The 20% Rule

What would you think if I said, you should get a 100% hike over your last compensation? While secretly being happy, you would think I’ve gone cuckoo. You would happily settle for a 20% hike isn’t it? The 20% chain shackles you.

What is the mysterious 20% rule that everyone keeps talking about? Are you in it by design or default? Lets find out.

Here is an example :

‘So what is your expectation ,’ I asked the job seeker. ‘ The usual 20% more than my last compensation.’ And I asked, ‘why not 60%?’

‘That, will never happen.’ He smiled. ‘Ok, if you insist. But what stops you ? Who stops you ?’ I probe further. The job seeker sheepishly smiled and said, ‘that’s what the industry standard is!’  ‘And who set the standard? Who set the rule? Since when? ‘ I ask. ‘No idea, but that’s what everyone does.’ ‘Congratulations, here is your 15%’ !  He accepted.

That is how deep rooted the 20% syndrome is ,people know it exists, but never seem to question it or even find out more about it. They accept it as an unseen, unwritten rule of getting hired. And even accept a little lesser if  pushed a bit further. Its like the chains around an Elephant’s leg. The park officials tie the chain when the Elephant is first brought to the zoo. At first the elephant tries to break-free, but over time it gives up.

So the park officials merely wrap the shackles round the thick wooden peg instead of tying it tightly, because by now they have tamed the mighty Elephant’s mind, and seasoned it into believing that, he will never break free. Cruel, isn’t it?

Typically most organizations offer to negotiate on 20% or 30% from previous compensation for most candidates they hire, sure there are a few exceptions, but in most cases that seems to have become a benchmark. In most countries, supply far outnumbers demand. It may not take long to find another candidate, unless the role requirement is very niche and specific.

This take it or leave it leverage the employers have, introduces a sense fear of losing in a candidates mind , cripples them of objective assessment of their competency levels, coupled with their own insecurities ,compulsions , economic liabilities, and in most cases ,plain ignorance, some or all of which eventually lead to accept the 20% rule.

They happily accept what is on offer, and ironically go on to crib and complain about being underpaid and overworked for the duration of the tenure, till they find yet another employer who offers yet another 20% hike! Yike! Taking up a job having resigned to the 20% rule, is a telling statement on your self-worth. Taking an opportunity only because you fear losing it, means you’ve already lost it.

As a word of caution : over-estimating self-worth is another big problem – the idea is to not inflate your capability, not bite more than you can chew, but to correctly, objectively, assess the impact you bring to the business by way of executing this role to the best of your ability. If you can indisputably quantify that even better! That is your best shot at breaking the 20% rule.

Executing the same 20% type deliverables will not get you a 40% hike! Get a grip on what are you going to do differently which commands a higher compensation. But if you don’t have those answers. Then don’t ask. Stay in your current role till you earn that vocabulary. Its the X factor that commands the extra hike. So work on whetting the X factor in your profile and back yourself, ‘coz no one else will.