What's the Salary? (Part 1) – May 2010
By Wayne Perch
For recruiting firms contacting junior and
intermediate level candidates, one of the first
questions is always; What’s the Salary? For
search firms contacting more senior candidates,
the question is worded differently: . . . pause . . .
sound of Vice President’s office door closing,
“I am already making $xxx,xxx plus car,
membership and xx% in stock options, are we in the right range?” or “can your client afford me?”
The real fact is, that in most cases our client does not care how much you are making now, they only care how much they need you or how much income you can/will make for them. The real question is: How can you add value to their business? Most employers are as reluctant to negotiate salary, as candidates are poor at it, because neither side gets much practice or have good metrics to measure the value of different people in a similar role.
- How to get a raise? Determine how to measure value and then, add more value!
- How to get promoted? Get your boss promoted and/or add more value than your boss!
If you input ‘Salary Negotiation’ into Google, in .23 seconds, you will get 2,370,000 results. Most agree that the first thing that you need to know as either the employee or employer, is the value of this position in this market, based on market conditions - not on what you'd like to earn or have earned before. The demand for ‘Ice Road Truckers’ in July is very low and so is the pay. In January, the demand for good drivers is very high and so is the pay but it is still an hourly paid job trading your time for ‘x’ dollars. Ice Road Truckers get paid more because of the risk, the poor working conditions and the value/income that they can generate for their companies.
Typically there are three ways to determine value or pay.
Hourly/Task/Detail
If you do hourly work, truck driver, programmer, pilot, you will probably get paid, the same amount as everyone else doing the same job. The lower your contribution to corporate profit, the lower your wages. If there a lot of people that want to do your job or can easily do your job (a surplus of supply) it may take you a long time to earn enough experience to add more value that others and therefore to get paid more. A Tim Horton’s part-time counter worker with 7 years of experience does not add much more value than one with 7 months of experience.
Sales/Service/Process/People
If you manage work, a process or people, you can start to leverage your value by how well the people that work for you are working for you. If you can do your job or manage your people better than others, and therefore add more value, you can get a bonus, which is effectively entry-level profit sharing. If you can build things; new products, new sales or profits, you can get paid a lot more because you value is much easier to measure and your specific results can be rewarded.
Most of the 2,370,00 websites give a list of ‘10 Tips for Negotiating Salary’ 1) Dress well, 2) Research a salary survey, 3) Don’t tip you hand first . . . . What about: How much value can I add to your company in this role as it is now? What do I need to do to achieve maximum bonus? What do I need to do to increase the value of this role (so I can get paid more)?
Trends/Systems/Operations/Functions
If you can change the way we do business, you can significantly increase your value. If you can develop a new process or improve function, you can find new solutions for operations problems, you can add value and improve profit. If you can spot a fashion trend, business trend or consumer trend that can create a new business opportunity for our company, we will pay you very well.
Focus on How You Can Add Value
‘Adding Value’ has been an over used term of motivational speakers and publishers so here are some basic points:
Adding value: performing your duties in such a way that you are perceived by your superiors to offer an advantage to the organization over the "typical" manager in your job.
Adding value is not just doing your job well—presumably, that's your basic performance goal. You add value by giving your employers something extra, something tangible (if sometimes hard to define) that makes your boss think your salary is money particularly well spent.
There are many ways you can "add value" for your employer. None of them is relevant for every situation, and some aren't a good match for every manager role, but they are all worth considering. Here are some of the more common:
- Working your butt off: Most of us have been here before. Eager to prove ourselves, particularly in a new job, we vow that no one is going to outwork us. This technique is commonly used because it's effective. After all, if you had to lay off one of two employees, who would you be more likely to keep (everything else being equal): the one who's willing to stay late to fix a problem, or the one who's fixated on the clock, counting down the minutes until it's time to leave? On the other hand, you need to make sure that your supervisor doesn't end up assuming you'll always put in all those hours, and routinely overburden you, serene in the knowledge that you'll put up with it. There is a difference between being accommodating and being a doormat.
- Institutional knowledge: If you're like most managers, the longer you do a job, the better you get at it. More importantly, that experience allows you to build up a store of institutional or ‘Tribal’ Knowledge’—the undocumented ins and outs of a job that make you more effective than someone just thrown in that same job. This kind of knowledge can be even more useful if your supervisor is relatively new to the organization; it can give you the opportunity to educate your boss on potential pitfalls to proposed projects. The downside of institutional knowledge is that for it to be useful, you have to share it with others. Too many managers try keeping the information to themselves and therefore the value isn’t added.
- Working cheap: If the going rate for a position is x, and you're willing to work for 90 percent of x, aren't you adding value? Well, yes and no. It's certainly true that working for below-market rates will allow your company some budget freedom, and in these tough times, that's something. On the other hand, there are several problems with this approach. First, the cost-cutting logic implied in this equation never ends. What if you're up against a job candidate who's willing to work for 80 percent of x? What about overseas outsourcing—are you ready to compete on price with Bangalore's best and brightest? I don't think so. Second, while all executives enjoy saving money when possible, they are also rightly suspicious of something that looks too good to be true. Price yourself too low against the market, and companies are bound to start asking why. Finally, consider your own attitude. Wouldn't you end up resenting a company that paid you considerably below market wages for your job, even if you agreed to it when you were hired?
- Knowing what not to do: Sometimes you can add value by knowing when you can't add value. This allows you to concentrate on tasks that play to your strengths. For example, here at Derhak Ireland we find and evaluate candidates for our client’s open positions. We use evaluation tools created by other people or use outside services because that is not our strength. We go to great lengths to understand our client’s position and we know which tools to use but we don’t own or create the evaluation tools. We are very good at finding and recruiting people hard to find people: That is our key strength and that's how we add value.
- Inspired leadership: Managers are leaders. Leadership isn't just the ability to keep a project, product or process on time, or under budget. Those skills are essential but not sufficient. One way to stand out from your peers is to develop and showcase your ability to inspire people to follow you—not because they have to, but because they trust you and believe what you tell them. This is different from simply getting your team to like you. While always nice, that's not what we are talking about here. Inspired leadership is the ability to motivate a team or group to perform feats they didn't believe were possible. If you can do that, you've proven your worth to just about any employer.
- Creative ideas: Creative thinkers with the ability to problem solve will always be at a premium. If you've got the gift of conceiving new solutions for tough problems, then make sure your boss knows about it.
This is not an exhaustive list of ways you can add value, but it is a start.
Understanding Your Value
Once you understand what the market value is for your role and your specific skill set then you are in a more powerful position to negotiate. If, after your research, you determine that you will be paid less than market value, you will be in a better position to discuss the comparable salaries in the market and your own value related to the pay scale. If, on the other hand, you are at the top of the pay range, your ability to negotiate may be limited. If you can add more value somewhere else, it’s time for some sleepless nights. Maybe we can help.
