is variable. So my fixed is only ₹16 LPA?"
You (Recruiter)
"That's correct — your fixed component is ₹16 LPA, and the ₹4 LPA variable is paid annually based on your performance rating. If you hit 100% of your targets, you receive the full ₹4 LPA. If the company has a strong year and you outperform, some organisations pay up to 120–150% of the variable. The variable is not a deduction — it's an earning opportunity linked to your work."
Joining Bonus — The Most Misunderstood
A joining bonus is a one-time payment given when a candidate joins. It is used to:
- Help the candidate pay back their previous employer's notice period cost
- Compensate for an annual bonus they are walking away from at their current job
- Make the total offer look more competitive
Clawback Clause Almost every joining bonus comes with a clawback clause — if the candidate leaves before 6 or 12 months, they have to return the bonus (sometimes prorated, sometimes in full). Always explain this. Never hide it.
Target vs. Actual — The 4 Scenarios
| Performance | % of Variable Paid | Annual Variable (₹4L) |
|---|---|---|
| Exceeds Target (Outstanding) | 120–150% | ₹4.8L – ₹6L |
| Meets Target (Good) | 100% | ₹4L |
| Partially Meets (Average) | 50–75% | ₹2L – ₹3L |
| Below Target / PIP | 0% | ₹0 |
Key Questions to Ask the Hiring Manager
- What percentage of employees actually get 100% of variable pay?
- What is the variable based on — individual KPIs, team targets, or company revenue?
- Is variable paid monthly, quarterly, or annually?
- Has the variable been paid on time for the last 2–3 years?
Recruiter Tip For sales roles, variable pay can be 40–60% of CTC. For tech / product, it is typically 10–20%. For leadership roles, it can be 30–50%. Know the industry norm before you discuss.
Module 4
Benefits & Statutory Components
Benefits are often undersold in offers but highly valued by candidates. Knowing how to highlight them can close a deal where the numbers alone don't.
Statutory Benefits — Mandatory by Law
These benefits are required by Indian law. Every employer must provide them.
1. Provident Fund (PF)
Both employer and employee contribute 12% of Basic Salary each month to the EPF (Employees' Provident Fund). This is a long-term savings account that earns ~8.15% interest per year. It is part of CTC (employer's 12%) but the employee also contributes 12% from their gross — reducing take-home.
Monthly PF (Employee side) = 12% of Basic Salary
Monthly PF (Employer side) = 12% of Basic Salary (part of CTC)
// If Basic = ₹30,000 → Employee PF = ₹3,600/month deducted from salary
// Total PF savings per month = ₹7,200 (₹3,600 each side)
Monthly PF (Employer side) = 12% of Basic Salary (part of CTC)
// If Basic = ₹30,000 → Employee PF = ₹3,600/month deducted from salary
// Total PF savings per month = ₹7,200 (₹3,600 each side)
Recruiter Note Some startups are PF-exempt for salaries above a certain threshold. Others let employees opt out if their Basic exceeds ₹15,000/month. Always check and inform candidates.
2. Gratuity
A lump-sum paid to the employee on leaving the organisation, provided they have completed 5 continuous years of service. Formula: (Last Drawn Basic x 15 x Years of Service) / 26.
Gratuity = (Basic Salary × 15 × Years of Service) / 26
// Example: Basic ₹40,000/mo × 15 × 5 years / 26 = ₹1,15,384
Tip: 4.81% of annual Basic is the standard CTC-level Gratuity provision
// Example: Basic ₹40,000/mo × 15 × 5 years / 26 = ₹1,15,384
Tip: 4.81% of annual Basic is the standard CTC-level Gratuity provision
3. ESI — Employee State Insurance
Applicable only if gross salary ≤ ₹21,000/month. Employer contributes 3.25%, employee 0.75%. Provides medical and sickness benefits. For most mid-to-senior hires, this is not applicable.
Voluntary Benefits — Company's Choice
| Benefit | What It Covers | Typical Value |
|---|---|---|
| Group Health Insurance | Hospitalisation for employee + family (parents optional) | ₹3L–₹10L cover |
| Group Term Life Insurance | Life cover in case of death during employment | 2–5x Annual CTC |
| Group Accident Insurance | Accidental death or disability | Varies |
| Meal / Food Benefits | Cafeteria, meal cards, reimbursement | ₹1,500–3,000/month |
| Internet & Phone Allowance | WFH connectivity support | ₹500–2,000/month |
| Learning & Development Budget | Courses, certifications, conferences | ₹20,000–1,00,000/year |
| Creche / Childcare Support | Childcare for working parents | Varies |
| EAP (Employee Assistance) | Mental health, counselling | ₹5,000–15,000/year |
| Gym / Wellness | Fitness memberships | ₹5,000–15,000/year |
How to Use Benefits to Close a Candidate
🎙️ Script: Candidate Wants ₹1L More Scenario
Candidate
"Your offer is ₹22 LPA. My current company is at ₹21 LPA but they cover health insurance for my parents too. Can you match that?"
You (Recruiter)
"That's a great point. Our group health insurance covers the employee, spouse, and up to 2 children at ₹5L. For parents, we have a top-up option at a subsidised premium of ₹4,000/year for ₹3L cover — which you'd pay, but at a group rate that's significantly below what you'd pay individually. Net-net, you're still ahead on total compensation by approximately ₹1.2–1.5 LPA when we factor in the increment and other benefits. Would it help if I put together a side-by-side comparison for you?"
Total Rewards Framework
As a recruiter, always think beyond cash CTC. The total value to a candidate includes:
- Fixed Pay — guaranteed monthly income
- Variable Pay — performance earnings
- Benefits — insurance, allowances, perks
- Career Growth — title, scope, learning
- Work Flexibility — WFH, hours, leave policy
- Equity — ESOPs/RSUs (covered in next modules)
Recruiter Tip Build a "Total Rewards" comparison table for candidates who are on the fence. Include health insurance value, PF contribution, L&D budget, and flexibility. It often reveals the true advantage of the new offer.
Module 5
ESOPs Explained — From Grant to Cash
ESOPs are among the most powerful — and most misunderstood — parts of compensation at Indian startups. Learn to explain them simply, accurately, and compellingly.
What is an ESOP?
ESOP stands for Employee Stock Option Plan. It gives an employee the option (not an obligation) to buy shares of the company at a pre-decided price — the Exercise Price — at a future date.
Key Mindset An ESOP is not a salary. It is a potential future wealth instrument. The actual value depends on: (a) how well the company does, and (b) whether there is ever a liquidity event — IPO, acquisition, or secondary sale.
The ESOP Journey: 6 Key Terms
| Term | What It Means | Plain English |
|---|---|---|
| Grant | Company formally gives you ESOPs | You are promised X shares on joining |
| Exercise Price / Strike Price | Price at which you can buy the shares | Your "locked-in" buying price (usually par/low value) |
| Vesting | ESOPs become yours over time | You earn the right to buy shares gradually |
| Cliff | Minimum time before any ESOP vests | If you leave before the cliff, you get nothing |
| Exercise | You use your option to actually buy the shares | You pay the exercise price and get shares |
| FMV (Fair Market Value) | Current market value of each share | What each share is worth today |
Vesting Schedule: The Most Common — 1+3
The standard Indian startup ESOP schedule is a 1-year cliff + 3 years monthly/quarterly vesting (total 4 years).
0
Joining
0%
🔒
1 Year (Cliff)
25%
✓
2 Years
50%
✓
3 Years
75%
✓
4 Years
100%
Orange = Cliff unlock. Green = Continued vesting. After the 1-year cliff, 25% vests immediately. Remaining 75% vests monthly or quarterly over 3 years.
How to Calculate ESOP Value
// Example: 10,000 ESOPs granted at ₹10 exercise price
FMV per share today = ₹500
Value per ESOP = FMV − Exercise Price = ₹500 − ₹10 = ₹490
Total ESOP value (if fully vested) = 10,000 × ₹490 = ₹49,00,000
// BUT: This is on paper. Real cash comes only at a liquidity event.
FMV per share today = ₹500
Value per ESOP = FMV − Exercise Price = ₹500 − ₹10 = ₹490
Total ESOP value (if fully vested) = 10,000 × ₹490 = ₹49,00,000
// BUT: This is on paper. Real cash comes only at a liquidity event.
When Do ESOPs Become Real Money?
- IPO — Company lists on stock exchange. ESOPs convert to publicly traded shares. You can sell on the market.
- Acquisition — Company gets bought. Acquirer buys out all shares including ESOP shares (subject to terms).
- Secondary Sale — Some investors buy shares from employees before IPO. Not always available.
- Buyback Program — Company buys back vested ESOPs from employees at FMV. Some mature startups do this annually.
Tax on ESOPs — Two Points (1) When you exercise ESOPs, the difference between FMV and exercise price is treated as a perquisite and taxed as salary income. (2) When you sell the shares later, any gain is taxed as capital gains. Inform candidates — they should consult a CA before exercising large ESOP grants.
Pre-IPO vs. Post-IPO ESOPs
| Pre-IPO | Post-IPO / Listed Company | |
|---|---|---|
| FMV basis | SEBI-registered valuer determines FMV | Market price on stock exchange |
| Liquidity | Illiquid — only via buyback or event | Liquid — can sell on exchange anytime |
| Upside potential | Very high (if company grows) | Moderate (already priced in) |
| Risk | High — company may never IPO | Low — shares already have market value |
Real Talk to a Candidate "These are ₹50 lakh in ESOPs on paper. If the company IPOs at a 5x valuation over 4 years, these could be worth ₹2.5 crore. If the company doesn't grow or shuts down, they may be worth ₹0. ESOPs are a bet on the company's future — not a salary substitute."
Module 6
RSUs & FMV — The Simpler Stock
RSUs are increasingly common, especially at MNCs, larger tech firms, and US-listed companies. Unlike ESOPs, there is no "buying" involved — you just receive shares when they vest.
What is an RSU?
RSU stands for Restricted Stock Unit. When RSUs vest, you automatically receive actual company shares — no purchase required. The "restriction" is time-based vesting.
ESOP vs. RSU — Side by Side
| Feature | ESOP | RSU |
|---|---|---|
| What you get | Option to BUY shares | Actual shares GIVEN to you |
| Exercise price | Yes — you pay to get shares | No — shares are free |
| Risk if company fails | Options worthless; no loss | Shares may become worthless |
| Tax trigger | On exercise (perquisite) | On vesting (perquisite) |
| Common at | Indian startups, early-stage | MNCs, US-listed companies, late-stage |
| Value when unlisted | Exercise price + upside | FMV at time of vesting |
Key Difference in Plain English With ESOPs: "I get the right to buy 1,000 shares at ₹10 each. If the share is worth ₹500 later, I pay ₹10,000 and get shares worth ₹5,00,000." With RSUs: "I just get 1,000 shares handed to me when they vest. If each share is worth ₹500, I've received ₹5,00,000 worth of shares — no payment needed."
How RSU Vesting Works
RSU vesting is typically over 4 years. At US tech companies (Infosys, Wipro US business, Google India, Meta India), a common schedule is 4 equal tranches annually or a back-loaded schedule.
| Schedule Type | Year 1 | Year 2 | Year 3 | Year 4 |
|---|---|---|---|---|
| Equal (25% each year) | 25% | 25% | 25% | 25% |
| Back-loaded (common in US Tech) | 5% | 15% | 40% | 40% |
| Cliff + quarterly (Indian MNCs) | 25% (cliff) | 6.25%/qtr | 6.25%/qtr | 6.25%/qtr |
What is FMV — Fair Market Value?
FMV is the current market value per share of the company. For listed companies, it is the stock price. For unlisted companies (most Indian startups), FMV is determined by a SEBI-registered Category I Merchant Banker or valuer, usually once or twice a year.
RSU Value at Vesting = Number of shares vesting × FMV on vesting date
// Example: 500 RSUs vest. FMV = ₹800/share.
Value received = 500 × ₹800 = ₹4,00,000 (taxable as salary)
// Tax: This ₹4L is added to salary income and taxed at your slab rate
// Example: 500 RSUs vest. FMV = ₹800/share.
Value received = 500 × ₹800 = ₹4,00,000 (taxable as salary)
// Tax: This ₹4L is added to salary income and taxed at your slab rate
RSU Refresh Grants
At larger companies, employees often receive annual refresh grants — new RSUs granted each year to keep them engaged. This creates a "golden handcuff" effect where walking away means leaving unvested RSUs on the table.
Candidate Scenario A candidate at Google India has ₹60L in unvested RSUs. They get a job offer from a startup at the same CTC. As their recruiter, you need to help the hiring company understand the "leave money" and perhaps structure a joining bonus or accelerated ESOP grant to bridge the gap.
How to Value Unvested Stock When Comparing Offers
| Item | Current Job | New Offer |
|---|---|---|
| Fixed CTC | ₹30L | ₹35L |
| Variable | ₹5L | ₹8L |
| Unvested RSUs/ESOPs (annual value) | ₹15L/year | ₹10L/year |
| Total Effective Annual Value | ₹50L | ₹53L |
Recruiter Tip Always ask a candidate: "What is the vesting value of your current equity per year?" Factor this into the total compensation comparison. Missing this step is the #1 reason candidates decline offers that seem financially superior.
Module 7
Startup Stages — Series A, B, C & Beyond
When you recruit for a startup, understanding its stage changes how you pitch compensation, how you assess equity, and how much risk you communicate to a candidate.
Why Stage Matters for Compensation
A startup's funding stage tells you how much cash they have, how mature they are, and what their equity is worth. Compensation structures differ drastically across stages.
Bootstrapped
Seed / Pre-A
Series A
Series B
Series C+
Pre-IPO / Unicorn
How Equity % Changes by Stage
As the company raises more money, existing equity gets diluted. But the absolute value per share grows. This is why joining early (lower %) can still be more valuable than joining late.
| Role: VP of Engineering | Seed | Series A | Series B | Pre-IPO |
|---|---|---|---|---|
| ESOP % offered | 0.5–1% | 0.25–0.5% | 0.1–0.25% | 0.03–0.1% |
| Company valuation | ₹50 Cr | ₹300 Cr | ₹1,000 Cr | ₹7,000 Cr |
| Paper value of ESOPs | ₹25–50L | ₹75L–1.5 Cr | ₹1–2.5 Cr | ₹2.1–7 Cr |
Reality Check Paper value is not real value. At Seed stage, ESOPs are highly speculative. At Pre-IPO, they are much more likely to be realised. Calibrate your pitch to the stage: "potential wealth" at Seed, "meaningful upside" at Series B+, "near-liquid value" at Pre-IPO.
Typical Comp Structure by Stage
| Stage | Cash CTC | Variable | Equity | Your Pitch |
|---|---|---|---|---|
| Bootstrapped | Below market (60–75%) | Small | Large, speculative | Ownership + mission |
| Seed | Below market (70–85%) | Low | Large | Upside story |
| Series A | Near market (85–95%) | Moderate | Meaningful | Growth + equity |
| Series B+ | Market rate (95–110%) | Good | Decent | Stability + growth |
| Pre-IPO | Above market (100–120%) | Strong | Liquid soon | Total value package |
Questions Every Recruiter Should Ask the Startup
- What is the company's current valuation (post-money)?
- What is the total ESOP pool size? And what % of the pool is this offer?
- Has there been any secondary sale or buyback in the last 12 months?
- What is the FMV per share as of the last valuation?
- Are there any anti-dilution provisions for employees?
- What are the IPO / exit plans and timeline?
Recruiter Tip Always present equity as "upside potential" not "guaranteed income." Candidates who join for equity alone and then see none realised become unhappy and blame the recruiter. Set expectations right.
Module 8
Real Negotiation Scenarios
Theory is fine. But negotiation is a live, human skill. These scenarios are based on the most common situations you will face as a recruiter in India.
Scenario 1: Candidate Has a Counter-offer
⚡ The Counter-offer Problem High Stakes
Situation: You close a candidate at ₹28 LPA. They resign. Current employer counter-offers ₹32 LPA. Candidate is now confused.
Candidate
"My current company has matched the offer and given me ₹32 LPA. I'm not sure anymore."
You
"That's great validation — they clearly value you. Let me ask you three things. One: why did you want to leave in the first place? Was it just money, or were there other reasons? Two: if money was the answer, why didn't they pay you ₹32 LPA before you resigned? Three: in 6 months, what changes? The same manager, the same ceiling, the same culture — only the number is different. Counter-offers solve one problem temporarily and leave the rest unchanged. That said, this is your decision and I want you to make the right one for yourself."
Scenario 2: Candidate Wants a Higher Fixed
💰 Fixed vs. Variable Standoff Common
Situation: Offer is ₹30L (₹24L fixed + ₹6L variable). Candidate wants ₹28L fixed.
Candidate
"I want more in fixed. I cannot bank on variable — last year my company paid only 50% of it."
You
"That's a completely fair concern, and I hear you. Let me give you the context on this company's variable track record — they've paid 100% to 85% of the team for the last 3 years. I'll get that in writing if it helps. In the meantime, let me check with the hiring manager if there is any flexibility to move ₹1–2L from variable to fixed. That may be possible without changing total CTC. Would that work?"
Key: Don't promise what you can't deliver. But do advocate. And always get track record data from the client before it becomes a candidate concern.
Scenario 3: "My Current CTC is Higher"
📊 CTC Verification Challenge Tricky
Situation: Candidate claims ₹22 LPA current CTC. Your client's max is ₹22 LPA. You suspect the candidate is inflating CTC.
You
"Can you share a breakdown of your current CTC? I want to understand the fixed vs. variable split, and whether any part includes ESOPs or one-time payments. This will help me make the best case for you with the client."
Candidate
"My fixed is ₹16L. Variable is ₹4L and I have ₹2L in ESOPs that are unvested."
You
"Got it. So your reliable annual cash is ₹20L today. The ₹2L in ESOPs is unvested, so it's future potential, not current income. Our offer of ₹22L fixed is actually a ₹6L improvement in guaranteed monthly income. That's a strong move. I think we have a good story to tell the client if you're comfortable. I'll also check if there's a way to address the unvested ESOPs through a joining bonus."
Scenario 4: Explaining ESOPs to a Sceptical Candidate
📈 The ESOP Sceptic Series B Role
Situation: Strong candidate. The offer is ₹35L fixed + 5,000 ESOPs. Company is Series B. Candidate has never worked at a startup.
Candidate
"ESOPs? That's funny money. My MNC gives me stock every year. At least I know what that's worth."
You
"Fair point. RSUs at a listed company are liquid and predictable. ESOPs here are different — they're pre-IPO. Here's the data: the company's current FMV is ₹1,200 per share. Your 5,000 ESOPs have a paper value of ₹60 lakh today, vesting over 4 years. The last two funding rounds were at a 3x step-up each. If the company IPOs at a similar trajectory, these could be worth ₹2–3 crore. I won't guarantee that — no one can. But the fixed comp here is ₹2L more than your current package, and the upside is real. Would it help to speak with 2–3 people who joined at the Series A stage and have since exercised ESOPs?"
Module 9
Scripts & Objection Handling
Here are the exact words you can adapt for the most common compensation objections. Read them out loud. Practice until they feel natural.
The 10 Most Common Objections — and What to Say
1. "I expected at least ₹X more."
"I hear you. Let me understand what that ₹X is based on — is it what you need to sustain your lifestyle, or is it a market expectation? I want to make sure we're comparing the right things. What did the ₹X include — fixed only, or variable and benefits too?"
2. "My colleague got ₹X at Company Y."
"That's useful data. I'd want to understand the full picture — was that fixed, or did it include variable/equity? Also, Company Y is at a different scale / stage / industry, which affects bands. Within this company, your offer is at the 75th percentile of the band for this level. I can walk you through what the growth trajectory looks like here so you can compare total earnings over 3 years."
3. "I have another offer."
"Congratulations — that's a strong position to be in. Can you share what that offer looks like so I can go back to the hiring team with a clear ask? I want to give them a fair chance to compete. Also, beyond the number, what's pulling you toward this role versus the other? Understanding your priority helps me go to bat for the right things."
4. "I don't understand ESOPs."
"That's completely okay — most people haven't seen ESOPs before. Let me give you a simple explanation: you are being given the option to buy X shares of the company at a fixed price of ₹Y per share. These vest over 4 years. If the company grows and the shares become worth more than ₹Y, the difference is yours to keep. It's like a bonus that rewards you for the company's success. The risk is that if the company doesn't grow, it may not be worth much. The current value on paper is ₹Z — I can walk you through the scenario analysis if that helps."
5. "Can I get a joining bonus?"
"Joining bonuses are possible in specific situations — usually when there's a notice period cost, or a leaving bonus at your current company that you'd forfeit. Can you tell me what your situation is? If you're walking away from ₹3L in unvested equity or a pending appraisal bonus, I can build a case for a joining bonus to cover that specific gap. Companies respond better to a specific reason than a general ask."
6. "20% variable is too high."
"I understand the concern — you want income you can plan around. Two things: the variable here is linked to your individual KPIs, not company profit, so you have more direct control. Second, for the last 3 years, the average payout has been 105% of target variable. I'll share the payout history in writing. Would it help if I also asked the hiring manager to clarify what the 'at target' KPIs look like for this role specifically?"
7. "My increment is due in 2 months."
"Two months is not a long time, but you'd still be leaving your increment on the table. Let me do the math: if your increment is likely 10–15%, that's approximately ₹X more from next year. The offer here is ₹Y more right now — which means the break-even is roughly [X months]. Also, increments come with another year of commitment. Is there a particular reason you'd prefer to wait?"
8. "I want to think about it." (Stall)
"Of course — this is a big decision. What specific aspect do you want to think through? If it's compensation, let me see if I can address any gaps now. If it's the role or the company culture, would it help to speak to someone on the team again? I want to make sure you have all the information you need, and I also want to be transparent that the offer has a deadline of [date]."
9. "The notice period is 3 months. That's too long."
"I hear you — 3 months is long. Most companies will negotiate this down to 45–60 days in practice. The new company's joining date can also sometimes be pushed. In the worst case, the joining company can buy out the notice period. What does your current offer letter say about buyout? Let me check the client's policy and come back to you."
10. "I need ₹2 LPA more — can you ask them?"
"I'll absolutely make the ask — that's my job. Before I do, help me understand the basis: is it because of a competing offer, your current CTC, or a lifestyle expectation? The stronger my case to the client, the better the chance they'll move. The ask will be stronger if I say 'She has a competing offer at X' versus 'She wants X.' What should I tell them?"
The Golden Rules of Compensation Negotiation
- Never negotiate against yourself. Don't volunteer "max budget" unless the company instructs you to.
- Always get both sides to agree on what the ask is for. Money? Title? Flexibility? Misread and you lose the deal.
- Don't overpromise. If you're not sure the client will move, say "I will try" not "they will."
- Triangulate CTC. Fixed + variable + benefits + equity + career growth = total picture.
- Ask about the non-money reasons first. Candidates rarely leave only for money. The real reason is often the deciding factor.
- Time your ask correctly. Don't negotiate before verbal interest. Don't delay after verbal interest.
The SNH Way A great recruiter closes deals by helping candidates make the right decision — not by pressuring them into the wrong one. When you act as an advisor, candidates trust you, take your future calls, and refer others.
Module 10
Dubai & Cross-Currency Pay
When a candidate earns in AED, USD, or GBP — here is exactly how to understand, compare, and present their salary simply and accurately.
Who is this module for? Every recruiter at SNH — whether you are one week into the job or ten years in. As India's executive search industry grows, more candidates are returning from Dubai, Singapore, the US, and the UK. Knowing how to handle their salary is no longer optional.
First — What is PPP? (In One Sentence)
PPP stands for Purchasing Power Parity. It simply means: the same amount of money buys different things in different countries.
The Coffee Example
A coffee at Starbucks in Dubai costs AED 22 (≈ ₹500). The same coffee in Mumbai costs ₹350. Your AED buys more coffee in Dubai — but India's ₹350 is still a lot for a coffee here. This gap in what money buys is PPP. It is why you cannot simply multiply AED × 23 and call it an India salary.
A coffee at Starbucks in Dubai costs AED 22 (≈ ₹500). The same coffee in Mumbai costs ₹350. Your AED buys more coffee in Dubai — but India's ₹350 is still a lot for a coffee here. This gap in what money buys is PPP. It is why you cannot simply multiply AED × 23 and call it an India salary.
The #1 Mistake Recruiters Make
A candidate in Dubai earns AED 25,000/month. The recruiter multiplies by 23. Presents it as "₹69L CTC equivalent." The client laughs. The candidate is offended. The deal dies.
Why it is wrong: Dubai is 0% personal income tax. India can be 30%+. Dubai also gives housing allowance, flight tickets, and school fees that simply do not exist in India salaries. You are comparing apples to mangoes.
The 4 Things That Make a Dubai Package
| Component | Typical Amount | What Happens in India? |
|---|---|---|
| Base Salary | AED 15,000–18,000 | ✅ This is the real comparable — not the total |
| Housing Allowance | AED 5,000–8,000/mo | ❌ Does not exist. Candidate funds housing from net pay |
| Annual Flights | AED 400–600/mo | ❌ Not provided. Their personal expense |
| Education Allowance | AED 2,000–3,000/mo | ❌ Not provided. International schools in India still cost ₹5–15L/yr |
| Medical Insurance | AED 500–800/mo | ✅ India companies also provide — roughly equivalent |
| Income Tax | 0% | ❌ India: 30%+ on income above ₹15L/year |
The Simple 3-Step Method
Use this every time you get an expat candidate. No calculator needed — just these three questions.
STEP 1 — Ask: "What do you actually save every month?"
Not the gross. Not the package. The savings. After rent, car, school, groceries, flights.
You: "Can you tell me approximately what you save every month in Dubai after all your fixed expenses?"
Candidate: "Maybe AED 10,000–12,000."
AED 10,000/month savings = AED 1,20,000/year = ₹27.6L per year in real savings.
STEP 2 — Gross Up for Indian Tax
To keep ₹27.6L after Indian income tax (30% bracket), the candidate needs approximately ₹39–40L gross just to match their Dubai savings. This is before housing, schooling, and lifestyle.
India Gross Needed = Savings × (1 ÷ 0.70) = ₹27.6L ÷ 0.70 ≈ ₹39–40L
Add a conservative ₹15–20L for housing + lifestyle difference = realistic India CTC floor: ₹55–60L.
STEP 3 — Cross-Check India Market Rate
Find the India market rate for that role, level, and city. Take the higher of PPP-adjusted need vs market rate. That is your offer range to present to the client.
Offer Band = MAX (PPP-adjusted need, India market rate for role)
If market pays more → great, no issue. If candidate needs more than market → explain the gap to the client honestly, with the math above.
Real Example — Walk Through Together
| Item | Dubai | India Equivalent |
|---|---|---|
| Total Package | AED 28,000/month | ₹77L/year (face value — misleading) |
| Monthly Savings (actual) | AED 10,000/month | ₹27.6L/year (real number) |
| India Gross to match savings | — | ₹39–40L/year |
| Add: housing + lifestyle | — | +₹15–18L |
| Realistic India CTC Floor | — | ₹55–58L |
| India Market Rate (VP, Mumbai) | — | ₹60–70L |
| Recommended Offer Band | — | ₹62–68L |
Notice: Market rate (₹62–68L) is higher than PPP floor (₹55–58L), so we use the market rate. The candidate is happy. The client pays a fair market price. No one is misled.
The Expat Premium — And When It Is Justified
Returning expats often ask for 20–40% above the India market rate for their role. Is it always justified? Sometimes yes. Sometimes no.
| Situation | Premium Justified? | What to Do |
|---|---|---|
| Candidate has rare global experience India doesn't have | ✅ Yes | Present the value to client with specifics |
| Candidate's Dubai role was same level as India role | ⚠️ Partly | Use PPP math — adjust, don't inflate |
| Candidate's Dubai role was junior to India role offered | ❌ No | India market rate applies. Be honest with candidate |
| Candidate has personal reason to return (family, health) | ⚠️ Negotiate | They may accept less — have the honest conversation |
Don't oversell to the client either. If you say "he was earning ₹77L in Dubai" and present this as their India expectation — the client either laughs and drops the candidate, or makes an inflated offer they regret. Always present the PPP-adjusted number, not the raw conversion.
Scripts — How to Say This Simply
🎙️ SCRIPT: Talking to the Candidate
You: "I understand your Dubai package is AED 28,000. Before we present your expectations to the client, I want to make sure we get you the right number — not just a face-value conversion that might actually hurt your case. Can I ask — what do you roughly save every month after rent, school fees, and expenses?"
Candidate: "Around AED 10,000–11,000."
You: "Perfect. That's roughly ₹2.3L a month in real savings — which in India, after income tax, means you'd need about ₹55–60L gross to maintain the same financial position. Does that feel right to you as a starting point for what you'd expect?"
This approach builds instant trust. You are the first recruiter who actually did the math instead of just quoting a big number. The candidate will remember you.
🎙️ SCRIPT: Talking to the Client
You: "I want to give you an honest picture of this candidate's salary expectations. On paper, she was earning AED 28,000 in Dubai — which looks like ₹77L. But that number is misleading because Dubai is tax-free and includes housing allowance. When we do a proper PPP adjustment — looking at her actual savings and the Indian tax impact — the realistic equivalent is ₹62–65L. That also happens to be market rate for this role in Mumbai. So there's no inflated expat premium here. The numbers work out very cleanly."
When you do this for the client, you become the advisor, not just the CV forwarder. This is exactly what Spencer Stuart and Korn Ferry do on every cross-border search.
Quick Reference Cheat Sheet
| Currency | Approx Rate to INR | Tax Rate | PPP Adjustment Rule of Thumb |
|---|---|---|---|
| 🇦🇪 UAE Dirham (AED) | 1 AED ≈ ₹23 | 0% | Savings × 1.43 + ₹15–20L for lifestyle |
| 🇺🇸 US Dollar (USD) | 1 USD ≈ ₹83 | Varies (25–37%) | Net post-US-tax × 1.43 + adjustment |
| 🇸🇬 Singapore Dollar (SGD) | 1 SGD ≈ ₹62 | 0–22% | Net savings × 1.3 + ₹10–15L |
| 🇬🇧 British Pound (GBP) | 1 GBP ≈ ₹105 | 20–45% | Net savings × 1.43 + ₹15–20L |
Note: Exchange rates change. Always verify current rate. These are for estimation only.
The SNH Way on Expat Candidates: Never quote a face-value conversion. Always ask for net savings. Always gross up for Indian tax. Always cross-check against India market rate. Present the higher number with the math. This is what separates a professional recruiter from an order taker.
Reference
Compensation Glossary
Every term you'll ever hear in a compensation discussion — explained in plain, simple English.