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.

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.

The end-of-year bonus will be here before you know it. Some companies have a written-in-stone procedure to determine bonuses such as using a factor of the employee’s salary and the company’s profit to formulate a bonus.   Many other (often smaller) companies use a more seat-of-your-pants process. It may be each manager is given an amount to split amongst the department as s/he sees fits.

Regardless how the bonus is determined, now is the time to remind management of your impact this year. The people who do this will be top of mind for managers while those who do not will be seen as being okay with whatever is given them. Really, do you want to be okay with just any ol’ thing?   Even if you think your manager has no say, it is worth having a bonus conversation. It is a good reminder for raises, promotions, and not to be on the next round of lay offs list if it doesn’t impact bonus.

Remind yourself of the work you have done before popping in on your manager. Your impact on revenue and costs are the best arguments for additional money. Employees tend to think in terms of their actions when discussing work, i.e. “I managed the Smith project.” Try figuring out what the Smith project generated or saved the company and talk about that instead. Let’s face it; money is the fuel of all organizations including non-profits. When you show that you know how you are creating more fuel then you have a much better shot at getting more money (fuel for your household). Did you complete the project on time or even early? Did you bring the project under budget? Can you compare this to other projects managed by other people? When all was completed would the project itself bring in more money for the company or save money? Most likely the project would not exist if it did neither of these things.

Don’t worry if you are not management. Each employee is considered a revenue generator or cost center. Take a great waitress. What makes her better than the other wait staff is that she is brining in more money each shift. She probably is doing this by pushing higher end liquor and turning her tables over quicker in the friendliest of manners. Don’t talk about turning the tables over. Talk about the average revenue per shift. Here is a sample of things to consider for different types of employees:

• The money saved in vendor contracts that you negotiated to lower rates
• The money saved in your widget redesign that takes less time or material to produce
• The increase in revenue based on the customer service improvement you implemented resulting in a higher percentage of return customers

The list can go on and on depending on the type of work you do. As the saying goes “follow the money” and you will figure out your financial impact.

Once you know your impact it is time to pop in on management. Notice I refer to it as popping in. You don’t want to make this a big deal. It truly is a quick touch base. You state your case and leave. You are not waiting for a more meaningful response from your supervisor than “I’ll take it into consideration.” So, what do you say to start the conversation?

You: Hi, boss. I know the end of the year and bonuses will soon be here. Just a reminder, I saved our company $X by doing Y and made the company an additional $Z by doing Q which is why I believe I deserve the high end for bonuses this year. Do you agree?

From there you and your boss are having a conversation. It may be very brief or it may open up a longer conversation.  Regardless, the fact that you had this conversation just gave you a better shot at more money come bonus time.

Boston, my hometown, is a great place for inspiration to set yourself free of the fear to negotiate pay and benefits.  As the birthplace of our revolution reminds us, one is not handed equality; one has to fight for it. In the same manner, women need to speak up to have a shot at equal pay. As an added bonus, one estimate shows that people who negotiate can earn as much a $1 million more during a career. So, women here are five tips to negotiate your pay and benefits inspired by the many historic sites and a holiday that are Boston.

The Old North Church: “One if by land, two if by sea.” The British could arrive one of two ways. Either way, the patriots were ready.   They created options to handle the potential situations. Similarly, there is nothing as effective in negotiating as not needing to take a job. Create options so you do not need to accept anything offered.  You can do this by talking to recruiters who contact you especially when you are perfectly happy at your current job. Hey, they will need to offer you the world to get you to leave something you love. Guess what? They often do.  If headhunters are not contacting you, then apply to a dream job that you think you have no shot of getting from time to time and update your LinkedIn profile so recruiters will start contacting you.

The Battle of Bunker Hill: It’s been decades since I walked to the top of the Bunker Hill Monument. I could say the lesson from the Monument is stamina. Keep going until you reach the top but I’m going another route. The expression “don’t fire until you see the whites of their eyes” came from this battle. The saying means don’t use your vital resources (bullets) before you are sure they will have impact. The same is true with answering two common questions; 1) what is your current pay and 2) what do you want to earn. Don’t shoot this information out in the application. Just skip over the questions or enter “0” if the field is required in an online application. Your pay will first be used to compare you to other candidates and then to benchmark your salary offer when you get the job. With the gender pay gap at 23%, your current pay will make you look less desirable than the male candidates and hinder you from getting an interview. When you do get a job offer, the salary will be lower if you had a low previous pay. Also, as a woman, you will most likely state a desired amount of pay that is 30% lower than the guys are saying. Once again, lowering the amount of pay offered should you get the job.

Tea Party Ship: Say NO just like our fore fathers and mothers said. Instead of no to taxation without representation, say no to the first salary and benefits offered. Managers expect negotiations so that first offer is never the best one. You don’t even need to say the word no. Try “That offer seems low based on the current market.”

Evacuation Day: I know, it’s not a physical place but it definitely is part of the background of Boston. Growing up, Evacuation Day was one of my favorite holidays. Let’s face it, Evacuation Day creates a way for Irish Proud Boston to celebrate St. Patrick’s Day since Evacuation Day falls on March 17th. This is a great lesson in finding creative solutions. Incorporate your benefits package in the negotiation so you can be creative. You can’t increase the base salary. How about a signing bonus? Commuter allowance? Cell phone allowance? Additional vacation time? Putting more things in the mix allows both parties to find a fit that works.

USS Constitution aka Old Ironsides: The warship survived very lengthy and close range battles. Just like a warship, you need to be ready for a few shots to come your way. The more ready you are, the more likely you are to overcome the pushback in the negotiation.  Classic NOs from hiring managers and recruiters include:

“We can’t afford to offer you more.”   You can prepare your response by having researched the organization’s finances for the past few years.   Your response will be something similar to, “Wow, that’s surprising. I saw your profits grew double digits for the past three years.”

“We can’t pay more because that’s the highest pay in the department.”   You are looking for pay that is the market rate for the job. Research salaries on one of the many salary research sites or job boards that exist. Check with a trade association for your industry or job function.   Then respond with, “That’s interesting to know but not what matters. I’m looking to make market rate for the job and that offer is below market.” You can see more responses to Classic NOs in this free download.

Take to heart the five tips above and you can emulate the Boston sports teams and become a champion at salary and benefits negotiation.