The Old Joel on Software Forum: Part 3 (of 5)

negotiating pay raise

I am a contractor for a small wing of a huge multinational. Through serendipity (or, I was out with the accountant and he got very drunk) I learned that I am one of the lowest paid contractors in my office. In fact, I am making the same rate as what a couple of glorified secretaries are making (their job is probably more important than mine, but let's not go into that).

My contract is up for renewal, and the company seems gung ho to renew, but I would like to bump up my pay rate. I'm currently being paid $50/hr. The highest paid contractor is being paid $162/hr. The other contractors make between $75/hr and $100/hr. I do the same work as the $75-$100/hr contractors. Everyone is pleased with my work. Everyone likes me. I would like to make at least $75/hr, on par with the other contractors.

What is the best way to approach this? Are there good books or articles which suggest tactics for increasing your rate with a current client?

Tuesday, January 13, 2004

I would simply say that you feel the previous contract went well, and that the quality of your work merits an increase in payrate. Tell them that you think $75/hr would be an appropriate market rate for a programmer who has proven themself. Don't come across cocky, but don't seem too shy about it. Always remember that the success of the project will do more to advance the career of your manager than keeping costs down, giving him an incentive to stick with a proven entity.

mph
Wednesday, January 14, 2004

Coupla things I would keep in mind if i was in your shoes.

1 - Dont sound bitter or whiney at all. Be matter of fact and detached. Bitter whineyness is weakness.

2 - You will probably be asked to name a number, dont expect to say "I want more" and they will throw a nice juicey new number at them. Be prepared to name a number.

3 - give a coupla reasons then give the number

"well i am happy working here and it seems people are happy with my work, Looking around at what other people, both in this organisation and in other organisations are getting, and looking at what my contemporaries with similar levels of experience are getting I would like $xx"

The key to assertiveness is not what you say but how you handle silence.

If somone tries to get you to say something and leaves an uncomfortable pause, be prepared to wait it out.

If they offer you less than you expect say "I would like to have a think about it and get back to you". Even if you get back later and agree its better than caving in minutes in front of his/her eyes. Which would make it seem like you talk but arent actually serious.

Main thing seems to be that employees think money is a big emotional issue about how worthy they are compared to others.

Employers see it as a straight practical issue, get the best we can for the least we can. If Joe will take 1/2 what Eddy will and produce better work.... great....

braid_ged
Wednesday, January 14, 2004

You might consider asking for more than $75. For two reasons:
a) The other people will likely be getting raises with their next renewal. If you want to stay at the same salary level as them, you should build in that raise.
b) It gives you some wiggle room in the negotiation.

Of course, this whole strategy is based on your implication that your work is comparable in scope and quality to these other people. If you think there's any doubt of that, you may want to be more conservative.

Zahid
Wednesday, January 14, 2004

"I'm currently being paid $50/hr. The highest paid contractor is being paid $162/hr. The other contractors make between $75/hr and $100/hr. I do the same work as the $75-$100/hr contractors"

And you wonder that they are "gung-ho" to renew?

Be careful. Are you sure that the others are getting the rates you quoted?

Wednesday, January 14, 2004

Letting on that you've heard what other people in the company are being paid might be tactless. Some companies regard that as confidential information no one is supposed to tell anyone else. (I regard *that* as stupidity, but there's plenty of it about.) Apart from that, I agree with braid_ged's advice.

Gareth McCaughan
Wednesday, January 14, 2004

Definitely be careful when mentioning what other people know, it could cost the accountant his/her job. Also, be *very* sure that they like you for your skills, not your 33% discount.

It could get very nasty if they say "Sorry, you're not worth what the others are getting, good bye"

Michael Koziarski
Wednesday, January 14, 2004

I am historically bad at these sorts of negotiations myself, so you might want to take these with a grain of salt. Here's a few additional tips:

* Don't expect to get what you ask for, and don't expect to get what you deserve. Those things have only peripheral relevancy to a negotiation. Expect to get what you negotiate, because that's what you're going to get. An obvious corollary of this is KNOW WHAT YOU WANT BEFORE YOU START. Don't try to figure it out during the negotiation.

* Be very careful about naming salary numbers. The reason that people are reluctant to name numbers is because the first person to name a number is the first person to be haggled up or down.

For example, you say "I want $75", immediately that does two things. First, it precludes you asking for more than $75 for the rest of the negotiation, and second, it allows the manager to say "that's a 50% increase, doesn't a 5% increase seem more reasonable given this economy? I'll give you $52.50." Whereas if the manager is the first person to name a number, then you have the advantages. Making the other person name the number first can be hard.

* The most powerful negotiating factor you have at your disposal is the ability to walk away. If you don't get what you want, do you walk? Do they know that? And are you replaceable?

Eric Lippert
Wednesday, January 14, 2004

I would not mention that I know what other people are making, otherwise they can argue that you're only arguing to be like everyone else. So make sure you don't mention that.

Talk about the market being better; that you can get a job for $nn elsewhere.

Say you would vry much like to stay but it would be silly of you to accept $nn when you coul be paid $nn elsewhere.

Ask to be fairly rewarded. If you're as good as you reckon you are then they are not going to say no unless you get their back up and it becomes a matter of their personal pride.

Do it all very nicely. Tell them what you think you could earn elsewhere ($75-100 or whateva) and then say that you're happy to accept the low end because you like the job (if that's where you're pitching).

One of the common retorts will be them trying to compare it to your current rate.. "You want a 50% payrise?!".. but you simply need to point out how cheap they've had you for, and actually even when they pay you the $75 you want then overall it's still cost them less than it should have.

Be firm on your price. Don't haggle, you've picked a figure so stick to it and tell them politely that that is your requirement.

If you're as good as your coworkers on those sorts of rates what can they do? Just leave them their get-out because you don't want them to react emotionally.

I've negotiated lots of times and haven't failed yet. I have accepted cuts though, the last being 20+% (from £460/day to £350/day) last year.. but that was the limit imposed by HR (allegedly) for any contractor so was harder to argue but it's a part time role and it's close to home and the market was shite and there were other benefits for me so I accepted. I get to roll in at 10:30 everyday if I want or just not work that day... which is a great perk.

Gwyn
Wednesday, January 14, 2004