How to negotiate your remuneration package
The 2023 Total Remuneration Survey from Mercer brought good news for employees in various sectors. It projected a 5.1% salary increase for 2024. Knowing this allows you to make informed decisions about your current and future employment. You can also negotiate a competitive compensation package.
A well-negotiated salary package can impact the course of your working life. It ensures you receive fair compensation for your work and provides you with financial stability and security. It can also play a significant role in your commitment to the company. When you feel valued, you are more likely to perform at your best and excel at work. This can lead to promotions and career growth.
In this article, we explain what remuneration packages are and provide valuable insights into how to negotiate them.
Here is what we will cover:
- What is a remuneration package?
- Components of a remuneration package
- How to negotiate your remuneration package
- Conclusion
- FAQs
What is a remuneration package?
Remuneration packages encompass all the compensation and benefits employers provide to employees. This includes the base salary or wage and other incentives, such as cash bonuses. Moreover, it extends to non-cash benefits such as insurance coverage and shareholders' equity.
Employers often provide details of the compensation package during the hiring process. They use them as a tool to attract and retain employees. If the package does not meet your expectations, you can always negotiate for better terms or explore opportunities for salary adjustment.
Businesses often conduct a yearly review of what their employees receive. This helps them determine whether their workforce is receiving fair and competitive compensation. During this time, they may adjust your package based on your performance and qualifications or to reflect current market rates.
Components of a remuneration package
Your remuneration package consists of different types of remuneration: direct and indirect compensation.
Let us look at each category below:
Direct compensation
This covers all monetary payments you receive from your employer. It includes the following:
Salary
Your salary is a fixed amount your employer pays you for the work you do. You receive it on a regular basis, typically every month or bi-weekly (every 15 days).
Hourly wages
This form of compensation depends on the number of hours you work over a specific period. Since May 2022, the minimum wage in Malaysia has been RM1,500 per month. The government plans to review the minimum wage amount and increase it if necessary.
Commissions
Commissions are performance-based cash incentives that encourage productivity. They are a common form of direct compensation in various industries with sales positions. Commission pay is typically a percentage of your total sales or a fixed amount for every unit you sell.
Bonuses
These are additional payments rewarding performance. You may receive them based on individual or group performance or following company-wide achievements.
Indirect compensation
This includes all non-monetary benefits you receive apart from your salary or wage.
Here is a list of common examples:
Health and life insurance
These add to your financial security. Health insurance can include medical, vision, and dental care expenses. Life insurance provides financial support to your beneficiaries in the event of your passing. Coverage depends on the plan your employer subscribes to.
Paid time off
This consists of paid leave of absence that you can use for various reasons, such as vacation leave and sick days. Paid time off encourages employees to maintain a healthy work-life balance. However, you usually must take your time off within a set period (typically a year).
Retirement plans
Businesses provide these to help secure the future of their employees. A retirement plan includes a pension plan funded from contributions to the Employees' Provident Fund (EPF). This is mandatory for working permanent residents and citizens. Both you and your employer contribute to your EPF. You can access the funds once you reach the age of 55.
Company car benefit
This provides you with a vehicle that the company owns or leases for you to use for business. You may also be able to use it for personal purposes. Some companies offer a company car benefit where they finance the vehicle and cover its maintenance and insurance costs. In this case, the company may require you to stay in its employment for a specific period or impose other conditions.
Equity-based programmes
These provide the opportunity for an employee to invest in the company and share in its growth. For example, stock options allow you to buy shares at a set price. The dividend you receive depends on the company's performance, so working towards its success is in your interest.
Flexible working arrangements
Many companies are embracing alternative arrangements to attract and retain the best employees. They give you more control over your work schedules, promoting better work-life balance. Examples of these arrangements include remote working, flexible hours, and compressed work weeks.
Additional perks
Apart from the above benefits, many employers also offer perks to sweeten the deal for their employees. These can include reimbursement for gym memberships, education expenses, and discounts on their products or services. Some companies provide free meals, transportation and clothing allowances, and on-site daycare services.
How to negotiate your remuneration package
Here are some tips to improve your chances of getting what you want when negotiating your compensation package:
Prepare to negotiate
Research market salary figures for your position and experience level to determine your worth. Consider cost of living adjustments for different locations. You can use our salary research tool to get a better idea of what others in your field are earning. Enter your salary and choose a location to see the average salary for your position.
Initiate the negotiation
Inquire about the negotiability of salary and benefits during the offer stage. If negotiation is not possible initially, explore the potential for future renegotiation. If the offer does not meet your expectations, provide your counteroffer. Always maintain a respectful tone to work towards a mutually beneficial agreement.
Evaluate your take-home pay
Work out whether your package is competitive. Factor in taxes, insurance, and other deductions to understand your actual pay. If you are not sure or do not have a copy of your payment record, ask the payroll staff within your company.
Review your benefits
When negotiating your job offer, discuss benefits like vacation time, extra paid days off, or stock options that matter to you. Request an annual statement showing your total compensation to understand your package's full value. During future performance reviews, consider renegotiating benefits if your personal situation changes or the company's offerings improve.
Request time for consideration
Ask for time to evaluate the offer before accepting. Make sure you are polite and thank your employer for the opportunity. Carefully review the details of the compensation package to decide if it meets your expectations.
Get it in writing
Make sure the final offer letter includes all agreed-upon compensation elements. If there are any discrepancies, ask for clarification from the hiring manager. It is important to have everything in writing to avoid any misunderstandings or disputes in the future.
Conclusion
Remuneration packages consist of direct and indirect compensation elements. These include salaries or wages, bonuses, and commissions. Non-monetary benefits are also part of the package. Examples of these are health and life insurance, retirement plans, paid time off, and flexible working arrangements.
When evaluating a job offer, consider both your salary and benefits package. Your total compensation can have a huge impact on your quality of life and job satisfaction. Your salary provides financial stability. But the benefits you receive can help you maintain a healthy work-life balance, achieve security, and reach your professional and personal goals.
FAQs
Here are answers to some common questions about remuneration packages in Malaysia:
- What is the remuneration salary?
The remuneration salary is the total monetary compensation you receive. It includes your base salary, commissions, bonuses, overtime pay, and other cash incentives.
- How do you calculate a remuneration package?
To work out the value of your total compensation, add up your salary and all other cash components. Then, assign a value to each non-monetary benefit you receive. For example, you can search for the market value of your company car and add that to your compensation package. This can give you a good idea of your total remuneration.
- What is a remuneration package based on?
Your compensation package depends on your role, the company and industry, and your experience and qualifications. Your employer may also consider the average salary for your position.
- What is a package in terms of salary?
This refers to the financial remuneration and benefits you receive from your employer as part of your employment package.
- What is the annual remuneration?
Annual remuneration refers to all monetary and non-monetary compensation you receive for the year.
- What factors should I consider when evaluating a take-home pay offer?
Look into the average salary range for your position and the cost of living in your location. Think about whether the offer includes the benefits you need. If not, your take-home pay may be lower than you thought. For instance, if there is no transportation allowance and you live far from your workplace, you may spend a significant portion of your pay on commuting.
- What should I do if the company is unwilling to negotiate my salary?
Check the benefits you stand to receive. If they are adequate and can compensate for the salary, consider accepting the offer. If not, ask whether you can negotiate for more or better benefits. Do not be afraid to turn down the offer if this is not possible.
- What happens if the offer letter does not include the agreed-upon remuneration package?
When you sign your offer letter, you acknowledge that its content is accurate and reflects what you and the employer agreed upon. If there are any discrepancies, you need to bring them up with the hiring manager as soon as possible. Ask for a revised offer letter with the correct details.
- When is the best time to negotiate my remuneration package?
The best time to negotiate your remuneration package is during the offer stage of the hiring process. If you are already an employee of the company, you may be able to renegotiate your compensation package in your annual performance review. Try to negotiate better terms if you do not get the average salary increase for your industry.
