I love tradition as much as the next guy, but I think there is virtually no advantage to employees from our cultural norm that comp information is as sensitive as health information. The advantage to employers is, ahem, fairly straightforward: they get to pay systematically lower salaries to people who don't realize that e.g. failing to say one sentence when you're 22 costs you almost a hundred thousand dollars by the time you are thirty. (The contents of that sentence is essentially "Your offer plus $5k.")
I came out of college in 2002 and was looking for a job in Dallas while my wife went to school. This was the lowest of the lows, right after the telecoms in Dallas had folded and just flooded the market with thousands of developers. Not that there were many jobs.
Thankfully I had some rather unique experience, and that helped me find a job. I took the first number they offered ($48k/yr I think).
That was a HUGE mistake, even in those times. After all, I had some fairly unique experience.
My second mistake was a couple of years later at the same company. We were recently bought and I took that as an opportunity to negotiate my salary. They asked me what I was looking for, and while I had done my homework on market rates...I really undersold myself. A part of me hoped that they'd come to a more competitive number on their own.
They didn't.
It put me in the weird position of asking for a proper market-rate adjustment just 6 months later. I got exactly what I asked for the third time too, but this time it was much more fair.
Over that period I probably lost $70k all told.
Huge mistake.
That's not the worst mistake you could have made though. For my first job, I was interviewing with a company that a college acquaintance was working for. Through a mutual friend, I had a rough idea how much this acquaintance was making... or so I thought.
When the salary portion came up, the company recruiter asked me how much I was expecting. Being incredibly naive about such things, and thinking I knew how much they were willing to pay, I gave a number.
What happened next is something I'll remember in every salary negotiation for the rest of my life. The recruiter apologized, and said that they simply didn't pay anyone that little, and she told me their company minimum and asked if I was ok with that. Sheepishly, I accepted, knowing that I had just completely screwed myself and I really was no longer in a position to negotiate for more.
After negotiating like patio suggested, you receive the offer and ask a few days to consider.
You then contact back and say that currently there are two/three offers on the table that you are considering. And since each has its merits, you decided to choose based on compensation and ask if there is any wriggle room on their offer.
Usually works perfectly, and even if it doesn't. You end up feeling that you really got the best they could do.
As for trying to claim another offer to get more pay... Bad idea! You're unlikely to have the offer retracted-- simply divulging that your offer was rescinded in the right corners of the internet will damage the firm's reputation in a way that is more costly than the cost of retaining you for a few months, but the "I have another offer" trick, if you use it to negotiate more compensation than you deserve, is going to damage your reputation among those who know you used the tactic. Yes, they'll hire you because rescinding an offer leads to negative press, but they won't like you much.
Also, firms that lowball are generally not places you want to work. It's a huge warning sign. I got an offer at a company that lowballed me, I negotiated a 25% increase, and went to work there, and it was still a mistake. My observation is that the initial offer gives you the best sense you'll ever get (better than performance reviews!) of what those in power at the company think of you. If you negotiate a higher offer, you'll get a little bit more cash, but won't improve their perceptions of you. So you'll get crap project allocation and a high salary. When layoff season comes around, guess who's at the top of the list?
A good company will pay you fairly regardless of your salary history and other alternatives, and likewise not be pushed around by high offers from, e.g., Wall Street, an industry that throws money at people so they ignore its deep cultural problems and generally low quality of work.
If you want to negotiate a higher salary, there's a right way to do it and a wrong way to do it. The wrong way is to say, "I have an offer at Goldman Sachs for 50% more", to which most self-respecting recruiters will say, "Then go work at Goldman." The right way is to say, "according to my research <don't disclose what your research is, especially if it involves people at the firm> the proper salary for a person of my position is $<X>. I also believe that I have considerable long-term potential both on the technical and executive ladders, so add 10%. Also, I don't need the 10% hiring bonus upfront so why don't we just include that in my salary, which allows you to pay it on a later schedule. So $<1.2X> is what I consider a fair number." The negotiation needs to be about what you can do for them, not what you can get from a competitor.
You claim another offer to expedite hiring processes and to have leverage to ask for more insight into the work you'll be doing (and for more interesting work, to the extent that such things can be bargained). What you want to show is that you respect yourself and are looking for the best fit for you and your career, not that you're a mercenary who is only going to be there because of $5-10k in marginal compensation. People talk more than they should and you can get a negative reputation before you start if you do this.
Use the extra days to your benefit and come back with a realistic counter offer.
Remember, it does you no good to be that guy who extorted the company, but it does you no good to lowball yourself. Everyone needs to make a profit off the exchange of services for cash.
I can think of a handful of companies off the top of my head that would immediately rescind the offer if you made this proclamation. I'd be careful about doing so.
Wow. As a CS-grad about to take a full-time job offer, I'd surprisingly never thought of this at all. But how easy is it to say "Your offer plus $5k"? What could be the possible consequences of this?
You: I don't know, you're in a much better position to judge my worth to the firm than I am.
Decisionmaker: But in terms of an actual number?
You: [Polite nothings. Repeat as necessary.]
Decisionmaker: Alright, how would $80k do?
You: That's interesting. Would you do $85k?
Decisionmaker: OK.
That is literally how simple it is, and your downside risk is "Alright, in that case, $80k is alright" and nobody will remember this conversation 2 weeks from now except your checking account. You can do more complicated things, like demonstrating value to the firm, or treating any no as a suggestion that you negotiate some other aspect of the offer instead, but the simplest way to improve outcomes at negotiation is to actually negotiate.
The marginal $5k gets compounded at every annual raise you have, virtually certain to be calculated by an HR drone's spreadsheet by multiplying a contentious number by a very non-contentious number (your current salary -- now $5k larger). It will increase other benefits you receive, such as employer match to your IRA. If you actually treat questions about salary history at face value when switching firms, it will also act as an anchor for your pricing for the rest of your career. (Giving out salary history? Yeah, that's another thing that can't possibly help you. Anyone asking you for salary history is saying, in as many words, "Please give me a reason why I should give you less money.")
They won't retract the offer or anything. And even if they did, you probably wouldn't want to work for them in the long run, so would be doing you a favor.
I'm no expert on the state of the art in salary negotiation books, but http://www.amazon.com/Negotiating-Your-Salary-Make-Minute/dp... is decent for getting you in the right mindset.
Now, you may have to convince them you're worth getting paid higher in the range for that role but you should definitely counter-offer.
Also, my general rule of thumb while negotiating is to counter with a number higher than you'd be happy with and then negotiate to something near the middle of the two.
(I learned all this the hard way in my first job, but fortunately my manager was awesome and I got a 50% raise after a year.)
On average. For (perceived) good employees that have above average negotiating skill, there can be a big advantage to this system.
You can say that again. The takeaway should have been to find another job, who would want to work for a company like that?
I didn't think so.
Early in your career, your market value increases so fast that there's simply no way a percentage raise can keep up.
I remember a situation at my 2nd job after college, where I knew that I was worth almost double what they were paying me. I told them as much and laid out the case as to why. They bent over backward and scraped together something like a 20% raise, which they probably thought was pretty good.
Of course, on top of a junior dev salary it was still way out of line with what I should have been at. I polished up the resume and within a couple weeks I accepted an offer for roughly double my pre-raise salary. At my exit interview I told them how much I loved working there (it really was the best job I ever had), but I just couldn't afford to leave that much on the table.
It was probably the smartest career move I could have made, and it really drove home the point: You don't adjust your salary through raises in this industry. If you want to be paid what you deserve, you need to switch jobs.
I just got a 2.6% increase after two years - despite that I am a one-guy centre of competence. However, they are paying for me to emigrate (shipping + language courses + letter of guarantee for apartment deposit), replacing the inappropriate job-title-suffix 'assistant' with the awesome prefix 'research', and it is an awesome job.
The trick is knowing your value and making sure your company knows your value as well.
How early is too early to switch jobs?
It also depends on what you're doing and whether you're genuinely good. If you have a chance to build something that you can point to to prove that yes, I really am good at what I do, then you'll have a much easier job convincing the next place to take you on.
If that spreadsheet happened to be in my hands, I wouldn't know how to exploit it. What the author did is ruined the relationship with his manager over a crappy 2% raise.
I would just return it, make a joke, and started interviewing. If you're at the bottom while they tell you that you're great, it's a long way up.
He didn't go on the offensive when talking to the manager. It would have put the manager on the defensive and surely ruined the relationship then.
Instead, he tried to take the approach of what can he do to make more. He finally got constructive feedback, got a clear explanation of why the differences, and asked for harder assignments to prove himself.
Right, and in return the manager put the squeeze on him which cost him thousands if not tens of thousands over the years. He should have
* gone to the manager first and have asked for a higher raise (in a non-confrontational way).
* used it as leverage for a better description of what he needed to do to get a higher raise in the next review round
* not let him be pushed in a corner where he's being compared to his colleagues. This is a sure loss position. You need to differentiate yourself so that you are freed from the mental chains of other people's salaries, and you can argue a higher salary on individual merit. This is a rookie mistake I hear so often (and that people have thanked me for pointing it out to them when I discussed with them about their upcoming salary negotiations).
(apart from this, it's refreshing not to have post scores visible!)
The relationship is what it is. The only thing was before, the manager knew it and he didn't. c/ruined/revealed.
Fortunately, she changed jobs from academia to industry, and probably now makes two to three times as much as me...
Part of the disparity is likely negotiating tactics (I know one employee who got a nice raise after getting a competing offer), and the desire of the company to pay the least amount possible.
For me, another big part is that my job can't be directly attributed to a revenue stream (we're in the services industry). For those who's jobs are directly paid by contract with the client, they'll pay whatever the client will agree to. For those of us in "overhead", they'll pay as little as possible because it's difficult, if not impossible, to assign a dollar amount to the value that we bring to the company.
I would venture to guess that devs that work for software development business get paid more than those that are just in IT at a non-software company.
It's not even just about salary negotiation; knowing you can walk away whenever you want to (and actually believing that you will if you decide to) gives you the freedom to take risks and just have more fun at your job in general.
I believe the only people that can truly justify their pay with any accurate metric are salespeople. They are paid entirely by commission and no sales means no income so there is no question about what they are paid. They do get additional perks like company cars, expensed meals, etc that fall outside the metrics. So 10 developers work on one product that draws in $2 million of revenue. How do you slice that up? by lines of code, hours worked, bugs squashed?
I would also say that large software companies pay developers more than small software companies. But I find this to be the case in almost every industry.
And you don't have to take any of the offers you get, you can do what ever you like with the information. But if you want to know what you're really worth this is the only true way.
In all the technical teams (sysadmins, dbas etc) that I've managed, I've consistently seen variations of between $50k-100k between the lowest and highest paid person of the same skill (ie I'm not comparing junior to senior staff).
The things I learned as a manager:
* Always know what the market is paying for your skills. Even if you are not looking for another job, remain subscribed to job websites so you understand what the market is after and what it is paying
* Sharing salary information with people you trust is incredibly valuable - you need to know where you stand. It's in the companies best interests to keep everyone in the dark - it means you won't know your true worth.
* If you love your job, by all means stay - but make sure you aren't using that as an excuse to cover up the fact that you are scared to make a jump, or that your ego is wrapped up in your job title. There are no medals for long service - and as companies (in my experience) generally only pay market rates to external hires, you are better jumping jobs every few years than staying in the one place. You'll develop more skills, earn more money, and I believe in the long term more employable.
Disclosing/discussing your salary, while often forbidden in your employment contract, isn't enforceable in many countries.
In the US, some states have specific laws that make such clauses unenforceable (yes, even if you sign the contract). Beyond this, Section 7 of the National Labor Relations Act says that you have the "right to engage in concerted activities for mutual aid and protection." The section has more pretty clear wording on just how well-protected you are.
In the UK, the Equality Act 2010 also protects such discussion/disclosure for the purpose of ensuring you aren't being discriminated against (how can women know that they are being paid less than men if they get fired for talking about salary).
I have to believe that other countries have similar laws, but you should obviously double check.
Of course, if you piss people off, they can generally get rid of you for some other infraction (or none at all). This is easier in some places (like the US with At-will employment) than others (like the UK where I'm told it's considerably harder).
I am curious though with whom the burden of proof lies. If your employer says they fired you for no reason (as they can), but you say they fired you because you discussed your salary...something's gotta give. If you can prove that you discussed your salary before being fired, I would think it would look very badly on your employer. At-will might mean that they can fire you for no reason, but it doesn't mean that they can fire you for any reason.
Managers, read up. Do you want to make your team members feel like this? Communicate clearly beforehand about what leads to incentive pay (good code) and disincentive pay (chatty phone calls). If you didn't communicate clearly, you don't get to skimp on labour costs.
Being cynical, I would say that up to the point the info leaked, you had a good developer at a cheap rate who actually thought he was being paid well. A win win for the manager.
However, I think the way raises are calculated needs to be revised. Currently raises are typically some percent of the salary and the range of percentages is fairly narrow (so the disparity remains constant). If instead raises were calculated with the goal of equalizing the salaries of like-performing employees the disparity would fade in a few years.
The problem with this, of course, is that lower paid employees get larger raises, which may seem unfair to the better paid employees. This can be solved by making salaries more transparent.
Although if salaries were more transparent then you probably wouldn't have as many problems in the first place.
a) everyone thinks they're smarter / better / faster etc than the folk around them.
b) everyone thinks they deserve "above average" pay.
c) there is always someone else at the company making more. There's always some company down the road paying more.
given these constraints there are always going to be people who think they deserve, or indeed want, more. No matter what he does a bunch of people are gonna be upset.
Reminds me of the time I was managing 3 developers, and all 3 independently came to see me to complain they weren't being paid more than the other 2, when in fact they worked harder than the other 2 and were more valuable. Of course they measured "worth" differently to me, but whichever way it turned out 2 were gonna be unhappy.
My point is that a) you cannot make all the people happy all the time b) chances are, at least some of the time you'll be in the unhappy group. c) if you change jobs every time you're not happy (in this context) you're gonna have a lot of jobs because every manager is working under these same constraints.
Or put another way - the rules of the game are not set by the manager - therefore changing jobs to find a better manager (generally speaking - and in this context) is not a fruitful solution.
I'm _not_ saying all managers are the same, or you should work for a moronic manager who is bad at their job. I am saying that in order to play the game it's helpful to understand what the rules are. The running-back can blame the quarter-back all day long, but if what he's asking for is unachievable, then no amount of quarter-back-changing will help.
This is true indeed for a worse than average developer: after a year or so the employer learns that they are not really worth the money; at this point it will be hard for employer to cut back the salary.
Any developer (good or bad) stands a better chance to get hired by agreeing to lower compensation. Best developers have a good chance of successfully negotiating a significant salary raise after a year or so once they've proven their worth. At this stage they have much more leverage over the employer because it's quite costly to let a good developer go.
Overall I feel the author could have negotiated a much better deal.
I like Roger Dawson's 'Secrets of Power Negotiating' myself.
Play boardgames, if you have no other opportunity. (Diplomacy is good, and can be played by email.) Or start haggling in shops.
Salary increases tend to be considered in relation to your current salary, not in relation to your value to the company, unless you do something mind-blowing. Better to get in at $120k and never get a raise than to get in at $80k and get small raises every 6 months.
So he gets back to me and says they want me but my salary requirement is a bit high. Hmm, okay, what do you have in mind? He throws out a number that is $30-40k lower than my salary requirement. I laughed out loud and said good luck finding the right candidate.
I found the same job listing on Craigslist the other day. They lowered the years of experience from 5-7 to TWO, and made a bunch of required experience optional. Good luck with that!
Now, 2 years in, I have the experience out of uni to be able to move to other jobs, but i'm still on a pathetic salary, with no additional benefits or anything, even during crunch times.
Since coming to this realization, I have made a plan to do something about it, so I have started learning new programming languages and tools, generating a portfolio of project euler problems, brushing up my CV, etc. Articles like this serve as good motivation/reminder that I need to keep doing this and aim for something better.
Only if you have no better options. This guy was building a house and probably had limited savings. His manager knew it. If you want a higher salary, improve your negotiating position—for example, by having enough savings to live for a year at your current lifestyle. Focus on accumulating that cash reserve before building a house or otherwise overextending your finances and you'll suddenly find yourself less of a pushover when performance review time comes along.
(sent from phone)
