Anatomy of a Real Life Negotiation (part 1)
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.
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.
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.