How should one negotiate with one's potential employer on his/her salary? - it has always been a point of contention for many who look out for change after being employed for 1.5-2yrs or more. It remains an area of expertise for some who could always end up getting more than anyone else in market due to just mere communication abilities. Conveying right points to HR and selling oneself is something which comes by experience and practice.
Questions that come in picture while changing jobs are - Why this change? How will you add value to us? What salary do you expect? etc... Rest of the questions may be answered with full confidence but salary is one area that is one time discussed. More you discuss on that, more you show your restlessness. Deeper you delve into Basics, HR and taxes with HR, deeper you drag your eligibility away to get selected - unless you are one key resource which the company is hell bent on taking.
There are some companies that look for their own standards while selecting candidates for a profile. Say for example - for a Marketing Manager position in a company, if John applied, he would be first asked about his previous salary. Imagine that salary to be Rs 10 Lakhs/annum with perks. Now if the new company has budget of 13 Lakhs + perks, he would be an ideal candidate. At the same time the company maintains a minimum level of say Rs 11 Lakhs, below which a Marketing Manager is not to be selected. So even if John had a previous salary of 5 Lakhs, but has the proven expertise, he would get minimum of 11 Lakhs without asking questions. This happens in most of the big companies.
But normally in small companies, cost is one thing which they are more inclined to cut first. They would always ask for previous salary if they are not confident about their salary structure. If John had said 3Lakhs, they would have given him 5Lakhs. If John had said 8Lakhs, they would have given him 10-12Lakhs. This type of Marking Up strategy is prevalent in many Indian companies (not sure about abroad), which is in one way good for organization and on other hand bad too. I have had friends, who deserved 50k per month but were getting 20k. Now when time of change came, they were offered positions for packages just 20-30% higher than what they used to get. The same company would have given 30% higher for same post on 30k also for other candidate. This breaks the transparency illusion which companies talk as they are not able to justify the difference. Most of the HR work is just done on basis of maths formulae rather than pure ability.
There is another parameter that we hear is "Industry Standard". Company HRs mainly refer to this term during negotiation when you expect more from them from your previous salary. A tactics which works in cases where the candidate is new and has no knowledge about standards and how they get defined with experience. Have that calculations done with all your facts and figures by discussing it with your friends who are in similar profiles. What experiences they have, how many success stories they share, what potential they can bring to the table, how good are their communication or interpersonal skills, etc decides your new salary.
You will find some guys so bad in studies and so good in communication that when they sit for interviews, they end up getting better packages than their peers who stood 1st or 2nd in class. It is like they were born for that 1 hr of interview and whole life they have been preparing for that ;). To get good hands on some of the questions and how the answers are given, I used a website that hosts most of the interview questions. Videos are posted so one could also see body languages (http://newgradlife.blogspot.com/). Though salary part is missing, but can be an addition to the free treasure, if you go ahead with these amazing answers ;). A lot can be discussed over this topic but i leave some for your cerebellum activities :)