In the December 6, 2016 Ask The Headhunter Newsletter, a reader wants a 30% salary increase to accept a big promotion and relocation.
As a senior manager with a big manufacturing company, I lead a sizable sales team and have enjoyed good career growth over 18 years. I’ve been told I am a high-potential employee and they are considering me for a promotion to a director job at HQ or in one of our national regions, which would require a relocation. I’m ready to move, but I won’t do it without a considerable salary increase.
I have done some homework and 30% seems to be the right number. Our company typically would only give me a 10% raise. But my thought is that, if I am getting uprooted and taking on more pressure and responsibility, they need to compensate me for it. Is this a reasonable response to give them, or a bad one?
Congrats on the good news. My view of this is, you put your proposal out there along with your justification, and that’s where the negotiating starts. But there are two potential issues.
- Will you offend them because you dared ask for 3X what they were probably going to offer you?
- Can you justify what you’re asking for?
Let’s consider the possibilities — and prepare for them.
The salary increase stinks
There’s not much you can do about management that gets offended easily, so you need to make a judgment. Could asking for so much get them upset? Are you prepared to deal with such a reaction? What I’m really asking is, would you decline the promotion — or quit — if they don’t give you what you think you’re worth?
Finally, have you prepared for the worst case — they dismiss you? (See Negotiate a better job offer by saying YES.)
You need to ask yourself what the odds are in each case, and you need to plan in advance what your response will be. Don’t wait to figure this out while it’s happening, because that’s when people make mistakes.
Your justification stinks
As far as salary surveys and what you’ve determined others are getting paid —that doesn’t matter to your employer. If they were looking at the same data you are, they’d give you 30%, right?
I believe people should be paid what they’re worth to a business. But I also believe it’s up to the employee or job candidate to demonstrate what they’re worth. The employer will not figure it out for you. Don’t rely on salary surveys like Glassdoor — your employer will tell you it’s not really relevant. (For other readers’ insights, see Am I chasing the salary surveys?) Best case, they’re looking to pay something “fair” that’s still a discount for them.
No matter what Glassdoor (or any survey) reports, all your employer has to say is, “Those positions don’t accurately reflect our company.” Or, your employer will bring out its own salary survey — which shows you’re not worth so much. (In that case, see Beat The Salary Surveys: Get a higher job offer.) If you base your case on such data, the negotiation will end there.
Make sure your justification doesn’t stink.
Be worth the salary increase you want
So here’s the only way to deal with this, in my opinion. The case you make for a 30% salary increase must address the benefits to your employer — not “what’s right” or “what everyone else is making.” That is, what will you accomplish during the next year, in this new job, that’s worth 30%?
Map it out. Produce a mini business plan that will convince them you’ve figured this out and that it’ll pay off for them, too. In my experience, that’s the absolute best way to negotiate a raise and a new job. (For a detailed approach to using a business plan to get what you want, see How Can I Change Careers? — it’s not just for career changers. Read “Put a Free Sample in Your Resume,” pp. 23-26.)
Compared to haggling about salary surveys, you’re far better off talking about your company’s business, its challenges and problems, and about a specific plan you’ve devised that makes you worth a 30% boost. The critical advantage of this approach is that it stimulates a discussion with your employer about something you’re expert at — your job. There’s the negotiating edge that can make all the difference.
Plan the outcome
There’s no reasonable or bad response to their offer. There’s what will work, and there’s what you’re ready to do if you don’t get what you want — assuming what you want is really that important to you. You must be ready to control the negotiation and to plan the outcome.
So there are really two challenges for you here.
- First, can you demonstrate — hands down — that you’re worth what you’re asking for? (That is, worth it to the employer.)
- Second, are you ready to walk away from this employer if you can’t get what you think you’re worth?
I wish you the best, and I’d love to know what you decide to do and how it turns out. I hope my comments help you in some way.
(Since you haven’t yet discussed this promotion with your company, there’s a completely different strategy you can follow. It’s covered in Fearless Job Hunting, Book 7: Win The Salary Games (long before you negotiate an offer), in the section titled “The Pool-Man Strategy: How to ask for more money,” pp. 13-15.)
Is a 30% raise even possible? How would you advise this reader? What are the angles and gotchas in this situation?
If this is an increase in your role I.e. a promotion, then a salary increase could be justified. Otherwise, I would look at the relocation. There are websites that calculate the cost of living differences. Look at that as a potential increase. You don’t want to move to Chicago from Nebraska without a cost of living increase. Otherwise be careful. If you love the company, and your job, you may want to move for the opportunity. Wait and see what they offer you before you get too far along.
That 30% has a lot of variables: how much they adhere to their own policies of max raise, cost of living differential (might make 30% even too little), somebody else in the running, etc.
Not to change the subject, but here it goes. Contingency. Are you getting a contract or escape clause here? Once you uproot and a month later they decide to scrap the spot, what is your compensation and ability to get back on track? In the area you are moving to, are their better or more opportunities? If there is no contract, 30% may have no meaning anyway. Try to consider the tangible conditions that will rise if they change their minds once you uproot.
JimDR: Those are all key points you raise. I didn’t want to stray off the main question in my column, but the number of rescinded offers I’m hearing about makes me want a back door out of this promotion in case it goes south. Your advice is excellent. Thanks.
Do your homework…understand cost of living in the new location. Understand what you would be contributing to the corporation… incremental revenue. and wait for them to make the first move. Then respond with a request for a meeting to analyse the situation.
Focus on their growth potential with you contributing in the new position, and weave in the cost of the move. Don’t neglect the real cost of selling and buying real estate. Particularly if you’ve owned your home for a while. You’ll forfeit 5% of its value to a sales agent, and will likely spend another 5-10k decorating and furnishing a home in a new location.
Corporate stability should not be taken for granted, even though most will assume it. Some form of contract would be helpful.
I was moved to Maryland, where we had friends, but no support network. High performer, had just led converting the sales force from contract reps to direct employees. My region was the only one that was above plan. The day after the moving van left, a senior manager flew in to advise that my position was being eliminated in a downsizing. Bizarre, but it can happen.
Good points. When the management says “That would never happen!”, see how quickly they will put that guarantee in writing. You are at risk, they should assume some of that risk as well.
The employer is unlikely to agree to it, but I’d ask for a solid, written severance package that will kick in if the employee is terminated without cause after the move. (Cause is a legal concept. See my PDF book, “Parting Company|How to leave your job,” and the truncated article http://www.asktheheadhunter.com/crocs57causeclause.htm – sorry! – but also talk with a lawyer).
The point is, you want the employer to accept some of the risk if this new job goes south and it’s not your fault. A severance deal can do that. Even asking for it will force them to think harder about the future of this job now — and that’s good for them and good for you.
Know this going in: The company is most likely aware of the cost to replace you in your current position and even the cost to fill the promotion’s position, should you choose to either quit or not take the promotion.
You need to know this fact because it could support your request to get that 30% increase…or it could hinder your shots if you present a weak case.
Don’t ever look at a promotion as a promotion. Look at it for what it is: an entirely new job. This is one reason why we have terrible managers, no one thought to understand putting a good employee into a leadership role takes the good employee out of what they do good at and in turn makes them suck.
Leadership roles should never be tenure gifts. But I digress…
Kev: That’s no digression. Every promotion must be justified as a new job for both the employer and the employee who’s being promoted. It’s far to easy to throw a bit more money at an employee, than to go recruit a new hire who will likely cost lots more. It’s a factor to use when negotiating. We all know that changing jobs AND employers is a better way to boost your salary than getting a raise or promotion with the same employer.
“We all know that changing jobs AND employers is a better way to boost your salary than getting a raise or promotion with the same employer.”
I believe, statistically, it is the only way to achieve a large double-digit total compensation boost. Many fail to secure these deals solo…true headhunters are key liaisons.
“Produce a mini business plan that will convince them…” Yes indeed. That is what it is going to take to beat the competition unless the employer is simply looking to fill the position fast with a body.
I think your point is relevant when it comes to considering whether or not to accept a promotion, especially one into management as you present.
In this particular situation, maybe this person was groomed adequately 18 years. In far too many others we see the best programmer becomes Department Head of Engineering, the #1 salesperson becomes the Sales Manager, the most spectacular waiter becomes the restaurant’s General Manager, etc. Yet being the best at something doesn’t mean you can lead others at it.
This comes up a lot in technical fields, where the company’s only advancement path is into management. Some who loved being Top Performers can’t transition from digging in to delegating to others the digging in.
I also remember one person who did sales in radio for 30 years. I asked him if he ever became a sales manager. He exclaimed, “Absolutely not!” He was repeatedly presented with that, and was told he’d be such a good role model to lead up-and-comers. He said he heard too many regrets from salespeople who went into sales management roles. Each time, he politely declined. He said going into management would remove him too far from what he’s best at, being out in the field and meeting clients.
Management is not for everybody, despite so many press articles revering Director of This, VP of That. (My beef is how corporate Web site after Web site has tabs and photos only of the Management Team or Leadership. Doesn’t anybody else there get things done who’s also worth publicly revering?)
Yes, we gain some things, we also give up others. It’s worth weighing the advantages and consequences of not taking the promotion. (Then there’s also the Peter Principle.)
To your comment about the Peter Principle and the management vs individual contributor choice I recommend reading “The Gervais Principle”. In it, the organizational dynamics and relationships between the various factions in an organization are laid painfully bare. As all theories, it’s an approximation of reality, but will worth spending a few hours reading. I just wish that this knowledge would have been available when I started working in industry forty years ago. In hindsight, I would have done some things differently.
Currently I’m not close to my 40-year point. I am a little past my 20-year point, so I think I’ll be able to use this. (Hopefully other readers can too.) I’m actually quite intrigued by how this Gervais Principle reflects recent office happenings.
It’s strange how I find parts of what you supplied, John, to be a mix of sad reality that’s also entertaining with ideas on how to navigate office hierarchy. Thank you!
I remember a time in Silicon Valley when individual contributors were so valued and recognized that they’d often be paid more than managers — which is as it should be. In too many companies, “career advancement” requires a move into management. It’s silly. As Glenn points out, it’s not a path. Management is different. I like the idea of a Guru designation. You can get paid more than anyone else just for being outstanding at the work you do.
I’d love to hear Bob’s take on this.
Ask and you shall receive …
My take? There are two theories of compensation I know about: The value theory and the market theory.
The value theory is based on ROI – comp should be pegged to how much value you bring to the company. The market theory is based on supply and demand.
The way most companies actually set compensation is, I think, quite different from either of these. It’s based on social status. The folks running the company look at the folks who work for them and decide what sort of lifestyle they should be able to afford, mostly based on the perceived social distance between each group of employees and themselves.
If you buy into this view, the most important dimension of the negotiation is presenting yourself as a member of the executive team’s “social class.” If they think you’re one of them … a member of the club … your salary negotiation will be easy. If they don’t, your next best approach is to do what Nick always suggests, with this wrinkle:
They’re thinking social class and the market theory of value. Your job is to change the conversation without their realizing that’s what you’ve done … shift it to value instead of supply and demand.
Is that what you’re looking for, Nick?
It’s more likely that you will end up managing employees in a different timezone without any raises; I’ve seen it being presented as a take it or leave it. With leave it being layoff. And take it being severely disruptive to your family life.
Now as to negotiation- it is not capitulation. Create a BATNA, and be ready to walk without notice if feel you’re getting herded. Relocation gets harder with age and kids, comp it into the numbers you present and let them fight for every line item
Nick says there are two possible outcomes – you get what you want, or you walk away. There are more outcomes than that. In particular:
* You want 30% now. Your employer says, okay, but first you have to prove yourself. You say, okay, but let’s define what “prove myself” means and over what period of time … and let’s put it in writing to make sure we’re in sync as to what we’re agreeing to.
* You want 30%. Your employer wants to give you 10%. You end up at 20%. Do you take it? Depends how much you want the money.
* Your employer says, you’re good but you aren’t that good. 10% is the number. You decide not to take the job, but instead to stay where you are. No harm, no foul.
* You want 30%. You get it, and discover you hate the new position. Now what? Make sure it isn’t only about the money. A large majority of Americans would give up a significant chunk of their compensation in exchange for a better working environment. If you leave, you might find yourself joining their ranks.
There is, by the way, a rule of negotiation: Never let the negotiation come down to a single variable. That’s where win/lose situations happen. So figure out something else you can offer in exchange for the extra bump you’re looking for. Nicks suggestion of a full business plan is a good one. There might be others as well. Try to figure out another one or two to have in your back pocket.
As often happens when Bob chimes in, it’s advice worthy of a follow-up article… Bob’s absolutely right. The outcomes I discussed are not the only possibilities — these are all worth considering in advance. And “in advance” is key here. Please — don’t wait for events to play out without deciding in advance what your response will be.
Thanks, Bob! For those new to ATH, Bob Lewis produces the excellent http://issurvivor.com/. If you’re in IT, you can’t afford to miss his insights and advice.
“Never let the negotiation come down to a single variable.”
First place I heard that was back in about 1988 on audio cassett (The Secrets Of Power Negotiating by Roger Dawson).
“So figure out something else you can offer in exchange for the extra bump you’re looking for. Nicks suggestion of a full business plan is a good one.”
Exactly…as per my earlier recognition of Nick’s advice in this regard. If your plan is well researched and on target you’ll make it much easier to “walk away” if they want to reel you in on the c-h-e-a-p. Hopefully, your biz plan will hit the bullseye so true they can’t do anything other than offer you a “killer” total comp plan.
And, of course, talk is cheap so get every detail in writing as is common sense and regular advice on Ask The Headhunter.
Wow! I’m so pleasantly surprised to see the Roger Dawson title.
I remember eagerly awaiting catalogs by mail and buying cassettes in the late 80’s to early 90’s from the Nightingale-Conant Corporation. Still have them and relisten. Their advice is really timeless.
Personally, I think going in with the mindset you should receive a 30% increase will be damaging and potentially get you laughed out the door.
What I would do is look into the new role very carefully (ask for job description, try to connect with someone their already and build relationship to understand the needs and challenges more). Then, objectively benchmark to understand the market rate for similar positions, in similar industries. in the new location (payscale.com, salary.com). Have some degree of clarity about the pay range is at your company verses the local market rate. You could find that the 10% is exactly right?
Then I would consider the specific value you bring to the organization. What are things you can do the another person internally/externally would not be. Like ATH, have this documented or be able to present your plan. What you have done in the past and what you can do in the future is your pitch. A raise is always earned— you have either excelled and increased responsibility in your current role or will have increased responsibility in your new role.
Relocation– understand that there are often several levels of relocation packages. You want to read through yours with a fine tooth comb. Do they offer a home buyout option if you will need to see your home and can’t? Do they offer property management should you hold on to current home and decide to rent it? Have they run cola numbers for the new location? Will they transport your car? Should you be layed off in the future will they cover costs for you to return to home location? Do they pay airfare to visit home location once a year at holidays? Are they incentivizing you to move with a sign on or stay bonus? Are they providing you will transitional cash to cover the incidentals ( new drivers license, re registering car)? Do they cover the costs of short term housing while you are looking for a rental or home to buy? Will they provide a 2-3 day preview trip so you and family can visit the potential,new location, tour with an agent, chose the right area and school district? Important to understand that relocation is often more negotiable than salary. If you are a single person moving, understand that your move is already costing the company quite a bit less. Access where your costs, needs and personal happiness lie.
“There” (spelling) ugh…
I doubt you will get a 30% raise from your current employee. Too big a mental jump. In a similar situation, I tried (and failed) to negotiate a 10% pay increase. I started look at other employers and immediately had 3 job offers. Followed Nick’s advice and received a 41% raise at a new company doing similar work. 9 years later and I earn more than double what I earned at my previous employer. The lesson for me was to not be afraid to relocate and change companies.
“Followed Nick’s advice and received a 41% raise at a new company ”
I LOVE IT. :-) Thanks, Daniel.
I agree that there’s psychology at play here. The same employer is not likely to give that big a raise even for a promotion. But if the OP is going to try this, might as well go in fully loaded with a plan to win. (Then change employers if it doesn’t work.)
One very common objection you’re likely to hear about such an increase is, “If we did it for you, we’d have to do it for everybody.”
First of all, many salary aspects are not made public. In some places, discussing salary and compensation are reasons for termination. So if they give you that common copout, you can ask them politely, “And how would others find out about our arrangement?”
After that, you display a grateful yet businesslike smile. You want to demonstrate that you above everything you appreciate the opportunity, how they think so highly of you especially after 18 years. You want to also show that managing budgets is something you take seriously. That includes managing their budget at the new place. That includes managing your personal budget at your new place.
You want to convey somehow that you want to be at your best before you even move there. In order to prepare for that, you find it necessary as a responsible professional to make sure the financial parts are in order. You’re very happy to know that your supervisors and you can work on a reasonable package. You can show with your research how you’ve arrived at your starting figure. Then adjust with them as necessary.
You never want to make it about you. You want all your wording to show how they will be better off by making sure that they compensate you with what this situation and relocation entails.
You’d think the compensation challenge by itself would make HR the most innovative profession in the world. Huzzah.
Nick, hi, long time, etc.
HR IS innovative, depending on which company it is to which you refer. Many take their lessons from Hewitt/Aon, et al and spend sufficient time and energy to ‘do the right thing’ and create compensation/benefits programs that motivate and retain their people.
It is those companies that historically cheap charlie the deal that are the challenge for anyone in those companies who do not want to ‘go along to get along’.
Unfortunately, you and I have seen, first hand, too many companies that are willing to have their best performers drop off because they won’t tolerate being abused. The company shrugs its shoulder and because its culture is stuck like a needle on a record, simply replaces those persons and starts the process of grooming all over again. I call this the Mobius Strip Mentality.
This person’s past performance should be used to justify that raise, assuming thirty percent is reasonable. (Regional COL and Relo expenses are a separate issue, to be negotiated separately and do not figure into this thirty percent conversation.)
The company apparently recognizes this person’s worth, has a future in mind for this person and hopefully, plans for this person another jump up the org chart from DIRECTOR to VP, at a minimum. And, forward-thinking companies don’t move someone from DIRECTOR to VP if they don’t have an even higher level position in mind for this person, down the road.
[Research needs to be done- is the company anticipating this person replacing a current VP or SVP/EVP down the road? Are they thinking that far in advance?
Also, is there evidence the company has, in the past, promoted others similarly and provided an appropriate career path and sufficient reward package for that/those person(s)?
If there is evidence of either or both, this person has additional leverage.]
In the absence of either of these two possibilities, it becomes a question as to whether or not the decision-makers are willing to break their own cultural mold to do the right thing.
Also, if the company has shown creativity and risk with regard to its various executions, then perhaps the company can be motivated to meet this person’s salary requirements but if the company is known within its industry to be a ‘controlled growth’/’no risk’ organization, then perhaps the writing has already long been on the wall, already.
I agree with you that the first step is to create a Plan B before saying anything.
Paul: Thanks for the deeper dive on this. It’s a conundrum. There could indeed be a domino effect if HR gives a few people big raises (justified raises) then faces other employees when the word gets out. Can a company afford to give everyone the big raises it normally gives only when hiring someone new?
I suspect that letting such people go and hiring lower-cost people to do the same jobs is just a fact of life — it’s a mechanism everyone lives with. I certainly think HR accounts for losing great people who want lots more money as a cost of doing business. But I also think there are creative solutions no one (or few) has (have) worked out.
What I think is the biggest issue of sorrow is that company management so often/too often takes on an adversarial posture during these conversations.
Logic would suggest employers would welcome the opportunity to negotiate an opportunity to insure they keep their best but alas, this is not human nature for so many/too many companies.
What culture/nationality is best supportive of their employees?
“And how would others find out about our arrangement?”
It would be an HR zealot who would squawk and make noise.
“First of all, many salary aspects are not made public. In some places, discussing salary and compensation are reasons for termination.”
This is illegal in the US – there are exceptions, but a law was passed in the 1930’s banning this. I believe it was to make unionizing easier.
Many good comments:
What’s important & needs emphasis is that this person is an insider, a management insider. That should mean he/she should well know the corporation’s salary structure and relocation packages. True you may have been shielded from the exec packages which may or may not be offered to Directors. But with your tenure and I assume contacts, you should be able to find out. If as a senior manager with over 18 years with your company and you can’t find out this info, you aren’t worth 30% more. As to salary surveys, I agree with Nick. You should assume they won’t give a shit about your research. What’s important to know and a sr manager should know it, is how the company positions itself in the market. That is, they can strategically decide to pay below market, at market, or over market. And once they position, they live in their own world, not the outside world. This is important in factoring in Nick’s point, what if they throw you under the bus, or you take a walk? and find that for instance they actually pay above market, and you can’t get comparable pay because you’re already overpaid per the market.
Ditto relo. There are often packages plural’ not A package. Big surprise. execs get treated differently from mere mortals.
I think going in flat-ass asking for a 30% kicker for the reasons you give (I’m worth it per your salary surveys and the pain of moving) will negatively effect your credibility. You’re saying pay me more right now, for what I promise to deliver in the future, and by the way build in my salary a pain compensation that you will pay me forever.
Take the easy one 1st. Relo packages are set up apart from salary for a reason..to deal with it specifically in a way that doesn’t screw up normal compensation considerations and to provide focus. I’m not wishfully thinking, I’ve relo’d a # of times, I don’t recall it ever being fun, it’s an upsetting character building exercise, and my chief financial officer/wife notes and can back it up, that you should assume it will take a couple of years to get back on an even keel relative to real and intangible costs. So you do what others herein advise, do your homework on cost of living, what you think it will cost, map it to your relo package..and make relo a separate negotiation, negotiate the package, don’t try to use it as part of a new salary. And they are negotiable, because relo’s are a “one-off” type of thing…and as such offer managers a lot of leeway to deal with some really unique situations. For instance it’s not uncommon for someone who needed to (say for school district needs) to build a house in just the right spot to negotiate temp living per se or longer period for same. Or for an executive to simply make the move easy by buying your house after an agreed period of due diligence to sell it yourself. Management is much more likely to make relo concessions than salary concessions.
And to Nick’s point, Saying you’re worth 30% by itself is professional suicide. Better to treat it as if you’re a consultant, lay out a plan offering what you believe you can deliver..in a time line. And work your 30% in the time line. For instance, start with the proforma 10% when you take the new job…then lets say in 6 months you’ll acomplish X, an attention getting X, then for a tangibly delivered X, suggest they kick in another 10% (on top of your new pay) and in say another span of time whatever you believe you can do, another 10%.for delivering Y, again on top of your new salary. (Do the math and it will come to more than 30% compounded over your original pay. If you deliver X, but not Y that’s where you land, because that’s your demonstrated value-add, and hence you go into status quo comp mode.
Think it through and don’t hesitate to create your own job, i.e. prepare yourself to keep moving up.
You should be able to do the aforementioned planning because you’re an insider, who should be well prepared to develop such a plan. You know the strengths, weaknesses, what would be worth what you want. If you don’t, they are well justified for the SOP 10% offer, and you’ll know what your real worth is.
Don: Your insider perspective is a very useful one – it’s worth focusing on that angle while developing a strategy to justify the big increase. Too often, people don’t think through a strategy — they just jump in with a request without realizing it can be easily parried by the employer. When you consider how much this is all worth, you realize it’s worth the time to think it through.
Well said! Compensation has its own scheme and parameters. Relocations are where HR really has room to incentivize and be creative as needed to meet the need. If someone makes a good case, my job is to make it happen and make absolutely sure the employee stays whole across the board. When leaders say someone is really needed in location X buy such and such a date, the agenda has been established and I have all the backing to do what is necessary. And, even if the associate has the “average” employee package, it doesn’t mean certain options can’t be added one-off style.
I literally had one employee with a high end wine collection that could not be transported via moving van—- she made several personal air trips and I stashed all the wine in the back of a coat closet and kept my eye on it. We’ve relocated “the boyfriend and his Porsche”. We paid property management, international driving lessons. Horses have been relocated. People have been short termed housed in the back bay, boston. Associates going to China who decided not to move their belongings gave me an itemized lists for what they couldn’t take and got a payout (cheaper and easier all around). We’ve managed the death of a spouse mid process, disabled children etc.
Boston line is that if you need something, ASK.
HR Hybrid – Cool stories! Great to showcase examples of what good HR folks can pull off! This oughta raise expectations!