Salary negotiation, it’s not all about the Benjamins

Salary negotiation, it’s not always about the Benjamins

Not just about the salary

Salary negotiation is not just about the salary. As tempting as it is, don’t just go for “da money” with your salary negotiations. There is more to it than just money.

Right now, a few tech candidates in Seattle are juggling a few offers in their job search. The recruiting process is shorter, and the numbers are getting more significant. I advise anyone considering salary negotiation and taking an offer just for the money to “think again.”

My advice is to think twice about offering a large salary to an employee to close them.

Seattle Market

Companies like Google, Zynga, and Facebook entered the hiring fray with MSFT and AMZN in Seattle. All have brand new shiny offices with catered lunches and gym memberships. Despite the 9.1% unemployment rate at the time of this writing, there is a serious war for talent within the Seattle Tech community.

As a recruiter, I encounter this every week. For the most part, we can overcome this because the candidates we are looking for are the ones who will be successful and enjoy working in our startup. These candidates are trying to get away from large, soulless companies. They are looking to make a difference to the bottom line. This breed wants to work with dedicated individuals in an innovative and hot space. 

You can add 2M dollars to revenue at a number of the larger Goliaths, and it won’t even be a hiccup on the bottom line.  It may not even affect your department. You are encouraged to make a difference when you work in a startup.  Anyone can make a real difference, and we EXPECT that you change the world daily.  Anyone can break this company in half or put it on the map. That is pretty f’n exciting.

Strong candidate

I recently interviewed a candidate I liked a lot. I liked him personally and professionally. After meeting with the team, the hiring department liked him a lot as well.

During the interview, we discussed salary. The company and the candidate recognized that “$X” would be enough to woo him away from his current employer. “$X” was high, but we realized it was also “fair in this market.”

When it came to the offer time, I felt pretty confident. He liked us, we liked him. We discussed salary early in the process, and he said the other company he talked to wasn’t as sexy as ours. The commute to the other company was double. The odds were in our favor. It was Match.com, and we were ready to take it to the next level.

The offer

We offered 6% more than what was discussed.  ($X + 6%)  I thought the salary was a bit high, but not by much, and not enough to lose the guy over. We like to come in as high as possible with our first offer and not play the negotiation game.  If you are willing to pay someone an amount, pay them. Don’t try to cheat them on Day 1. Try to save a few bucks, and someone will steal them from you, or worse, the employee will resent me as the recruiter, the hiring manager, and the company.

The candidate let us know that he got an offer that was 15% higher than we offered and 24% more than he was currently making.

He said it was a struggle. He went with the other company, and suddenly, the date went sour.

Readers Digest Version of the next 24 hours:

• I congratulated him. I said that I understood where the other company was coming from.
• I explained that I wished we could afford him, but we are in startup mode.
• I try to explain why I think our offer is more compelling and our space is sexier, how much he will learn with us, etc.
• I wished him well. I told him that if things didn’t work out, he should call us, and I would follow up in a couple of months.

This candidate is a great guy. He handled himself like a pro and was very gracious throughout the proceedings. How he carried himself made me wish we had a massive war chest.  I would have loved to go after him.  (We didn’t need to match or surpass the offer. We just need to get close and make it compelling.)

The Math

I didn’t want to offer him X + 15%. If I did, I am confident I would set him up for failure within our company. When you pay anyone a price for anything, that price comes with specific expectations. It’s just human nature.  If you don’t agree, think about this:

• When you pay a lot for a meal, you expect great things.
• If you pay a lot for a meal at a fancy restaurant and the meal sucks, you are pissed. You don’t go back.
• Pay a price and get what you expect, there is a good balance.
• If you don’t pay much for a meal, but it is amazing, you are happy. You tweet, share, and like the place on your social graph.  You are a loyal customer.

If the company needs to make a cut

When we pay someone $12.00 an hour or $100K, we expect $12.00 or $100K of productivity.  I realize that, with the talent competition, there is a little wiggle room. There isn’t 24% worth of wiggle room. One, three, or six months later, after the employee is ramped up, can they produce the expected output level?  Simply stated, “No”. There will be resentment. Buyers will have remorse. As soon as the economy turns around, our boy must start producing “X” plus 24%. There will be whispers. If there needs to be a cut or a re-org, the expenses within the job descriptions will be looked at first. They may not be the first cut but will be looked at. Once you are “looked at” in this regard. . .game over.

I would much rather come in at a fair rate and blow the job out of the water. This results in my manager thinking, “we need to give you a raise.”  This is preferred to coming in with a salary that he will not be able to deliver against. My advice:  Accept a fair rate with a review for a predetermined review/raise in 3 – 6 months. Those who do this have confidence in their abilities.  If you are asking for 15% on a 100K salary, the difference is 15K. Let’s say that for  3-6 months, we are looking at a 5K to 7.5K sacrifice. Over a 3-5 year career, which would net you $300K-$500K, not much of a sacrifice considering how much credibility you will bring.

I don’t know of any managers out there who will have the guts to say:

“We offered you more money than you were worth because the market was so competitive, but you aren’t delivering to that standard,” or “The market has changed”.  

There will be other reasons given, and they probably won’t be the truth.

If you are juggling several offers or contemplating offering the world to a candidate, I encourage you to think it through.  Salary negotiations are not always all about the Benjamins.

See you at the after party,
HRNasty

nasty: an unreal maneuver of incredible technique, something that is ridiculously good, tricky, and manipulative but with a result that can’t help but be admired, a phrase used to describe someone good at something. “He has a nasty forkball”.

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