Demystifying Salary Information

Arun Jacob points us to an article in the NYTimes about online tools that can help in salary negotiations. The article concentrates on two websites — Salary.com and Payscale.com — that use different approaches to provide information on standard compensation packages for particular positions and roles. The theory is that, armed with information that was once available only to corporate HR departments, you could have an easier time negotiating your pay using a fact-based rather than a feelings-based approach.

Comments

my two cents

[User 956]

you could have an easier time negotiating your pay using a fact-based rather than a feelings-based approach.

Tip #1: get salary info from friends with similar experience in a similar job before the interview Tip #2: whoever mentions a number first, loses.

Re:my two cents

[forkazoo]

Mentioning a number doesn't have to be to your disadvantage. I usually shy away from it, but in this current position I named a number -- about 5% more than what I actually wanted -- as the bottom of my range, and that's what I ended up getting offered (plus a 10% annual bonus). You just have to be liberal.

(And this is for work for a major staffing company).

Ummm... I'm not sure why you suggest that this worked to your advantage. You named a number which was obviously well within their comfort zone or they would have had to decline it or negotiate it. If they had named the first number, it might have been higher since you don't know the full range of their comfort zone. It's also possible that their initial offer would have been lower, but you could still negotiate past your goal. Once you have named a number, then they know that they won't need to offer anything higher. You will never be able to negotiate higher than your first offer. Likewise, if you are offering a job, when you go first, you can never negotiate lower than your initial offer because the candidate knows you can do better.

Re:my two cents

[theshowmecanuck]

The salary surveys are good if you are moving from one region to another. You need to have some way to know the market rate if you are moving to a new area.

This is a good tip I got once, and it works for most types of negotiating: Always be willing to walk away if you don't get what you want. That means if you don't get what you want, really walk away and don't look back. If they really want you, they will follow and compromise and you win. If they don't, you won't feel bad about getting less than you want. That doesn't mean you might not haggle a bit with them. What it does mean is that you will be able to work from a position of advantage. And you won't have a look of desperation.

If you really need the job, you can always bluff, but in the end you really need the job so take what you can get. That is why it is always better to look for work while you are working. You can afford to walk away.

It's free advice. You get what you pay for.

Re:my two cents

[senatorpjt]

I've heard this a lot, and I'm genuinely curious: has anyone ever actually done a study to figure out how going first affects negotiations and haggling?

Sounds like a game called "Poker". You may have heard of it, I hear it's becoming popular.

Re:my two cents

[freeweed]

Sometimes, it's not all about nickel and diming your way to the absolute maximum possible salary. Sometimes, it's actually possible to be fairly compensated without resorting to psychological games with your employer.

If I'm happy and the employer's happy, it makes for a far more plesant salary negotiation than imagining my employment contract to be akin to haggling over a used car.

Re:my two cents

[IANAAC]

That's called "extra", not a disadvantage.

Re:my two cents

[ranton]

No, it is not extra. It is money that he seams to be worth (since the company is willing to pay it). He just doesnt realize what he is worth. If the company is willing to pay him $60k/yr, then he must be worth that to them. But if he thinks he is worth $55k/yr, and accepts a salary of $57k/yr, then he is missing out on $3k/yr. With constant 3% raises over 10 years that is $34k he is missing out on just because he spoke first. He lost out on a new Mustang GT Convertible just because he opened his mouth before the employer offered $60k/yr.

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Re:my two cents

[ContractualObligatio]

Your Tip #2 is flat out wrong. There's a known effect (supported by research) called anchoring, whereby whoever goes first sets the expectations of where the conversation is going to go. If you want the highest salary you can get, you need to be know what is possible (as per Tip #1, for instance) and then ask for it, or highball to a reasonable extent to allow for negotiation. What is reasonable is dependent on any number of factors - whether there's a conversation on benefits to be had, how aggressive the expected role allows you to be, the culture of the firm you're applying for, whether you have the right personality to ask for a high number without sounding like an asshole, etc.

Knowing what you can get can be difficult, but it pays off and for many roles and companies you can be sure there is some kind of market rate to guide your thinking.

If you let them go first, you're giving open invitation for them to set a lower salary than you would like, and then having to fight to get back up to what you wanted. And it is likely (remember the research!) that you will feel uncomfortable being too pushy despite only trying to get a fair price. The employer might start to see you as an asshole for being pushy, when if you had simply started high yourself the perception can in fact be one of confidence.

Never go first only really applies when you don't know enough about the situation to have a reasonable expectation of the outcome. You therefore run the risk of shooting yourself in the foot by asking for a lower salary than they were willing to offer. If you don't know what the options are, keep quiet and remember not to let a low opening offer anchor your own expectations too low.

For a great book on the subject of negotiation, try "Bargaining for Advantage" by G. Richard Shell. He gives an example of one of his better students (a successful entrepreneur) who always made the first offer as a way to fix the negotiation range low. So be wary of falling into the same trap by letting your prospective employer name the price if there's something you're aiming for.

Incidentally my handle is chosen to explicitly acknowledge that even in the tech game, contracts and all the bullshit that goes with them have far too much affect on our lives, but it's worth the time learning how they are negotiated and worked. A windfall courtesy of having a great offer handed to you on a plate is wonderful, yes, but it's even better if you know enough about the situation to have control, and to put yourself in the best possible position. I can remember being paid way less than what I was worth (oh, the arrogance!) and it was the most demoralising thing at work. After receiving a job offer where I confidently named a price, I re-negotiated my pay up ~38% and suddenly work was more enjoyable. Note I didn't get my asking price. So I'm fairly sure I got as much as possible, that I didn't have to be a hard ass to get it, and that I sure wouldn't have got 38% if I'd started with, "I believe I'm due a raise, what would you think is good?"

Inflated Numbers

[TheFlyingGoat]

I've never found the IT salaries to be that accurate for my region. A few companies pay the amounts listed, but most of them are around $10k less than all of the salary sites. I don't think that the IT personnel are underpaid either... I think the sites are just inaccurate. It's kind of like those places that claim they can train you for an "exciting career in computers in just 6 months". Most of their ads claim that IT people with 2-3 years of experience are making $70k/year.

While it's important to have some facts when negotiating your salary, it's far more useful to bring in a list of all of the major projects you've worked on as well as some positive review/feedback letters from coworkers (not just IT staff... talk to some other staff that like you). Bringing in a printout from a website isn't going to mean beans to a manager... it's what you actually do for their company/department that matters.

Re:Inflated Numbers

[walt-sjc]

That's interesting, I found the opposite.

I took a look at the SAGE salary survey and a few other sites. The problem I ran into is that I can't hire competent people for those rates, and have to pay 50% MORE for really good people. If you want really good people, you have to lure them away from positions that they are currently happy with, so it takes a significant incentive to get them to make a move. I've NOT had good luck with people that are currently unemployed - In general, I found their skill sets to be underwhelming.

"Web Developer"

[nick_davison]

Ten steps to misery, bitterness and potential unemployment... or how to gain empathy for your manager.

1. Go to salary.com
2. Search for a really common job. Let's use, "Web Developer"
3. Fail to find that job. Instead get offered variants of "Web Software Developer" that appears to describe a web application engineer rather than a general web developer.
4. Look at the salary range for a job that's markedly different to what you do.
5. Take offense at how unfairly you now feel you're paid.
6. Go to manager and demand a raise that you think is only fair.
7. Feel horribly taken advantage of when the manager, fairly legitimately, claims you're already pretty well compensated for the job you actually do vs. the significantly different job you found on the web.
8. Fester about the injustice.
9. Bitch about how the company you used to love is now terrible and evil.
10. Wonder why your manager who used to love you now sees you as a morale leech and someone they need to deal with.

Now see if you can guess the real reason a lot of managers get irritated by sites like this. Hint: It's nothing about being forced to pay what's fair.

Most sensible managers will want to pay a fair salary for the job they're having done simply because it attracts good applicants and a basis of fairness improves morale and hence productivity. Granted, not all managers are good or sensible but, honestly, most do try to be. Unfortunately, sites like salary.com, through their inherrent generalizations, often give thoroughly skewed impressions of what's fair and can cause all kinds of problems once someone that is fairly treated gets the impression they're being taken advantage of.

The flip side works against employees too... The last thing an employee wants is an ignorant manager finding a far less skilled job that kind of sounds similar and deciding 20% pay cuts or terminations and new hires are merrited.

Sure, they're a useful tool - but be seriously careful about building assumptions off over generalized data.

Re:"Web Developer"

[Dadoo]

Most sensible managers will want to pay a fair salary for the job they're having done

Except that, as someone above mentioned, most managers aren't in control of the purse strings. My manager is always complaining about how he'd like to pay more, because he's having an incredibly hard time finding applicants who'll work for what we're willing to pay. Unfortunately, his manager won't let him. Now, I suppose that could be an act, but as far as I can tell, he's not that kind of a guy.

Re:"Web Developer"

[beakerMeep]

If he claims his manager wont let him, it's very likely true -and- an act all at the same time. for whatever reason he is scared to push his manager for what he is telling you deserve. so either he's lying to his manager that he can run his deparment on a low budget, or he's lying to you about how much he thinks you are worth.

But dont let him get away with the "my hands are tied" argument. as your manager, if he is the one who can talk about your salary with you, then his hands are not tied. if he claims that his boss wont let him, then his boss is the one you should be talking to with merely a written review or reccomendation from your manager.

dont go over his head though, that will just cause animosity. what you should do is respectfully (and this part isnt easy, so dont kid yourself) request that you have a meeting with both your manager AND his boss. Again though, be careful, dont make it about him just say that you believe him but since rent is tough, or some other reason, you would like to take a crack at talking with the boss yourself.

Re:"Web Developer"

[Jah-Wren Ryel]

Except that, as someone above mentioned, most managers aren't in control of the purse strings. My manager is always complaining about how he'd like to pay more, because he's having an incredibly hard time finding applicants who'll work for what we're willing to pay. Unfortunately, his manager won't let him.

That is HR's job. Don't be fooled, HR's #1 job in any company of any size is to reduce labor costs. The bigger the company, the stronger HR's ability to enforce salary caps. In some companies HR will turn away exceptional talent rather than pay a commensurate salary because it "sets a bad precedent. HR is *never* an employee's friend.

Re:I care a lot

[Dadoo]

This is just blatant advertising

Big deal. At least it gets a discussion going. If you follow it, you might even learn something.

Personally, I think salaries shouldn't be secret. It's one of the ways "the man keeps us down" and nepotism runs rampant. A company should be able to justify the salary - higher or lower than normal - of every one of its employees.

The art of salary negotiation ...

[Ihlosi]

I would be extremely cautious haggling with my boss over large sums of money.

... is knowing where a "large sum" begins for the boss.

Re:crap!

[Dogtanian]

I'm getting paid like 20k$ too much... oh well, at least I've got this awesome list of tips to negotiate a fairer salary. Have you ever noticed that when a child yells "It's not fair!" it's never because they've been given *more* chocolate (or whatever) than someone else?

Re:Easy formula

[walt-sjc]

Here is the deal... Once you are employed, it's a LOT harder to get good raises - they are typically going to be 0 - 5%. Your big salary jumps are when you change jobs. 1.3X is QUITE reasonable. Even if you change positions vertically within a company, you are unlikely to get a large salary boost. If you are job hopping, obviously that formula isn't going to work, but it should work every 2-3 years. Remember, you have more experience after several years at a job too, and experience matters.

Re:You can't demystify the wife.

[mrcolj]

You know that's an urban legend, right? I remember hearing exactly that story 20 years ago, long before salary.com existed. As one commenter put it, "Find me a CEO with two employees, no revenue, and $200,000 in assets who makes $146,000 a year." If I do delivery for a pizza place, I do not get the combined salaries of a chauffer, a uniform tailor, a public relations consultant, a salesperson, and a french chef. Moms are basically like the best nannies, and those make $40K. My wife deserves millions, but not in a free market.

Re:Information Hoarding.

[Aqua_boy17]

it has to cut the loser's pay or bump yours, if it chooses to continue averaging it out. If the loser doesn't like the pay cut, separation makes it easier to average it out. And the playing field is truly level.

Or, they do nothing which I think is much more likely to happen in a not-for-profit (where I work) or in government. It's been my experience that it's very rare for these types of organizations to ever actually reduce someone's salary.

As to being paid relative to your peers, you're right about salaries being transparent. If they were, there would be a revolt and no work would get done for some time. Case in point: we had a DBA fired on the spot when she was confronted and admitted to sharing salary information from our payroll system with her peers. She got busted because others in her own group found out what everyone else was making and predictably, the lower paid staff were angry and complained to their manager. It was a good six months before all the dust settled from that and the employees that remained in the admin group got over their anger and settled down to work. I don't know if any salary adjustments were ever made or not.

Bottom line, I'm happy where I am now. But if I find out that the person coming in off the street that I have to train is making more than I am, I'm going to be pissed and I'm going to be a less productive employee. But is there anything I can do about it? Depends, but probably not, at least not where I work.

Value is not always meausred in revenue.

[twitter]

As one commenter put it, "Find me a CEO with two employees, no revenue, and $200,000 in assets who makes $146,000 a year."

The $150,000 in created value is not a revenue. ... Moms are basically like the best nannies, and those make $40K. My wife deserves millions, but not in a free market.

Not to knock the nanny, but they don't do all of the things the wife does and that's how they measured the substitution cost. People who don't grasp this concept run businesses into the ground because they don't have a real grasp on what their employees actually do for company.

Re:They'll just fire you

[Danga]

Programmers, no matter how "management" their title is, have no more business hiring than HR people have programming.

I notice you are going for an MBA and it cracks me up when people with MBA's think they are the God's of management when a lot of them (yes you) could really learn something by listening to the people you manage. I also think you are on a power trip if you think a programmer with a management position has no business hiring/managing, is that only reserved for the God's with MBA's? If you sincerely believe your above sentence then I hope I never work at a company you work at. Being able to be apart of the interview process for my potential co-workers is extremely important because I can evaluate the skills of a fellow developer much better than the typical HR drone. If someone has a million buzzwords on their resume it usually makes a HR person go nuts thinking they gotta get that person while I actually can figure out if they can back it up with actual knowledge. Unless the HR person or whoever is giving the interview truly understands the position in question and the technology that goes along with it then not having someone "from the trenches" be apart of the interviewing is plain stupid.

From the flip side if I was going to an interview at a company and none of my potential co-workers were apart of the interview I would be offended and I most likely would not take the job. I want to be able to ask the really technical questions about the position and get answers straight from someone who actually knows them.

Neither HR nor management care about saving money as much as they care about making money

These are the same thing in the end, if you can't save money then it eats away at the money you made and vice versa, any manager I know would be concerned about both equally.

a new graduate probably is more excited to work there, will work for less, and won't complain or sue; and old programers have their old ways of doing things, always demand more than market forces dictate, and always end up suing.

Of course a new graduate will work for less, that is true of any profession but I doubt ANY new graduate will be able to do 80% of the work at the same speed as a veteran programmer. That 50% money savings is not worth it when it takes them 4 times as long to accomplish the same thing and they can't do 20% of the things a veteran programmer can do. Now if the job truly is for an entry level programmer then hell yeah it would be a waste to hire the more expensive veteran. Find a person suitable for the position but don't bitch about a veteran programmer costing more when the job at hand requires that level of experience.

You crack me up saying they won't complain or sue, what do you want mindless drones working for you? I would rather have people working for me with a backbone who stand up for what they believe (within reason). If a person has a valid complaint why you rather have them be silent rather than speak out about it?

By the way what is your beef with "old programmers"? I am sure some of them are a pain in the ass but you just broadly group all of them together as overpaid complainers who have a little more knowledge but would never be worth any extra money. Is experience not worth anything to you?

That's not worth it when a young punk will do 80% as good for 50% of the money, and will have ideas.

There you go making yourself sound big and bad again since you have are going to have the MBA and think you are better than the "young punk" with a CS degree which is harder to get than your MBA (yes, I know this is true from the amount of friends I have who have gone to get MBA's). I don't get why you make it sound like old programmers won't have ideas. All of the "old programmers" I have met had great ideas, to tell you the truth they had some of the best ideas I have ever heard.

Get over yourself, you seem to have invented some hatred of "old programmers" just to validate your choice to hire