Anatomy of a Real Life Negotiation (part 1)

Woman hand writing PAY RAISE word with a marker isolated on white.Thanks to Leah Moschella of Boston GLOW, I know about this amazing podcast, The Intern, produced by Allison Behringer. I am now a fan of Allison. The episode entitled What’s Your Worth shares a real life negotiation for a pay raise. To the best of my knowledge it is the only real life pay raise negotiation that we are allowed to be a fly on the wall. I had the chance to talk on the phone with Allison. She confirms this is not the full story of her negotiation. She crafted the many parts of the process into one succinct, enjoyable, and engaging story. The resulting story is a master class for everyone. Employees should listen to hear a negotiation before they have their own. Managers should listen to learn what is going on in the employee’s head. Men should listen so they can hear how different women’s negotiations sound from their own.

Spoiler alert:  Allison got a raise.  I believe there was the possibility for a bigger raise.  What could have been done differently to get an equitable result for the employer and the employee? Many things. There are eight things in particular that I believe are worthy of highlighting. This blog post will cover the first four. I’ll post part two with the remaining four next week.

F**cking Unheard Of

Here’s what James the Manager said as reason for giving a raise that keeps Allison underpaid.

     James the Manager: What I’m saying is, like, you’re six months in. You have this product that you essentially own. You are driving it. That’s kind of f**king unheard of. That’s really an amazing opportunity.

What I’m saying, James, is that Allison should be paid for the thing that she is doing that is f**king unheard of. You would not let her own the product if she was not good enough to own it. She far exceeds expectations and is doing producer work with an intern title. Let’s pay her as such instead of talk about her work as an opportunity for her career.

My Advice to Allison:  Agree that you own the podcast and that it is unheard of.  That is exactly why you deserve better pay.  Allison is like most women who according to McKinsey, have to perform while men only have to show potential for promotions.  Performing at such a high level should be rewarded now with pay and a possible promotion, not later.

Intern

Allison was hired as an intern. Internships by definition are designed to give experience to people with no experience. Internships have an expiration date. They are not to last forever. When hired, the agreement Allison signed stated that the compensation would be revisited in three months. It is now six months after she was hired. She is producing and hosting a podcast with 70,000+ downloads and sponsors. Both are above the success factors established for the job.

My advice to Allison: The ask should not be for a raise but for producer title and the appropriate pay as a producer. Comments that “To be fair, to be fair, like no intern is getting paid that,“ would not be made as objections to appropriate pay if the ask is different from a raise with the same title.

Not Cool

     James the Manager: We want to, like, look at this and then again at the end of season   one. More because we think it’s, we just think it’s, like, not particularly cool to sort of, kind of, renegotiate right in the middle of something.

Brilliant move, James. He just made Allison feel unprofessional for holding James to the agreement the company made with her to review her pay and that they are actually three month delinquent in doing so. Brilliant.

My advice to Allison: Call him on it. It’s disingenuous. “James, it’s not ‘not cool.’ It’s the agreement we made when I joined the company.”   Allison does not share in the podcast that there are any stipulations other than time passing for the review. If that is the case then she can counter James when he says, “three months in, we didn’t have anything.” Her response should not be to agree with him but to say, “there were no other conditions for a review other than time. I guess I’m the one who could say ‘not cool’ to changing the rules in the middle of something.”

Percentage is Meaningless

James the Manager can get as please as he wants about giving a 10% raise but as the math and the research shows, he’s at best 25% of the way to an appropriate raise. Let’s walk through it.

Employers are budgeting raises for 2016 at 3% on average. The rule of thumb is you should never change jobs unless you get a 10% increase than what you are currently earning. Well, if that is the rule of thumb for candidates then it’s the rule of thumb for employers to offer about 10% more than you are currently earning regardless what the market value of the job is. That is the first problem with using percentage to figure out a raise or starting salary – it does not take into account the current market rate. The other problem is that statistically women and people of color are earning 20%+ less than men who are white or has Asian ancestry.  Statistically, a 10% raise will not get them to the appropriate pay.

Here’s where those math word problems from school come in handy.

Allison is earning $50,000. According to her research, her job should pay $70,000 – $80,000. What percentage increase does Allison need to earn the appropriate amount for her job?

(70,000-50,000)/50,000 = 20,000/50,000 = 40%

(80,000-50,000)/50,000 = 30,000/50,000 = 60%

Answer is 40% – 60%. An average 3% pay raise will not get Allison to pay equity. A 10% pay raise, which is considered the equivalent of a promotion or new job is not enough to get Allison to the market rate for the job.

My Advice to Allison: Ask James why he thinks 10% is such an amazing amount. He states 10% with such flare that he obviously does. After he responds, talk how percentage is meaningless when you start so below market. An intern should start below market of an employee but using that intern pay to determine full-time real employment pay is meaningless. It is for this reason 10% is a meaningless reference point.

To be continued next week in part 2.

Your Referral Program is Killing Diversity Efforts

Employee Referral Programs have long been hyped as the number one means to recruit great employees. Among the many reasons include:

  • Referred employees onboard quicker than other new employees
  • Referred employees’ retention is high
  • Referral programs are cost-effective means to get good candidates
  • Referral programs turn every employee into a recruiter thus widening HR’s reach

Bigger Bonuses for Diversity Referrals
Last summer, Intel doubled its employee referral bonus for diversity hires. This sounds like referral programs can improve diversity efforts, yet it highlights that referral programs are not bringing in a diverse crowd.  As Kara Yarnot of Meritage Talent Solutions wrote, “By putting a higher ‘bounty’ on a minority candidate, you are essentially saying that only money will drive employees to refer these people.”

Referrals Equal More of the Same
That is just one problem with Intel’s new bonus and it highlights an overarching problem with Employee Referral Programs in general. You get more of the same with Employee Referral Programs. More of the same was great when it was cool to have a lot of white men running everything. Those days have passed. Research shows time and again that more diverse organization are more successful, with success being defined as profitable.

Candidates referred by director level and higher employers almost always get hired. It happens 91% of the time. So 9 out of 10 candidates referred by upper management are hired. I imagine the 1 out of 10 who is not hired is presented in a manner to ensure the referral is not hired.

“Hey, this is my sister-in-law’s brother. I need to refer him so I continue to be welcome at Thanksgiving dinners. He’s a mess. Can you do me a solid and phone screen him but then not move him forward? I’ll owe you one.”

Leadership in business is overwhelmingly white men. According to McKinsey & Company, 97 percent of US companies have leadership that DOES NOT reflect the demographics of the US workforce. As the EEOC wrote back in 2006,

“Unless the workforce is racially and ethnically diverse, exclusive reliance on word-of-mouth should be avoided because it is likely to create a barrier to equal employment opportunity for racial or ethnic groups that are not already represented in the employer’s workforce.”

I’d like to add gender diverse to the EEOC’s comment. Hiring nine of 10 referrals from leadership is not an exclusive means of hiring but it is highly preferential. It highlights that such referrals trump other candidates including the candidates found and charmed through diversity programs. Diversity programs that have costs, efforts, and time associated to them.

Referrals and Diversity Recruiting Working Together
At its core, this preference of leadership referrals highlights how impossible it is to say no to the boss.  Put a process in place that acknowledges leadership referrals while not completely railroading every other recruitment method and no one will have to say no to the boss. I recommend:

  • Anonymous reviews of candidates’ resumes or applications by interviewers will enable all involved to give honest feedback on credentials.
  • Grading systems that give points for referrals and more points for referrals from leadership keep the “juice” of such referrals with candidates but does not squash all competition.
  • Provide the feedback and grades to referring leadership on their candidate, the winning candidate, and other finalists so they can accept or overrule hiring decisions not in the favor of their referral.

Having such a process takes the onus off  recruiters and hiring managers. Having such a process shines a light on the lost opportunity of hiring the referred candidate instead of the winning candidate. Then again, the referred candidate and the winning candidate could be one and the same.  Just not 91% of the time.

 

Help! My Paycheck is Broken

At its core, the pay raise conversation is the same as telling your boss about any other broken tool. You don’t sweat for one month about saying the Internet is down, the printer is broken, or your chair is uncomfortable. Instead you expect action to fix it and go about the rest of your day waiting for your manager to solve the problem. Borrow that mentality and the pay raise conversation just got less nerve-racking.

It’s 3:00 PM and you have a big meeting the following morning at 8:30 AM. The company printer breaks as you are printing the many materials needed for the meeting. You try all the tricks you know (turn off and on, check and replace the toner or ink, check for a paper jam) but nothing works. Off you go to your manager informing her that, “the printer is broken and we have the Cuddy meeting in the morning!” You don’t even need to finish the rest of your thought. Your manager has the solutions at the ready and replies, “let me take a look and if I can’t fix it, you’ll need to go to a print center.”

You knew the options as well but your boss needed to approve the cost of using a print center. It is not your job to decide to spend that money. It is hers and you know it. The same can be said when you know your pay is not enough aka broken. You know the solution (more money please) but it is not your responsibility or authority to create. It is your manager’s.

Know the problem, state the problem, and then sit back and wait for a solution to be suggested. Granted you may not like the initial solution and will need to state that your paycheck is still broken. It is not until this moment, that I recommend employees throw out their pay and benefits ask.  You want to give your boss the chance to offer you more than you expected.  It can happen and often does.  Sure you still need to know what your ask is and what your goal is. You just don’t need to put all the solutions on the table when you point out the problem.

I hope you don’t think I am referring to you as a tool. No one wants that. The tool is your paycheck. The right pay keeps you with the employer and employers hate turnover. The right pay keeps you motivated to do the job well. The right pay keeps you focused on work and not on your bills. Truly, it is just as important to your employer to find the right salary for you as it is to you.

Do I Look Fat with this Paycheck?

How often have you asked your spouse, significant other, or friend, “do I look fat in these jeans?” The fact that you are asking the question means the answer is most likely … YES. The answer you want to hear and will get is a resounding…. NO. Whoever is asked the question just wants to get out of the conversation without hurting anyone’s feelings. No is the quickest and most effective means to accomplish this.

Questions about your paycheck are the work version of this. The mere fact that you are concerned enough to ask should tell you most of what you need to know. The answers are designed more to end the conversation than to enlighten you.

“Am I paid equally to the guys doing the same work?”   “Yes.”

“Is this raise on par with the bump in pay the others got?” “Yes.”

“Did everyone’s end-of-year bonus get cut this year?” “Yes.”

“Is this offer negotiable?” “No.”

“Does everyone get a pay cut for an increase in flexibility?” “Yes.”

“Have others gotten a promotion but no increase in pay?” “Yes.”

These are just a sampling of some of the questions clients have shared with me. Then I have to burst their bubble. I feel a bit like a nicer version of my then 7-year old brother announcing, “there is no Santa!” as he showed 5-year-old me where Mum hid the Christmas presents. Thanks, Johnny.  I’ve been cynical every since.

I’m not dinging you or your boss in these scenarios. Just like I’m not dinging your friend for bold facedly telling you how amazing you look in those jeans when you really don’t. Instead of asking your boss, research the situation. Research what is happening in the market. Research the company’s financials.

Then try having the conversation with some data in hand and without a Yes or No question.

“In the past when we discussed raises, I’ve been told the company can’t afford it. I was surprised to see net profits increased a minimum of 10% over the past three years. Can you explain how that translates into cannot afford a raise?”

“I’m very interested in the promotion and delighted that you thought of me for it. The problem is taking a new job without the appropriate pay for it seems more like a punishment than a pat on the back. Here’s some information I researched on the current market value for that job. What can you do to get the pay inline with the market?”

“Thank you for the great performance review and the accompanying raise. Unfortunately, the modest raises these past few years means I actually lost purchasing power. Just to keep up with inflation, I need to get an x% raise. It seems as though I should get more than just staying even based on these great reviews. What can be done to address this issue?”

So let’s make a pact to stop asking if we look fat in these jeans. We know we do. And let’s make a pact to stop asking if our pay is good. We know it’s not.