We all wish we made more money. However, you have better chance of making that money if you ask for it.
Before you ask for a raise, though, it’s important to do your research. Jason Hull from myFinancial Answers joins us to talk about how to negotiate a better salary. If you are trying to decide how much to ask for, and how to approach the situation, this episode is for you.
[0:00:02] ANNOUNCER: Welcome to the Money Mastermind Show. Let’s Talk Money.
[0:00:18] GC: Welcome to the Money Mastermind Show. For tonight’s show, we’re discussing one of those big financial win situations that could put a lot of money in your bank account but it’s also one of those that I think a lot of people are hesitant to try and that’s negotiating your salary. Joining is tonight is Jason Hull of Myfinancialanswers.com. Welcome to our show Jason.
[0:00:38] JH: Hey, thanks for having me guys. I appreciate it.
[0:00:42] GC: Thanks for coming and the rest of the Money Mastermind Show is Kyle Prevost of Youngandthrifty.ca, Miranda Marquit of Planting Money Seeds, Peter Anderson of Bible Money Matters, Tom Drake of the Canadian Finance Blog and I’m Glen Craig of Free From Broke.
Before we start, I want to direct you to our events page. If you have any questions about negotiating your salary, head on over there, use the app and ask us. We would be happy to answer your questions. Negotiating your salary; we’ll start with you Jason, why don’t people do a better job negotiating their salaries?
[0:01:18] JH: I think it’s fair. So first and foremost, Times Ten Cellars, this is their anniversary blend. It is a winery in Fort Worth in Dallas, Texas so cheers, thanks for having me on the show. Why don’t people ask for salary negotiations? I think it has a lot to do with fear of the unknown. You probably think, “Hey, my boss has a certain budget that he can allocate for my salary and if I go ask for a raise and I don’t get it then they’re going to fire me.”
And that’s really not the case of what’s going to happen. I have run a company before we had employees and we certainly didn’t fire anyone for asking for a raise but I think it’s something that people are really nervous about because money overall is a taboo topic. I mean the one, two, three, four, five, six of us and however many people are listening online are kind of the exceptions to the rule in that we’re all comfortable talking about money and most people are not. And especially in a work situation where you are asking someone who has power over you and control and ability to say whether or not you continually have a job.
So it’s a large psychological burden and statistics show that it’s even more so for women. They don’t ask for raises, they don’t negotiate for salaries and as a result, they earn 79 cents on the dollar compared to men. Part of that is due to women also leaving the work force but part of it is due to the fact that they don’t ask for raises and they don’t negotiate their salaries when they take on a new jobs.
[0:03:04] MM: Right and one of the things too is when you don’t negotiate your first salary and one of the things that I found especially with women is not negotiating that first salary means $500,000 over a lifetime left on the table because that starting salary is where you begin with promotions where your bottom is for the next job and all of that kind of stuff and so that’s a really big deal when you talk about negotiating your salary. It really does matter.
[0:03:35] JH: Yeah, I mean how many of you have been in a job interview and the recruiter asks, “What are you being paid right now?” It’s an anchor, absolutely. And everyone’s like, “I am never interviewed. I am an entrepreneur.” Okay, how many people who are watching, who are not in this panel, you can raise your hand and ask questions about this but it’s an anchor. Yeah, you are absolutely right Miranda.
Every time you get a pay raise, pay raise is based on a percentage usually of what you’re currently making. If you are hamstringing yourself by not asking for that salary in the first place, then really the best way to increase your salary is going to be jumping somewhere else and getting a lateral promotion that way and that way, you can get yourself a lot closer to what the market bears.
[0:04:27] PA: Do you think that a lot of people go into a performance review or whatever, maybe they go into those unprepared and they don’t come in actually knowing what they want for a salary increase or what they should be getting and as a result, they are just unprepared for that question when it comes.
[0:04:46] JH: Yep, it’s not just knowing what you want and what you should be getting. So you should be coming in armed to help your boss and really, this should be happening before your performance review. If you’re doing this at your performance review, it’s too late. I know I worked at Capital One and I managed a team of 40 people. We had to have a forced distribution ranking by the performance review. By that time it was too late.
Instead, have those weekly one on ones. Have sessions where you were documenting, “Here is what I did and here is the value that I bring to the company.” All of this is focused on I am delivering value to the company so let’s help capture some of that and make sure that I am being compensated for the value that I’m bringing and it’s comparable with the market bare. If you’re in a performance review then by then, your boss should already know all the value that you’re bringing to the company so that you can have that negotiation either then or at the time that you take a new responsibilities and roles.
If you get a promotion and they say, “Hey, we’re going to have 20 more things to your list of stuff to do,” then you want to be able to say, “Hey, I have found comparable job descriptions and this is what they are being paid and therefore, I’d like to discuss how we could get me aligned with what the market pays for the responsibilities that you’re asking me to do because, one, here’s all the value I have delivered and two, here’s all the value I’m going to deliver.”
James Altucher has a good idea, which take off for me to take off of Ramit Sethi’s briefcase method which is, if you’re going into a situation like that, you bring 10 ideas of, “Hey here are all the new things that I’m going to do for you,” and you share five of them but you leave the other five uncovered so that you’ve got some stuff kind in your back pocket but you can show, “Hey, I am thinking about how to incrementally drive value beyond what you guys have seen so far.”
[0:06:56] GC: How do you really find your market value though? A lot of times jobs they’re not so cut and paste where I can look it up somewhere’s else. It’s not like, “Well, we all produce TPS reports so I know if I do 10 of them and you do 10 of them that you get paid this and I should get paid that.” A lot of times, jobs are very dynamic and maybe it has a little bit of this and a little bit of that. Without asking the guy in the cube next to me how do I really get a gauge on what my value is?
[0:07:25] JH: There’s Glass Store, Salary.com and Compare.com. Those are three good websites and then the other is use your network. You should have a network where there are people in your network who you can talk to about these issues. Someone who works at a company that does something similar to what you do or has a job similar to what you do or a recruiter or someone in HR in your network, I think those are the places that I would go. Even if it’s not a direct apples to apples comparison between Glass Door, Compare and Salary.com, you can probably get at least fruit to fruit and that should be close enough to be able to draw the conclusions of what you’re asking for.
[0:08:13] GC: Yeah, I know when I was in the corp world, as big as the company was and all the other companies in the industry, it was actually a pretty small industry because the people that you work with today, a lot of them are going to leave and be in the next company by tomorrow. Before long, you know people in a lot of different companies that you could probably bounce ideas off of.
[0:08:36] JH: If you’re good, then the people that leave that go somewhere else probably want you to come along with them and so they’re going to tell you, they’re going to give you, “Hey, you’re making X at this company and you can make 1.2 times X at my company so why don’t you come on over?” In negotiations with your boss, you don’t want to have the threat of like, “Hey, if you don’t do this, I’m going to leave.” You don’t want it to be confrontational, you want to be positive of, “Hey, here’s the value. Here’s the value I deliver. I want to be loyal. Let’s make sure that we’re compensating me in a way that it’s fair for everyone.”
The thing is, if you bring that offer of, “Hey, Smith Company just offered me 1.2 X salary,” you are now on the boss’s cut list because even if you don’t leave right away, I as a manager always knew, “Hey, this person is seriously considering leaving and so what I don’t want to do is differentially invest in them as a high performer to like send them to training and to get them up to speed on something new that I’m doing because I’m afraid when I train them, they’re going to leave. They’re going to go to my competitor and then the competitor is going to get all that benefit.”
So be careful with the salary negotiations but at the same time, like I as a manager always told my team, “Hey, you should know what you’re worth and you should know what the market will bare so that you know that you are staying where you are staying by choice as opposed to feeling like your trapped in.”
[0:10:15] MM: Okay so one of the things that I was wondering about is, is this something that is actually dependent on your particular career path or your field? Because when you talk about don’t come in and try to leverage another offer with a higher pay than your current place but this is actually something a strategy that they use in Academia. My ex-husband that is something that they do all the time in Academia where they go out, they apply for other jobs and they get a higher offer then go back to their department and say, “Hey, I have this other offer. Are you going to match it or exceed it? You either match it or exceed it or I walk,” and that is actually a negotiating strategy in Academia as opposed to the corporate world.
[0:10:59] JH: Yeah and I’ve seen that with friends. I have a friend who works in a federally funded — that’s not champagne — a federally funded research in the [inaudible] center.
[0:11:08] MM: It’s a rosé. It says it’s a rosé.
[0:11:10] JH: Oh okay.
[0:11:11] TD: It’s barely there…
[0:11:13] JH: [laughs]
[0:11:14] MM: It says “Sweet Rosé, California Champagne”, that’s what it says.
[0:11:18] JH: It’s just missing the bubbles by now. So yeah, I have a friend that works in a FFRDC, a federally funded research and development center. I think it was Albany National Laboratories, except it’s not that one. And he effectively does the same thing. He’s got someone that wanted to hire him as an assistant division director and so he kind of let it be known through the grape vine that he had that offer and his current boss was like, “No, we got you on track. In the next year, we’re going to promote you assuming you continue to perform at this level and we like you. We want you here.”
I think in a more structured environment like Academia or probably the government, you could probably pull that like, “Oh hey, the Navy is offering me this. Why make me stay in the army, if you’re a GS civilian.” But in the corporate world where the exchange and the free flowing of talent is much more prevalent, I think it’s something that you probably have to walk a little more carefully on. If people in the audience have experience with this, if they have tried to wave the “Hey, I have an offer letter from this awesome startup,” what happened to them? That would be an interesting story to hear.
[0:12:44] TD: It’s good to know what you’re worth with, like you said, Glass Door. But twice, I’ve gone and asked for a raise and gotten a pretty nice raise without having necessarily having a number in mind. Like just knowing that, like you said, you’re bringing value but I didn’t have this idea of, “Oh, I should be making $10,000 more.” I just went in and said, “Can I get a raise?” Basically. And I’ve done this twice and then both times, it worked out nicely.
It wasn’t really about hitting a certain number that I knew other people are making. It was just saying something. If you feel like you deserve more and you ask for more, they might actually just do it. They don’t necessarily go out of their way to do it on their own.
[0:13:31] JH: You don’t have to name the number. If you wanted to say, “Hey look, here’s all the value I deliver, here’s all the great things I’m going to do for you. Let’s talk about my compensation.”
[0:13:40] PA: That’s something that I was going to ask you about that because that’s one thing that I have heard. When you’re going into the salary negotiation that you should never be the first one to throw a number out, that you shouldn’t allow the person on the other side of the desk to make the first offer and some of these people are adamant about this. Even if they ask you a number first, turn it back on them with, “I’d like to hear about what you think I’m worth,” or all sorts of things just turn it on back to them that you shouldn’t never give them a number.
[0:14:10] JH: Yeah and you can — you could say things to turn that conversation like, “Hey, let’s talk about all the things I’m going to be doing. Let’s talk about the roles and responsibilities that you’re looking for. Let’s talk about the plan for the future.” Eventually, someone’s going to come up with a number and if you’re in the same position that the other person is in terms of “I am never going to say the first number,” then you’ll never get to a number.
I mean I’ve done tons of negotiations and I’m perfectly comfortable laying out the first number. It sets an anchor somewhere. There are two streams of thought. One is you let the other person say something because you might have been thinking, “I want a raise of $10,000,” and they go, “Okay, well I’ll give you a $20,000,” and you’re like, “Woo-hoo alright, I can go up from there!” But the other one is, “Hey, why not, if you’ve got a number in mind, set an anchor even higher and then make the negotiations from there?”
If you set higher than what you’re targeting, you could always say, “Look, I am meeting you half way”. There’s a lot of reciprocity that works here. If you make the first concession then the other person feels pressured psychologically to make a concession to you assuming you have a good relationship. By the way, all of this is predicated on “You kick butt at work!” Then you need to go bring it. You’ll figure out what it is, it’s going to make you valuable at work and do it. If you’re the anchor, if you’re the albatross, if you are the left hand side of the bell curve, you cannot do this negotiation. This is all predicated on you delivering value.
[0:15:59] GC: Yeah, we need to have a separate episode for like if you’re not very good at your job and you’re okay with that, just making sure you don’t get negotiated down.
[0:16:10] KP: How to snow your manager to thinking you don’t really suck that you’re sort of mediocre.
[0:16:15] MM: I think I need that, I need add advice right now. I’m embarking on a new job and I’m like, “Yeah, I just hope I can prove that I don’t suck.”
[0:16:25] JH: How not to be melted in your negotiations, “Yeah, we’re just not going to pay you anymore.”
[0:16:30] KP: I was going to mention though, that very point there Jason just because especially for some of the younger listeners out there, I know it’s a bit stereo type amongst millennials but I think each one that maybe has a little juice behind it that, “Hey man, we have no problem asking for promotions. We’re good with all of this. It’s all you folks that like to work hard and put in extra hours and you are usually a little older than us that you guys have the problem asking for the money. We can ask for it.”
But if there’s no value proposition there, then there’s really negotiation. If you can’t articulate what you’re doing different, then the guy down in the next cubicle or another company or what you’ve learned since you’ve been there, how you’ve developed and grown and why you can deserve this, why would I want to and if you don’t have the communication skills to communicate that reality, why would I want to give you more money?
[0:17:18] JH: That was awesome Kyle. I mean that’s a great point and remember, your employer is not a charity. They are not a non-profitable, well I mean they might be a non-profit. Yeah, we always joke that some of the startups I’ve been involved in have been involuntary non-profits but their goal is to make money and it’s always critical to understand two things. One, how does the job that you do help the profitability of the company you work for and two, what are the thing that are on your boss’s evaluation that they get measured on and how are you making your boss look like Steve Jobs?
[0:18:09] GC: Yeah, you see it took me a while to figure that part out but then after a while, I realized, “You know, if I can get into my boss’s head, if I can make their job easier and make them look good, I’m just going to write their coat tails up because when they get the promotion, I’m coming with them,” and they’re the ones obviously doing my review half the time. It took me a while but once I realized that, it was like, “Okay, I need to not just do my job but keep asking them what’s going on, what makes them tick, how can I make their load lighter?”
[0:18:41] JH: One thing you can do is we call them “skip 360’s” which is basically, where you spend an hour with your boss’s boss and that’s the perfect time to say, “Hey, what is Tom being measured on? How do you view a successful year for Tom? What are the measurements and how can I contribute to that?” And that way, you get it from your boss’s raters mouth. If your boss does A, B and C then their good. If you can help them do A, B and C and you free up their time for them to go D as well, then you’re crushing it for them.
[0:19:27] GC: If you can make them look like a superstar as long as they’re not the type of people that are going to step on your on the way up, then you’re going to set up a good spot for yourself.
[0:19:36] JH: For the people that step on others on the way up, karma has a real way of biting them in the — am I allowed to curse on here? Biting them in the beep. If your boss takes all the credit, eventually other people will realize that it’s you that’s doing something because every time you’re not involved, your boss falls on their face. People figure it out and sometimes you just have to wait for karma to kick in. The other thing that you can do is find are there other opportunities where I can deliver value for other people so that I can get cherry picked out of my organization into another organization.
[0:20:26] KP: Did you ever feel less respect or maybe think slightly less of a person because they didn’t have the guts or the strategic thinking to ask for a raise Jason?
[0:20:37] JH: I was never going to complain but someone didn’t ask for a raise. As a company owner, any salary I don’t have to pay goes into the pockets of the owners and the retained earnings. Where it did concern me was if I thought that that was going to be a retention problem. We paid about 75th percentile and we had some pretty awesome perks. I wasn’t that concerned that people were going to stay because it was a cool company and people wanted to work with us. We had a line out the door basically so if someone left, it was automatically filled. So it wasn’t that big of a deal.
But if I thought that there was someone who I really wanted to keep who was going to leave for something that wasn’t in their wheelhouse. I mean yeah, we lost people with Google, okay I’m going to lose people with Google. I understand that. But if they are going to go to a competitor down the street who paid more but had a not so fun work environment, kind of turn-the-crank work and it wasn’t really that exciting, then that’s where we took the opportunity to say, “Hey, what is it that’s driving this interest in this other competitor when you’re not going to go have fun there?”
And so that — I mean I’d like to think that it was be being pro-active but realistically, it was probably them not being willing to ask for the raise and if someone else was paying higher opening salaries than we were, then that was something that I hope they would have said, “Hey look, I can go make more down the street,” and we could have that discussion and maybe it was, “Hey, you don’t realize the value of the healthcare benefits because we give you the Cadillac plan where you don’t have to pay anything. You have a fully stock fridge full of beer, you get to work on whatever you want to work on on Friday,”s and hey, that’s how I roll.
But for some people, it’s still, “Hey look, I’ve got two kids, I’ve got a mortgage, I have whatever.” And I mean I wasn’t a financial planner back then. I was a software slinger but still, if I don’t know what the situation is then I can’t help find a solution for it and for the people that I wanted to keep, I won’t iterate the concessions. But if you would have come to me, then yeah it wasn’t be me that will volunteer like, “Hey, I can give you an extra $10,000. It’s not going to hurt me.” I wouldn’t go and volunteer that! Like, “Let me throw some money at you. Here you go”.
[0:23:37] PA: Make it rain.
[0:23:38] GC: I know what you’re saying though. It took somebody trying to leave for them to get a 10, $20,000 offer from their own company and it always seemed frustrating like, “Why do I have to get a job somewhere else in order for you to either hire me back at so much more or?”
[0:23:57] JH: This is what we talked about in the beginning that you cannot and should not be afraid to bring up salary as part of an annual review or when you take on a new job, new roles, new responsibilities or something like that. It has to be a two way street. Right? The employer’s job is to pay you as little as possible to keep you on board. Their goal is to make money.
There’s something called zone potential agreement, which is you are willing to accept anything above X and the employer is willing to pay you anything up to Y. Usually there is a zone between X and Y where you will both agree. The employer’s job is to get you as close to X as possible. Your job is to get as close to Y as possible but the employer is not going to volunteer, “Hey, we have this number over here.” It’s up to you, the employee to suss that out.
[0:25:03] GC: I think that’s a hard thing for a lot of people too in any negotiation and not even like a salary. They could be buying a house, buying a car or whatever that you don’t want to low ball yourself and feel like, “Oh man, I cheated myself.” Even if you get something, you’ll still feel like you’re cheating yourself if you found out that somebody else got much bigger raise or was able to get a deal somewhere. I think there is also the fear of maybe going too far like, “Oh, I need a $100,000 raise,” and then like, “Well yeah, sorry. Bye.”
[0:25:33] JH: It has to be grounded, this is what we talked about in the beginning. It has to be grounded by data that says, “This is what people who do what I do get paid and I happen to be super exceptional and therefore, I deserve 10% more than the average,” or whatever. The difference between negotiating with your employer and negotiating with the used car salesman is that unless you are a used car junky, you are only going to have a onetime interaction with that used car salesman. In a transactional interaction, it is your goal to extract as much value as humanly possible out of that transaction.
Whereas with your employer, ideally you are having this on an annual basis and you like them, they like you and you have a long career. Although, I do have the statistic which is pretty interesting from Forbes. Let me finish the thought and I will go to the Forbes statistic. So instead of being transactional where you’re trying to extract value, the idea is you’ve got to grow the pie. And so in creating value, you have to show what you’re going to bring to the table that they don’t have right now and then once they agree to it, you’ve got to deliver it. It’s a contingency clause contract. Whether or not it is actually written in your employment agreement, if you are saying, “Hey, this is the value that I am going to deliver, this is why I am worth this much”, you better deliver.
There is a Forbes article and I can paste it in the chat and you guys can share this. The people who stay in companies longer than two years, get paid 50% less than the people who jump every two years.
[0:27:27] TD: I remember seeing that one, that’s where they can expect about a 3% raise but if you leave the company and go somewhere else, you can negotiate 10 to 20% for this. I’ve seen a lot of people where they change jobs every year or two and they end up leaving for that and then that’s where loyalty gets you.
[0:27:47] JH: Yeah, 3% number. There is a survey by Buck Consultants which is an HR consultancy. I’ve got it pasted in the chat. The average pay raise is 3% but even then, the HR folks that were surveyed, they differentially invest in their high performers. So if you’re an average Joe/Jane, you’re going to get 1.4% pay raise. That’s probably not going to keep up with inflation.
One of the underlying themes of all these is you’ve got to bring it at work. You have to deliver value. They hire you to help with profitability or to drive a non-profit mission or if you work for the government, do governmenty things. You have to bring it and if you’re an entrepreneur it’s the same thing. You have to deliver value because people are paying you to do something. If you want that referral or if you want that testimonial, if you want them to continue on and hire you again, you can’t just ship it.
There are a few jobs nowadays where you can just show up and open the mail and do nothing. Deliver value and then you get to claim it.
[0:29:01] KP: One of my favorite podcast is the Jalen & Jacoby Podcast. I’ll give you a free plug here, they got sports podcast of the year this year. I’ve been with them since the second episode, just saying, and Jalen Rose was like…
[0:29:13] JH: Long time listener for some caller.
[0:29:15] KP: That’s right, a long time MBA vet and he’s fond of saying in this very cool way that I can never mimic, “it’s not what you know and it’s not even who you know, it’s what you can leverage,” and I just think that such a true thing and whether it’s freelance work or what’s your job. Freelancing is nice because once you reach a certain point and Miranda can certainly speak with more authority than I can, once you reach that certain point, you can leverage because, “Hey, I don’t really need what you’re giving and I know I’m worth a lot” so go ahead and leverage up on that.
On the other hand, if you’re depending on that income and you’re living paycheck to paycheck, you don’t have much leverage and that’s where personal finance can even come in and affect your bargaining position.
[0:29:58] JH: Yeah, if you’re in debt. One of the things that you don’t really want to, even though I mentioned this before, you don’t want to bring up in a negotiating session about your salary is, “Hey, I’ve got a $25,000 worth of credit card debt and I need you guys to give me a raise to pay it off because I was irresponsible with my money.” That’s not the story you want to tell. I mean your boss may like you, may care about you as a person but the focus of this conversation for what you’re getting as a salary has to be what am I bringing on an eight to five basis, or if believe the research 48 hours a week is probably the optimal amount to be working. So a seven to five basis that is benefiting the company.
And yes, you’re right. This is not salary negotiation but absolutely, when I sold down my shares and my company, the ability for me because we were in a good financial position and we had managed our personal finances, it allowed me a lot more flexibility in the negotiations than it would have been if I needed to sell the company to pay the mortgage payment or something like that. So having that flexibility because you got your house in order from a personal finance point of view does so much in your life and it’s beyond just what your job is.
[0:31:28] MM: I kind of wanted to touch on, because we were talking a little bit more and I had left a comment on my blog recently as well, but we’re talking a little bit about — that’s right. Thanks Jason! We were talking a little bit about when to accept less. I was talking about sometimes just accept less. If I can work with somebody I like to work with and who will let me do whatever I want to do when I want to do it, I’ll accept less because that flexibility and that time and everything else is a little bit worth it but I think in salary negotiations, there might be times when it is worth it to consider the benefits package and not just the bottom line salary.
[0:32:15] JH: Right. It doesn’t have to be monetary. Can you take four weeks off instead of three? Can you work remotely? Do you have fly time?
[0:32:27] KP: Do you have a beer fridge?
[0:32:28] JH: Yeah, they have a beer fridge yeah. Any developers that are really good in Solr Hadoop [Apache], go to Opensourceconnections.com, we’re always hiring. I say “we” because I am still a minority owner in the company. Yeah, it’s not just monetary. It is, “Can I wear jeans to work?” I mean there’s a lot of things you can do that are not directly salary related. Anything in negotiation where you can give away something that doesn’t mean much to you but means a lot to the other party is always a win.
If you’re in this negotiations, try and find the things that are important to you but are particularly costly to an employer. Vacation time is a huge one and especially in a smaller company. There are companies now that have no vacation policy whatsoever, you can take however much you want as long as you do whatever you’re doing. If you’re in a position like that and you want to work from the beach on Thailand and you could deliver what you’re doing, maybe ask for that because hey, you don’t have to have as much salary because the beach in Thailand is a lot cheaper than a condo in New York City.
[0:33:45] GC: I think also the mistake is that a lot of people, they measure the salary based on what their paycheck says and really what you’re getting paid is more than that. It’s, are you contributing to move my 401(k)? What are my health plans or do you give me any sort of life insurance? All these other things like even a week of vacation, you don’t necessarily see that in your paycheck but you’re being paid to not be there basically.
[0:34:11] JH: Right, right. It’s HR parlé, that’s called total benefits. A good one is, “Hey, will you give me a high deductible heath care plan and fund my HSA — my health care savings account?” Because that is a backdoor retirement plan as well.
[0:34:32] MM: The HSA is my favorite thing. It’s like my favorite thing.
[0:34:35] JH: Oh yeah. I have a heartache. I hope they’re on the pitch for health equity. If you’re an independent contractor and you don’t have a HDHP or HSA, go to Health Equity, those guys are awesome. So yeah, you’re right. It’s not just the money because really, money buys you two things. It buys you stuff and it buys you time. If there are things that your employer can do that either give you stuff like, “Can I get a company car or can you pay for my subway ticket?” Or it buys you time like, “Can I get more time off, can I work from home so I don’t have to commute?” Those are also valuables but you have to know what is the value of your time in order to make that negotiation.
[0:35:30] PA: I have a friend who actually did something like this where the company didn’t give anything up. He just wanted to work from the office four days a week and just take Fridays off basically. He said, “I’ll work four 10 hour days instead of five eight hours a days,” or whatever and they were fine with that and he ends up saving gas money and saving all sorts of money and getting that Friday off every week.
[0:35:56] JH: That he spends on three day weekends every week right?
[0:35:59] PA: Exactly.
[0:36:02] JH: You can’t take that on certain — because if you are in an office environment, some people sometimes have to have in person meetings. There is a reason that they have offices. You can’t all be working three day weeks where you have to be in an office but it’s completely dependent on the situation and if they ask and they say no, at least you ask and now you’ve started the conversation. You’ve planted it in their mind of, “Hey, I deliver value. Here’s why,” but that’s the whole, “Hey, I deserve a raise.” I mean you’re not going to say, “Hey, I deserve a raise” to your boss but the underlying thought behind that conversation should not be blind siding your boss with that conversation at performance time, whenever. It should be a steadily documented building up kind of wave of, “I kick butt at work, here’s why, here’s the value I deliver, I will make you look good let’s have the discussion about flexibility in my work arrangements.”
[0:37:19] MM: Okay so you said something about not blind siding your boss. When are good times to ask for a raise or ask for a promotion or have this discussion? I mean when is a good time like obviously Friday afternoon as everybody is trying to leave early is not a good time.
[0:37:35] JH: Yeah, chasing down the car and running at it and like, “Hey, hey, hey!” That’s the best time to do it because they just want to go home and they’ll give you whatever they want. To me, it’s two times. One is when you take on a new roles or are going to take on new roles and responsibilities. When they ask you to take on something new because you’ve been kicking butt and they want to give you more stuff for you kick butt at.
The second is successful completion of a large delivery. If you’ve had a project that you’ve been working on for six months that drives $10 million worth of MBV for the company and you deliver it and it actually drove 11, that’s probably a good time. Because now you’re writing a wave of goodwill so that you could point at, “Hey, look at what I just did” and you can take advantage of something called the recency bias which is a psychological bias that says, “Hey, I’m going to look at the last thing that you’ve done”. The whole “What have you done for me lately” question is the recency bias. So if you could say, “What have you done for me lately?” And it’s, “I just kicked butt on this project and I made you look like a rock star,” perfect time to take advantage of that opportunity.
[0:38:47] GC: I remember and this is not even in the corporate world, I was working at a supermarket and obviously the scale is a lot lower and what I was getting paid was a lot lower than what people are saying to minimum wage should be now.
[0:39:00] JH: A bagger. I was a grocery bagger.
[0:39:02] GC: Yeah, pretty much that and I did something and my boss was like, “Oh yeah, that’s really great,” and I’m like, “Yeah and I probably deserve a raise”. I just threw it out there and he’s like, “You know what? You probably do,” and I had an extra quarter to my minimum wage or whatever it was.
[0:39:16] JH: Yeah but it’s probably because you were the only bagger who asked for it.
[0:39:20] GC: But it was also the value that I brought. I mean not that I was like so phenomenal but it was like you’ve got to do it more and I really appreciate the fact that you’re really talking about how you have to bring something to the table. You have to be a performer. You have to be somebody who’s doing something.
Because the other side of it is that I’ve discovered is, if you’re the person who does just enough, if you’re just getting by not only are you not getting the raise but you’re the person who’s going to get outsourced. If you’re just doing the thing where you just have to check the box or just entering the data, that job is going to disappear.
[0:39:53] JH: Yes, I can find crank turners in the Philippines, in India, in China and we even outsource call center works to Canada.
[0:40:03] GC: Wow.
[0:40:05] TD: To third world countries.
[0:40:07] JH: Third world countries like Vancouver, god!
[0:40:09] MM: Developing countries is like Quebec.
[0:40:14] JH: No, well I mean the point is outsourcing doesn’t just happen to what we think of as third world countries which are the Philippines, India, Indonesia etcetera. While I was in Capital One, we did outsource in India, we outsourced to the Philippines, we outsourced to Ireland, we outsourced to Canada. And in my development company, we outsourced to Costa Rico and Nicaragua, Honduras, Uruguay, Brazil, Argentina and England.
Outsourcing happens and it’s not just to places where they have to get a bus to drive everyone in to the call center. It happens to countries that you think of developed world countries. Don’t just think because you don’t have a job that necessarily can be done by someone in a call center in India that you are subject to outsourcing. Because you are absolutely right. If you are delivering value, then it’s encumbering on the company to try and find a supplier that can deliver value at a reasonable price and outsourcing is always on the list.
[0:41:33] GC: The thing is too, you may not think that your job could fit that description now but that doesn’t mean that somebody’s not going to create a technology tomorrow that makes your job like, “Well, you know what? Jones over there, he just does that anyway so we’ll have the computer do it.” If you’ve got a guy like, “Oh, you know what? I need this guy on my team. You can let everybody else go but let’s find something for this guy.”
[0:41:57] JH: Right and so innovation is something that computers are not going to be able to do for a long time. Anything that involves creativity, that involves using your brain to come up with stuff that no one else has come up with, that’s always valuable. That’s where you want to focus your extra energy. You have to do the things that you are expected to do on your performance evaluation but where you will create differential value is in using your brain to have creativity to come up with the things that no one else has thought of because the computer can’t do that and won’t be able to do that for years and years and years.
[0:42:35] GC: It’s like…
[0:42:36] MM: Sorry.
[0:42:38] GC: Go ahead.
[0:42:40] JH: Rock, paper, scissors.
[0:42:41] MM: I know right?
[0:42:42] GC: I just facilitate the conversation. I’ll let everybody else speak.
[0:42:46] JH: I don’t actually add value, I just facilitate.
[0:42:49] GC: Not at all.
[0:42:50] MM: Actually what I really want from you Jason, now, is a pep talk because as we know, as we know women have a harder time asking for raises. Women have a harder time even if they’re providing value, they have a harder time recognizing the value that they provide and talking about it. They have a harder time talking themselves up, they have a harder time trying to get out there and do it so give us a pep talk. Give us a pep talk, we need a pep talk, really badly here Jason. Tell us how we can feel good about ourselves and feel good about asking for more without feeling like we’re being total bitches because that happens.
[0:43:33] JH: Women bring a lot of value to the workplace particularly because they think, and you could look at FMRI’s all day long and this is proven, women think in a different way than men do. There is inherent value in that first and foremost. If you’ve ever read Pygmalion, the George Bernard Shaw play. There is something called the Pygmalion effect, which is basically, the more you expect of yourself, the more you will be able to deliver.
The opposite effect is called the golem effect. And it’s not the, “Oh, me wants it, give us the ring.” It’s g-o-l-e-m, so the less you expect of yourself, the less you deliver. If you believe that you deliver value and you believe that you can deliver value, then you will deliver value. This is all based on your own personal belief and there’s no reason that a woman who does the exact same job as a man can’t claim the exact same amount of value that a man does. My software company had unfortunately, not nearly enough women. We tried to hire them, we tried to keep them, they were awesome but they brought something completely different than the guys did.
[0:45:01] GC: Isn’t it true that there are still a lot of them…
[0:45:03] JH: I’m not done with my pep talk! No go ahead. [Laughs]
[0:45:07] GC: Isn’t it true that there are still a lot of boys clubs where it is very difficult to kind of crack in there?
[0:45:15] KP: I could tell you stories about the other side of the fence in public education where like 85% plus of the new people coming in are all female and it’s incredibly difficult to justify that there should be more men for the exact same reason Jason just said because there is different value pitches, different ways of approaching certain situations and you do want diversity. I could tell you stories from that side of the table.
[0:45:40] MM: I guess what I’m asking for too Jason though is — I mean I have a hard time feeling like I should be pushy about — I feel like I offer value but I feel bad asking for it. We had one situation where I was trying to hype myself up and it just went poorly. Tom was there. It was ugly and it did not go well because I just was like, “Hey, I’m going to try this thing.” And I was like, “No, I don’t do this well,” and it was horrifying.
[0:46:20] JH: One of the things that you can do is practice beforehand. A lot of people and this is men and women, walk into this discussion cold and just like you don’t expect the keynote speaker to walk into a presentation and present without having practice before, it’s the exact same thing. You need to practice this discussion. You’ve seen preparation for a presidential debate, right? If the president is going to be in a debate, they’re going to get the vice-president to play the other side and to throw all the hardball questions at him to see if they’re ready to answer the questions.
You need to have that same preparation before you even go to the conversation so that you don’t have these feelings of, “Wow, am I being a bitch? Am I asking something that I shouldn’t ask?” You should be done with those feeling because you practiced it already. This isn’t the Allen Iverson, “we’re talking about practice”, you know, this is real practice. I mean you have to know all your talking points cold when you walk into that discussion. By practicing it, you will eliminate the emotion that will override what your logic tells you need to be doing.
[0:47:43] GC: It’s like having a cold efficiency, like you’re not emotional about it but this is what it is, this is the accesses that I’m bringing and this is what I’m asking for it. I’m not trying to be mean, I’m not trying to be whatever, but this is what needs to happen.
[0:47:57] JH: You have to believe it and you have to [inaudible]. This isn’t the Jack Handy “I’m good enough, I’m strong enough, gosh darn, people like me.” You know, you have to believe, “Hey, I do a good job.” I mean Miranda, do you do a good job? Can you say that from your heart?
[0:48:12] MM: Yeah, well most of the time.
[0:48:14] KP: I’ll say it for her.
[0:48:15] JH: Okay, so yeah, you know you bring value.
[0:48:17] MM: I need Kyle standing there going, “Miranda rocks!”
[0:48:20] JH: Right, yeah! You know in your heart you do a good work so really, all this is, is the practice of getting what’s in your heart into a cohesive logical narrative that is practiced and that has emotion removed from it and that is just doing it over and over and over again until you have the conversation down cold and until you know what are the objections that the other side is going to raise?
I mean this is in any negotiation. You try put yourself in the other person’s shoes and say what are the objections that that other side is going to raise? And so, how do I counter act this objections in a logical way as oppose to being emotional about it? Even if it’s woman to woman in the negotiations, it should still be based on logical rational thought, you should take the high ground, which is logic and rationality.
[0:49:29] GC: I think we just touched on something that I think is a big problem for a lot of people too in salary negotiations. I’ve done a bunch with some resumes over the summer for both myself and other people. And one thing I’ve noticed is, a lot of people don’t realize the value in what they’re doing. They say, “Oh yeah, I just do this,” and they don’t think much about the job maybe because they’re so good at it that they just maybe hit a couple of keys and they done. But to somebody else, it’s like, “No, no, no you’re adding a lot of value and you don’t notice it.” They don’t really know the things that they’re doing that really brings a lot of value.
[0:50:06] JH: Yeah. And the way that — so I’ll say this in resume coaching and it’s the same thing in terms of preparing for your performance evaluation. Your resume should always be quantitative, it should not be qualitative. By quantitative, I mean delivered X which helped the company do Y, which are number based. “I reduced overhead by 33%” or “I reduced the amount of time it took to run a crone job process from four days to six hours.” If you can have quantifiable numbers that are behind the things that you do, that helps you understand the value that you’re delivering for your employers.
And it helps, if that’s on LinkedIn and it shows up, “I saved X money, I drove Y profitability,” recruiters are looking on LinkedIn all the time and they’re going to key in on that stuff. If you aren’t getting the salary that you want at your current employer, beef up your LinkedIn profile because they’re looking for stuff, they’re looking for keywords and the more quantitative it is that you can show specific value that you deliver, the sexier you look to a recruiter.
[0:51:33] GC: We are having some great discussions here and I really think that we could probably go on for maybe hours because I think we didn’t even touched maybe on a lot of the psychology of what it is and why people can’t talk to other people and just being assertive and confident about things.
But we are bouncing on an hour or so almost right now. One thing we’d like to do is sum up our shows. We do a final word and we go around and we’ll take everybody’s final word on negotiating their salary. We’ll start with you Tom, what’s your final word?
[0:52:04] TD: Whether you’re regular or an entrepreneur, it still comes down to the same thing. You have to ask for what you’re worth. You don’t just wait for things to happen. Even as an entrepreneur, there’s going to be those times where you do low ball yourself and someone says yes too quickly. It’s the same way if you ask for a raise. If they say yes too quickly, you kind of think, “Yeah, I probably went a little too low on that,” so it’s good to know what you’re worth and aim a little higher than that.
[0:52:36] GC: Peter what’s you’re final word?
[0:52:39] PA: My final word is just to again, we’ve touched on this multiple times, but focus on the value that you’re bringing to the company, what you can do for them and not on what you want from them. Keep the focus on “this is what I’ve done for you, this is what I’m going to do for you and make it quantitative,” like he said, and make sure they know that you’re an invaluable member of the team and that they should be paying you.
[0:53:04] GC: Miranda, what’s your final word on negotiating salaries?
[0:53:08] MM: Do your homework and figure out how much you’re worth and how much it makes sense to get paid. This is difficult in the freelance world because there’s such a wide variety of rates out there and so people are always like, “How much do you get paid?” and a lot of us go, “Well, I’m embarrassed to say” because we’re either embarrassed because we’re asking too little or embarrassed because we’re asking a lot. We fall into this range but getting a general idea at least of what other people are making so that you know how much you should be getting paid and you have a general idea of where you stand and then also, on top of that figure out what really matters to you. It may not be money so it may be worth it to accept a little bit less if you can get something else in return like what Jason was talking about earlier.
[0:54:00] GC: Kyle, what’s your final word?
[0:54:02] KP: I guess one of my final thoughts was just to flip around. One thing that was said earlier, if you can give us something in negotiations that means a lot more to another person than does to you, do that. In the flip side, look at what your employer can give you that cost them little. It may not be a bump in salary but it might be a very good lifestyle increase for you. I’ve seen weird things like for example, I don’t know what it is but I hate organizing my dry cleaning and I hate ironing my own shirts.
Value based proposition I’ve seen in places where it’s like, “Yeah, we’ll take care of your dry cleaning just bring it in.” Man, I would be willing to give an absurd amount in negotiations for something that small or little and it’s often a very good value proposition for the employer because of course, looking at how taxes work and different things like that. Just have some of those things in mind especially if you know you’re in a market where maybe there has been a little bit of a salary stagnation, you might be able to get a lifestyle bump somewhere else.
[0:55:04] GC: And Jason, if you could close out a final word and tell us what your thoughts are on negotiating salaries.
[0:55:11] JH: Positivity. There was recent study by the Center for Retirement Research out in Boston College that said basically that, “Happier and more positive people make more money and have more money”. Anytime you want to enter into a negotiation, you have to do it in a mindset of positivity. “Here is what I have delivered, here is what I am going to deliver for you, let’s work together.” This is not meant to be adversarial. It has to be a situation where both parties benefit, otherwise you’re just going to be fighting a losing battle.
[0:55:48] GC: Thank you so much Jason. For anybody out there that’s not familiar with your work, can you fill them in and tell them where they could find you and what you are all about?
[0:55:57] JH: Yep, so I am a certified financial planner. I am the chief technology officer of My Financial Answers — Myfinancialanswers.com which is a comprehensive online financial planning software service. So if you want to know “will that raise help you retire earlier?” Then you can go to our tool and it will answer that question for you.
[0:56:20] GC: Excellent. Thank you so much again for educating us and our viewers and thank you everybody out there for watching and listening and until next week, be good with your money.
ANNOUNCER: Thanks for joining us on the Money Mastermind Show, get more information at Moneymastermindshow.com. Don’t forget to subscribe to the show on iTunes and YouTube and follow us on Google Plus.
Important issues discussed in this episode:
- Is money everything when it comes to salary?
- Why don’t people do a better job of asking for money?
- How much are you leaving on the table by not negotiating your salary?
- Tips for ask for a better salary.
- How to value your benefits package as part of your better salary package.
Panelists In This Episode:
- Special Guest: Jason Hull | myFinancialAnswers
- Glen Craig | Free From Broke
- Kyle Prevost | Young and Thrifty
- Miranda Marquit | Planting Money Seeds
- Peter Anderson | Bible Money Matters
- Tom Drake | Canadian Finance Blog
For a quick bio of each of our show participants, head on over to our panelists page.
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