How to negotiate with broker

I had interviewed for a right to hire contract position. The interview went great. Both the manager and technical interviewer said that I was the only candidate with all the qualifications they wanted. They want to hire full-time after a 6-month tryout. The broker is low-balling on the rate. I got a job description from the broker's office that gave the rate range as $45 - $65. I don't know if they meant to give the range or not. The broker is offering $50 as W-2. I asked for $65. Broker is playing word games with how much I am earning at my current job,etc.  He further says, the client will pay about $85K as full-time, after the 6 month try out. If that is the case with $85K + Full benefits, how do I determine how mcuh the client might pay for the six month try out as a contractor. I would guess I should earn higher than $50/hr for 7 hours/day. I don't know how true the quoted range ($45-65) is. But I offer the expertise they need and they told me so.  This is my first contract. I am willing to walk if they don't negotiate the rate higher. How do I phrase this to the broker without being offensive or unprofessional?

Mike
Monday, May 10, 2004

If the employer is prepared to pay a salary of $85,000, he would be paying $85 to $100 per hour for contract.

The lying arsehole you call a broker obviously wants to earn $35 per hour or higher himself, for sitting on his bum while you work.

Do this - contact the employer and tell him you're really interesting in his job, but have another offer, and wish to find out more information without the broker getting in the way. Just confirm the employer wants you.

Then tell the broker you have another offer at $70 per hour but will accept $65 per hour at the first place because you like the job. In fact, tell the employer this too.

If the broker refuses, call the employer and tell him the broker is stuffing up the hire.

If the broker says the contract is confidential, ask him why. If he threatens legal action, tell him you would like that.

Inside Job
Monday, May 10, 2004

keep it low key...repeat your terms, but if they say no then thank them kindly and politely for their time, explain how much you liked the job itself and the people involved, express sorrow that you were unable to come to an understanding that everyone can agree to and gently put the phone down.

stay polite and matter of fact, even kindly.  If they want to negotiate the phone will ring and they will do so.

FullNameRequired
Monday, May 10, 2004

FNR nailed it!

_
Monday, May 10, 2004

Not to side with the broker, but he did a lot of legwork to get the confidence of this company in his skills in weeding out all the riffraff to find you, the best candidate for the job.  That's worth something, right?

In my experience with this kind of contracting, you can bill for every hour you are on site.  You don't have to worry about marketing yourself to 10 people to get one small job.  Therefore, the broker is providing value to you. If the contract doesn't work into full time in six months, but if you have done a good job, then he will have another job ready for you when the contract ends.  That's worth something, right?

$45/hour, 8 hours/day, 50 weeks per year is $90K. That's more than the company wants to pay for you as a full time employee.  So even at his lowest figure, you are going to take a PAY CUT if you go fulltime.  So right off the bat he has made you $2,500. That's worth something, right?

Everyone thinks that brokers are out to screw the contract developer.  Some of them are.  Sounds like this guy is giving you a fair deal.  I'd take it at the $50 - that's $50K for six months' work.  That's not bad.

Karl Perry
Monday, May 10, 2004

You sound like a broker Karl.

The broker did not do any legwork to benefit the contractor. He did it to benefit himself. If the broker wasn't there, the employer would still need to hire the contractor.

The broker is providing no value to the worker. The broker is creaming off some of the pay that the employer is prepared to pay to obtain the skills of the worker.

You say everything's OK because the broker will have another job ready at the end. Really? Says who? And on what terms and where. You're offering a non-guaranteed low-quality benefit as justification for a definite well-monied benefit ( the broker's $1,500 plus cut per week).

Your equating of contract rates of pay with staff is wrong. Contract rates do not include any days off, especially holiday breaks. They include no training, and they include no scope for advancement.

Inside Job
Monday, May 10, 2004

$85k salary means the employee costs around $110-130k/year for the employer, not counting hardware and software expenses.

Taxes and benefits cost money.

I agree with FNR. If they were serious about "you're the only candidate we found" then it sounds like a seller's market to me. By the way, lots of signs of the economy picking up, so they don't even get to use *that* lie any more.

Philo

Philo
Monday, May 10, 2004

Mike, I will provide a direct answer to your question asking how to present your position without being "offensive or unprofessional."

First, do not ever let brokers try to control your behaviour using accusations of being unprofessional. It's completely irrelevant. This is negotiating. This is what professionals do.

The broker will try to set up the negotiation so that, for you to assert your rights, you would have to become "offensive." Thus you avoid it. Don't. Just be assertive instead. Just keep repeating your demands, and do not agree with his line or argument, which will lead you to the conclusion he wants.

Walk when and if appropriate.

Inside Job
Monday, May 10, 2004

A totally unfair but effective way to do this, is agree, give the company a start date, arrange to sign the forms a day or two before, and then feign misunderstanding at the last minute. That gives broker no time to find another candidate, and he will bend over.

Another way is negotiate through the manager, find out what they are paying the broker and have manager talk to the broker (i.e. 25/hour profit will have to do ...)

Another way is to simply bypass the broker and let him try and sue.

The Artist Formerly Known as Prince
Monday, May 10, 2004

> he did a lot of legwork to get the confidence of this company in his skills in weeding out all the riffraff to find you, the best candidate for the job

I doubt it. He probably just sent them a bunch of CVs, and let them do the work themselves.

Tuesday, May 11, 2004

Karl, I was reading your post again. I would say you are definitely a sleaze (i.e broker) trying the usual lines on the dumb schmucks.

First, there's the appeal to the candidate's pride ( "weeding out all the riffraff to find you, the best candidate for the job.")

Second, there's the offer of the follow-on job ("if you have done a good job, then he will have another job ready for you..")

Third, there's the use of the little sales screw (" That's worth something, right?"). Twice.

Sleaze, professional people are getting sick of the way you guys work.

Inside Job
Tuesday, May 11, 2004

Guys, I don't know wbaout going to the client directly since the manager who interviewed me was placed in his position by this broker 4 years ago. So they seem buddies. But if the client is in fact telling the truth that I am the only candidate they found who meets their requirements, then I have some leverage. I will just stick to my guns and tell him the rate I want and refuse to get into a debate. If only I knew the billing rate!!! Also this is a 7/hours per day contract and not 8 hours/day.

Mike
Tuesday, May 11, 2004

Mike, don't forget that they do not have to hire you after the contract.  Yeah, you're probably a great guy, and a hard worker, etc, but unless the employer is willing to hire you now for $85,000 per year, then you need to assume that they won't in your negotiating.

With the contract, you're taking on quite a bit of the risk, which is why employers like them so much for new hires.  It gives them the chance to evaluate you long term without the risk that you will sue for wrongful termination if they don't like you.

Stick to your guns.

Steve Barbour
Tuesday, May 11, 2004

No, I'm not a broker.  I'm a software developer - have been for 20+ years.

I've worked for a broker who took 33% at one time and the next time the company wanted me I went direct.

I also know how difficult it can be to find work directly.  That is why brokers exist.  They're just another form of business.  Businesses exist to make a profit.  Brokers don't have Barbie dolls, or cars, or jet engines, or rivets to sell; they have the skills of developers like us.  The difference between what they pay the contract developer and their client is called - loosely - "profit." 

Brokers act as the liaison (? I can never remember how to spell that word) between companies wanting to hire talent and talent wanting to be hired.  If they do a good job, then their talent gets continuing work.  If they do a bad job, they go out of business.  Part of this bad job is charging an exorbitant markup and not helping their talent find the next contract when the present one ends.

I'm speculating here: brokers spend their days making phone calls to business contacts, or drinking bad coffee with business contacts, or cold-calling business contacts, or ...  All to make a profit at helping software developers avoid that kind of drudgery.  Sure, there are some of us who enjoy the business side of our professions.  Many of us, however, would rather just code.  For those, a broker is a Godsend because h/she takes all of that out of the picture.  The broker finds the jobs.  The coder does the coding.  THERE IS NOTHING WRONG WITH THAT, EVEN IF THE BROKER'S RATE IS DOUBLE WHAT THE CODER MAKES.

If you don't like brokers, then don't use them.  It's really that simple.

Karl Perry
Tuesday, May 11, 2004

7 hours a day is just another way to screw you.
Think about it, will you really be leaving at 4:00? Doubt it.

I strongly recommend you stick to your guns, or do the late rate change thing I mentioned.

As youll only be getting 87.5 percent of what you negotiated for

The Artist Formerly Known as Prince
Tuesday, May 11, 2004

About contacting the manager directly, is it ethical? Moreover in this case, the manager was placed at the client by the same broker some years ago. I would think that would make it really akward. I suppose I could send an email to the manager thanking him for the interview and tell him that unfortunately due to the broker lowballing me, I am unable to come on board even though I want to come on.

Mike
Tuesday, May 11, 2004

Karl, you are definitely a broker, continuing the spiel a bit further. Developers with 20 years' experience don't talk like that, I'm afraid.

Inside Job
Tuesday, May 11, 2004

Mike, if the manager was placed by the broker and the manager is now using that same broker, then the manager is in the broker's pocket and you need to be careful.

In fact, I would avoid that job.

For a manager to maintain a close tie like that with a broker indicates a level of behind-the-scenes dealing. In my experience, such environments are 2nd rate and dangerous. The manager is probably biding his time to move on to the next gig his mate lines up for him.

Inside Job
Tuesday, May 11, 2004

Could be. In fact the broker repeated the rate today and said he can't do anymore. He did say I could to talk the manager if I wish. Interesting.....

Mike
Tuesday, May 11, 2004

Well, "Inside Job," you can think what you like about me, but you are wrong.  I am a software developer.  I write software for a living.  I have been doing so for 20+ years, like I said before.

And I used "That's worth something, right?" THREE times, not twice.  Not to sound too much like you, but ... does your code make those same kinds of mistakes?

And ... I have the courage to use my real name, in every forum where I post.

Tell me: why is it that a developer should not ever defend the broker, which is what you are implying?

Karl Perry
Tuesday, May 11, 2004

I've been a hiring manager and have worked to get candidates independently and through brokers, and I've been an independent consultant, going through brokers and directly to clients to get contracts.

I agree with Karl, agency is a legitimate economic role and good brokers provide a valuable service to both parties. Traditionally, the economic value of that service has been around %30 of a year's salary and it has been borne by employers. (Brokers get into trouble, IMO, when they try to lock that 30% in on an on-going basis). Also, like programmers, brokers have seen a pretty major correction downward the last couple of years.

Assuming by W2 you will be on the broker's agency's payroll, I don't think he's lowballing you. If he's getting $65 from the client he's got about 20% of costs for your taxes and his overhead. So that's ~$52 for you and his profit.  Throw in his health plan and 401k and you're doing damn well. If you had no idea about the company before contacting or being contacted by the broker, then admit it, they guy has done you a huge service and he should get paid - it doesn't matter if he spent weeks vetting hundreds of candidates or 10 minutes browsing monster.com. It seems to me like his real payday is if you go full-time and there's not much in the six-month contract for him.

I think Inside Job's advice throughout this thread is terrible. Sure, there's some crappy brokers and body shops around, but dealing disingenuously with your potential employer is only a short-term win, and one in which you lose any personal integrity in the deal. Also, if these guys catch a whiff of anything squirrelly, you're toast. Don't be swayed by "you're the only candidate with all the qualifications" into thinking your indispensable before you even start. (Just think about how finely tuned your "psycho bitch" radar is on a first date; these guys have a lot of experience with flakes and posers.)

My advice? If you think you'll enjoy working there, take it. If not, then pass. If you take it, have a talk with the manager about  the conditions under which you'll be offered the full-time gig and ask him about a formal job description. He can't give you a binding offer letter or make firm commitments but he should have the job req open, with a job description and a title - which will have a salary range and benefits defined. The more upfront you are, the less room you leave to be unpleasantly surprised later.

Jim S.
Tuesday, May 11, 2004

Well, Jim S, if the billing rate is say $85/hr and not the $65 you had mentioned, what is fair rate to me? I think 80% to me is fair. Since the payday to broker comes if and when I go full-time, I think the broker should not try to squeeze unfair % out of me. Also, I won't be seeking 401k, health benefits from the broker.

If you are the hiring manager here and your broker said to me to go ahead and talk to you, would you be offended if I call and ask any question, even the billing rate? I guess you shouldn't be. If I knew the billing rate, I would know what would be a fair rate for me to ask for. It is funny that the broker says, you will be looking at $85-90K as full time but I will lowball you on the contract. Looks like the only one taking risk here is me.

Mike
Wednesday, May 12, 2004

But Mike,

You are not being lowballed.  As I calculated earlier, even at $50/hour, you are getting effectively $90K.  That's as much as the company is going to pay you if they take you on fulltime in six months.

Karl Perry
Wednesday, May 12, 2004

It's fair to ask any questions, but don't begrudge the broker his slice of the pie. He earned it. It's tempting to think that the size of the pie is fixed and that since you're doing the work, it's your pie and everyone else is just trying to take pie from you, but the reality is that sometimes the presence of others means the pie being served is actually bigger. If you hooked up with the manager directly for the same contract-to-hire gig, he might not be willing to offer $85/hour to you directly. Good brokers have long term relationships with hiring managers and managers are concerned with getting good people and having a good pipeline. They pay to maintain the pipeline. The rate the company is paying is not only for your services, it's for your services and the broker's services.

If you approach the manager about this, and by all means don't be shy, couch it in terms that make it clear you understand the broker needs to get paid and talk about how that's determined. You can ask if there's a placement fee if you stay full-time for a year or six months or if the broker's fee is built-in to the contracting rate. Remember,  the traditonal math means there should be $25k in it for the broker to place a successful full-time employee for the company at your salary. At $85 to him and $50 to you, that's roughly $15 for him for the 1,000 hours of the contract or $15k. In the big scheme of things, that's fair.

Also ask your manager about how they calculate your value to the company. What are the revenues per employee? But be prepared, he may turn it back on you to see how you think about it. What's your "value proposition," to use the buzzword.

At the end of the day, you can't get hung up on what other people make.  You must decide if $50/hour affords the life you want and is reasonable to you for the work, I presume, you enjoy. In the big scheme of things, $85k salary is nothing to sneeze at for a senior programmer without direct reports. Focus on finding a good team doing interesting stuff.

One last word, everybody has skin in this game, not just you. The manager has projects he's got to get done. If you come in and flake out on him, he's misses some of his objectives, takes a hit on his bonus, looks like a doofus to his boss, and pisses off his team. The broker needs you to work out or he loses his money and the opportunity for more with the next open job req. It's a potential career-limiting decision for everyone. The entire broker fee is essentially a risk-management charge.

Jim S.
Wednesday, May 12, 2004

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