6 scenarios about making more money

On my earlier posting (How to Make More Money), reader Svetla posed a comment with a list of six challenges that she believes prevent her from making more money at her job. After describing an abominable skinflint of a boss, she asks how she might justify a raise in the following situations. It’s a thought-provoking question that deserves a bit of space to discuss…

I’m going to try some short, fast suggestions for Svetla’s list. The challenge I throw right back is, if Svetla can work up a specific approach based on just one of my comments, then maybe she should give me a raise ;-)

Please check Svetla’s comments on the other posting so you’ll better understand her list.

What should you do about getting a raise when:

1. There is a set budget for your position or department.

My suggestion: Identify something your employer would really like to have more of. (Good ideas? Detailed lists of implementation steps for new projects? Faster turnaround time on reports?) Figure out a way to deliver it within your job. (Come on — put your thinking cap on. This could be worth money.) Make delivering it contingent on getting paid more. The added value you create should offset the higher compensation. If your boss orders you to take your list and implement it without additional pay, take it to his competitor and ask for more pay. (See also my response to 4. below.)

2. There is no direct link between your work and the bottom line.

My suggestion: I think this is never true in a healthy company. In cases where it is true, your job should be deleted for obvious reasons, or you should quit soon because your company is in a death spiral. In your post, you explained that your “cost center job” actually yields revenue improvements. I believe you. The connection is actually pretty obvious, if not defined in detail. That your boss doesn’t measure how your work yields profit and success for the business doesn’t mean there is no link. You showed that there is. So my suggestion is to find a different employer. Never work with jerks.

3. Your boss is unable to make the link between your work and the bottom line.

My suggestion: Then you must teach him. Put together a business plan and a spreadsheet that explains the links and estimates the yields in dollars. Your numbers won’t be accurate, but your assumptions should be defensible. If your boss refuses to learn, then you must turn him in or move on. Imagine what the board of directors would say to your boss if he looked them in the eye and stated that he does not know of any link between an employee’s work and the bottom line. If you move on to another company, consider sending your presentation to the chairman of the board at your old company, with your compliments. Close with a succinct comment about how you quit because your boss didn’t see the connection you just showed them. Offer to accept your old job back if they fire the boss and double your old salary.

4. You are giving more than the organization asks you to.

My suggestion: This is up to you. If that’s how you get your jollies, then don’t ask for more money. Otherwise, prepare a biz plan that shows how your job pays off, and how you will make it pay off even more next year. Put a quote on the project. (Ask for more money.) A rational manager will analyze your claims, test your ability to deliver, and gladly pay. Or you must quit and move on. I think the best way to actually attempt this is by offering a monthly deliverable in exchange for a monthly performance bonus. That way the company isn’t out a dime unless it gets what it wants. This is worth attempting only if you’ve got a solid written agreement that defines the terms and the payout. Mark my word: More companies will be doing this sooner rather than later. Those that do will blow away their competition.

5. Your boss refuses to give you credit for the work you have done.

My suggestion: Credit is part of pay. I know people who are paid a lot but get no credit. They don’t care. They want money. Some people value acknowledgement and accolades more than money. It takes all kinds to run a business. You’re saying you’re not getting either kind of compensation to an adequate degree. So it’s time to lay it out to your boss, or to his boss, and be ready to move on if they won’t compensate you fairly. Remember that their view of what’s fair may vary from yours, and upon getting a thorough explanation from them, you may decide they’re right and you’re wrong. Also remember that smart companies are in business to produce profit. They will pay to get the profit.

6. Your boss is stingy (happens often with entrepreneurial businesses).

My suggestion: You’ve defined a boss who does not want to pay for work. How can we have a rational discussion about compensation when the employer doesn’t want to pay money? The best entrepreneurs I’ve known are very happy to share the wealth when their partners and employees help produce that wealth. They recognize that success is generated by people, and sharing money with them is merely a happy step towards more success that pays for itself. If you want to get paid to work for an entrepreneur, go find one. Your boss fails the test.

Okay, these were quick responses. Ideas. Some of them are very in-your-face. I think all of them pose risks. (Business is risk, remember?) Business should be in-your-face. Business should operate to make money, and you should work for the kind of pay that you want.

Now if Svetla isn’t already bugged with me for holding her up here for everyone to see (Love ya, Svetla — no offense intended. You’ve put a sharp point on some important issues), let’s look at one thing she wrote that I think most people believe is true:

Oftentimes the quoted reason for the level of salaries or raises is the budget limit for the department.

Sorry, but that’s a perspective (or rule) worthy of a commune-ist operation. Any self-respecting capitalist operation will continue to throw more money at a department if every dollar spent on it produces more profit. M-o-n-e-y is spent to produce more money. And a lot more money will be spent if it will produce a lot more money.

Of course, companies today have rules about compensation that have absolutely nothing to do with producing profit. Like, We can’t pay you more than we pay the next guy because that would be unfair (or maybe even illegal!), no matter how productive you are.

People are our most important asset, and we like to think out of the box, and we recruit the best people in our industry, but we pay everyone alike and we have no interest whatsoever in hiring someone out of the box who is an important asset because she can produce more profit than those employees who are already on our salary curve.

Got it?

I’m reminded of a big layoff AT&T did around 1997. Whomp, thousands of people were given exit packages and fired. I know about this because AT&T hired me to help some of those people find jobs. I was there. Then management saw this one woman walking out the door. “Where are you going?”

“You gave me a nice package, thanks. I’m leaving.”

“But we didn’t mean you. We want you to stay. Heck, you’re great! You’ve been contributing over a million dollars a year to our bottom line! It’s pure profit! We want you to stay!”

“No, I’m sorry, but the baby is going out the door with the bathwater. I’m starting my own consulting company. And I already have my first client, who is paying me a percentage of the million bucks a year I’ll be generating for them. Sure beats the $70,000 you were paying me. Hey, thanks!”

Always remember: If you produce more than you cost, in a capitalist society there’s an employer that will hire you. I don’t claim it’s easy to find that company, but it’s out there. You will probably have to make the case that you really do produce more than you cost. What a concept, eh? Could be it’s more important to do that than to write up a resume, huh? Especially in this economy.

A word to Svetla’s boss, if he’s reading this: You say you don’t see a connection between Svetla’s work and your company’s success. If I were your boss, I’d fire you for employing people who don’t make a difference.

(Thanks, Svetla, for the sharp poke in the eye that made me look. There’s nothing like an in-your-face reader!)


Readers’ Forum: How to make more money

Discussion: March 2, 2010 Ask The Headhunter Newsletter

The Q&A in today’s newsletter is a biggie: What are the hot spots in your job and your career that present opportunities for you to goose up your compensation? And, when you encounter such an opportunity, what should you do?

This is the topic of a new book I’m writing, and I’d like your help.

In the newsletter I discuss two hot spots where you can influence how a company will pay you: when you approach a company for a job and when you have a performance review. Note that, before you can ask to be paid more, you’ve got to do lots of advance work and be ready to demonstrate how you will make more money for a company.

Now I’ll tell you about the book I’m working on. I’m outlining a lot of hot spots where I believe there are distinct opportunities for talented people to boost what they get paid. No single one is going to make or break your compensation level, but if you recognize these hot spots and capitalize on them, then you should see an overall boost in your earnings.

Why am I telling you this? Because I need your advice and insight. I think many of these hot spots are revealed when you tell me about obstacles and hurdles you face as you work toward greater success in your work.

  • What situations have you encountered where you think you could have boosted your pay, but you blew it (or didn’t exploit the opportunity as fully as possible)?
  • What obstacles do employers create that you believe limit your pay artificially or unreasonably?
  • In what ways have you gotten stuck in salary negotiations?
  • Which compensation topics mess with your mind, leaving you feeling like you have no control over the outcome?
  • Is there an experience that keeps nagging at you, where you think you might have influenced the outcome for the better but didn’t?
  • What do you want to know about making more money?

This is a big topic. I don’t pretend to have my hands around it, but since it comes up a lot on Ask The Headhunter, I’m determined to tackle it in a more organized way. I want to know, What do you want to know?

Most people pick their jobs for reasons other than money. They want to work with a certain product or technology or they want to work in a certain culture. But let’s face it: We all work to make money so we can take care of those we love and to enjoy a good quality of life. If you want to stand out in your field, one of they key measures is how you get paid for the work you do. Knowing how to make as much money as you can is an important skill that should pay off for you and for your employer.

Please read today’s newsletter, then tell me what kinds of hot spots you’ve encountered—and how you handled them. How can I help you boost your compensation?

[Update: Reader Svetla posed an interesting challenge in the comments section below. It’s so provocative that I think it merits a reply in a new posting. Here it is: 6 scenarios about making more money.]


Fib to get a raise?

Lots of folks work on contract, not on salary. It’s easy to net out less money when expenses go up and your client isn’t sensitive to it. Should you get paid a higher rate when that happens?

I work as a contractor for a company and I have a pretty good setup. However, my expenses have grown and I feel it’s time to ask for an increase in my contract rate.

I spoke to my immediate supervisor who said, “You will have to talk to my manager. If you were to say that you have another offer, the company would be likely to increase your rate to keep you. The manager would have something to go on to get approval from his boss.”

Now, I didn’t really care for this because I’m not going to lie. I do not have another offer, and enjoy working for this company.

I spoke to my husband and told him I wasn’t too enthused to go my boss’s boss and lie to get a higher rate. He said that I should just tell the truth and be myself. I smiled, because that isn’t the problem. Schmoozing someone who I may lose respect for — that is the problem.

What would you do?

I agree with you. Do it honestly. But that means being ready to show the boss’s boss a brief analysis and business plan. Showing how your expenses have grown is good… but what’s really good is showing how you contribute to the bottom line and how you will help with the company’s success. In other words, show a benefit to the company for the extra pay. It’s a healthy thing to sit down and work this out now and then. You might be able to figure out new ways to be a better worker who contributes more to the business. That’s what work is all about.

If you can’t figure out how to increase your value to the company in exchange for the higher rate, get your boss to help you out — or the boss’s boss. Try this: “I don’t expect you to pay more unless I can do my job in a way that adds more value to the business. Can we talk about the company’s objectives? It would help me to understand where the opportunities are to boost profitability. I might be able to offer ideas on how my job could return more on the investment.”

You get the idea. Nonetheless, the expenses argument might work by itself because it is valid… Use your judgment… but don’t stop thinking about were you fit in the profitability equation.


Forum: Mo’ money for contract jobs?

This reader feels taken advantage of by the “consulting company” she works for. What’s your advice?

I read your article about how to negotiate with a headhunter for a better offer. But if it’s a temp or contract job, how do you ask the agency for more money? You know how they’re short-changing you to begin with: If they say the job pays $14 an hour, aren’t they really getting at least $18 from their client while they pay you only $14?

When is it appropriate to ask for an additional buck or two? Or is it best to keep your mouth shut in this economy because there are tons of other candidates behind you willing to accept the rate that is offered?

Forum: What do you think? When you’re working through a “consulting” company (aka, job shop, contractor, etc.), why should it get so much of your pay rate? Give this reader your advice!


How to work with headhunters… and save ten bucks

In my last post I asked whether you’ve ever squeezed more out of a headhunter… Did you ever successfully negotiate a higher job offer via a headhunter?

How to Work with Headhunters

Now I’m going to do something I’ve never done before on this blog, on my web site, or in the Ask The Headhunter newsletter… I’m going to plug a new Ask The Headhunter product… and save you ten bucks because you read about it here first. I’ll give you a discount code in a minute… worth $10 off.

Everything on all the Ask The Headhunter “channels” has always been free (for over 12 years) — articles, blog posts, tweets, tips, newsletters. (Ah, no sweat — you’re welcome. Thank you for helping me keep it interesting!) I hope it’s kept you ahead of your competition. But it’s also kept me limited to short pieces.

So I decided to break the word-count meter and actually pack all I could into one big topic: How to Work with Headhunters… and how to make headhunters work for you.

I’ve been working on this on and off for the past year. 130 pages might officially make it a book, but I call it a guide because it’s crammed with (subtitle please…) 62 myth-busting answers for fearless job hunters. (That’s you. Thanks for submitting all those in-your-face questions all these years and sometimes keeping me up at night.)

I filled it with almost everything I know about how you can work with, deal with and profit from headhunters. (I say almost because I’m sure that if you read it, you’ll come back here with questions that will make me realize there’s always something more I can teach you… So we’ll be covering more.) I also expose all those unsavory characters who call themselves headhunters but waste your time and make you feel worse than the HR machine does when it chews you up and spits you out… When you’re done reading, you’ll never waste a minute with them again.

What about how to squeeze a headhunter for a higher job offer? It’s in there. No one else has ever told you how to do it quite like this before… How to really qualify a headhunter? It’s in there. What kind of resume is best at making you the headhunter’s #1 candidate? It’s in there. A crib sheet? It’s in there. I had a blast writing every page.

Instant gratification? It’s in there — this is a PDF and you can download it instantly. But don’t expect some cheesy Word document. The design is lean and clean — more editors and experts combed over it than publishers ever assign to their authors. (I know because a big-time publisher put out my first book. This PDF looks better and packs more value!)

You can learn more about it and decide whether it’s for you by clicking the book cover above: Features, benefits, sample pages, the table of contents and so on.

About the ten bucks: If you’ve been following Ask The Headhunter all these years, you can get the edge first and get it for $10 less than the rest of the world by using this discount code when you order (I’ll leave the code active for a reasonable period of time).

Click here, then type in this discount code: tenoffblog

About those 62 questions I answer in the guide: I’m ready to answer more once you use those up.


How to squeeze more out of headhunters

Uh, did I say that?? All I need is a bunch of angry headhunters showing up at my door with torches… Here’s what a reader asks:

Following my interviews with the company, the headhunter called me with the offer and I told him I’d think about it. I’d like to ask for more money but, since I’m not dealing directly with the employer, I don’t know how to handle this negotiation with the headhunter. What’s the best way to do this?

Can you squeeze more out of a job offer delivered to you by a headhunter? Should you negotiate with the headhunter, or go around him and negotiate directly with the employer?

HINT: If you go around, you might tick off the headhunter and the employer. And that won’t do much for your prospects for more money…

So that leaves us with the headhunter. What have you done to get a better offer when working through a headhunter? Is it necessary to squeeze? Can you do the ol’ I’ll-scratch-your-back-if-you-scratch-mine…? (Just how does one scratch a headhunter’s back and get him or her to do something?)

Tell me your story then I’ll tell you mine…

Gotcha: The Non-compete agreement

Employers have an edge today when they’re hiring. More people are out of work. So employers up the ante and bargain harder. More companies are insisting that people sign non-compete agreements (NCAs) before they’ll hire them. An NCA protects a company from you after you leave because it restricts where you can work, what kind of work you can do, and who you can work for. It protects the company from competition.

Desperate for a job — or just because they’re in a hurry to close a deal –, people sign NCAs without realizing the consequences. An NCA could shatter your career plans by literally restricting you from the jobs you want.

Computerworld‘s article last week, Don’t sign away your future, is one of the best career pieces the mag has done. (The date on the article on the website is April 23, 2009, but it appears in the May 25 edition of the magazine.) It discusses six tips to protect your career. Don’t miss it.

What the article doesn’t discuss is how goofy employers are — and what they get away with. For example, usually only top-level executives get employment contracts that define terms and obligations between the employee and the employer. These agreements protect both parties. Companies won’t give these agreements to lower level workers.

But employers routinely demand that employees at almost any level sign one-sided, restrictive covenants that benefit only the employer. NCA’s are an example. And herein lies the negotiating tactic you should use when an employer asks you to sign a restrictive NCA before giving you a job offer. Your objective is to get compensated for signing an NCA, just like a top-level executive — or to avoid the NCA altogether. Try this: Read more

Show me the money!

We’ve talked about disclosing salary to employers, and we’ve discussed when it’s appropriate to bring up money during the hiring process. The conventional wisdom says job applicants shouldn’t bring up money at all — wait until the employer brings it up. (I think that’s nuts. But I’m not conventional.)

I think it helps to consider other situations where money plays a role in decision making. You go to a car dealer. You pick the car you want, you take it for a test drive, you decide it’s what you want. You sit down with the salesperson. You tell him you want to buy it. Is that when you first ask about the price? (I’d like to do that after test-driving a Murcielago or an Aston Martin DB9. Whoa, sorry there, Bud — turns out there’s not enough in the checkbook…)

An Accountemps survey of managers asked when money should be brought up during the hiring process.

Most managers (30%) say candidates should ask about compensation and benefits during the first interview. 17% suggested bringing it up even sooner — during the phone interview. Good for them! That’s almost half of managers advising job applicants to ask about money early in the process. 26% suggest raising the money question in the second interview. (That’s 73% advocating asking about money before an offer is made.) Only 12% suggest bringing it up after a job offer is made.

Guess the conventional wisdom is wrong. The trick is in How to say it:

“So, what’s the compensation like?” (Smile.) How could anyone get upset if you ask like that?

At what point do you bring up the money?

Create your own job

Over on GL Hoffman’s blog, Seth Godin is telling people not to look for a job. And I agree. Godin thinks it’s smarter to start a business. And I agree.

What’s a headhunter doing telling people to start their own business rather than to go find a job? Well, I’d rather have one company client hiring lots of people than one job candidate filling one job. So I’d love it if you’d just go start a business and then give me your business.

I might as well ask you to wrench your neck 270 degrees and then fold your head under your armpit so you can walk backwards while looking ahead. Most people just aren’t cut out for it, though everyone would learn how to be better at any job they do — if they tried to start a business. And some would keep at it and a few would succeed.

I love Seth’s idea, but if you’re gonna tell people to do something I think you need to tell them how. So let’s look at two ways to do this.

First, if you’re never gonna try to start your own business, you should nonetheless approach your next job like it’s a business. Hell, the employer does. (If the employer could avoid hiring you or anyone else, he would. He doesn’t want to create a job. He wants to produce more profit.) So if you want to get a leg up, get your hands around that job like it is a business. Show the employer what you’re made of, or you don’t deserve the job. Here’s the basic blueprint to Create your next job without having to actually start a business.

Or, wanna have some real fun because you’re smarter than the next guy? Good for you. Don’t even pick out a new job. Go ahead and design your new company. Design your product. Then go find the vendors you will need in order to produce it. Find the customers who will buy it. Meet the competitors that you will put out of business. Go talk to all of them — they’ll be glad to meet you. (Aw, man, these meetings are looking a little like veiled job interviews, aren’t they? Well, consider that a bonus.) Know what? Every one of them is a potential funding source for your new biz, and they are also all potential employers. Your competitor may hire you to avoid beating its head against your wall. A vendor may want to use your idea to sprout a new product line. Your customer — well, customers are hard to figure out. Sometimes they want to bring an idea in-house… or they just wanna buy you out.

This latter approach to job hunting came up when a pair of software developers — a husband/wife team in Croatia — asked me whether they should Get a job, or start a business? It was fun to develop the path between both options to make them both viable. It’s not rocket science. Take a look and see if it’s the how-to solution you need.

So should you try to get a job? I dunno. I say, start by creating a job by designing the work you want to do as a business, then decide whether to do it for someone else or whether to work for yourself. Find a way to produce profit and go show it to people you respect. Either they’ll help you start a new biz or they’ll hire you.

The real reason employers want your salary history: Hiring is a crapshoot

We’ve talked salary history to death. I dunno — it still astonishes me that HR demands it. Not one compelling reason has been offered to justify why HR must have it. On the other hand, we’ve heard from enough job hunters who routinely decline to disclose their salary, and life still goes on. The Job Police don’t show up at anyone’s home with warrants for old pay stubs. Lots more folks are aware that they can say NO. (I’ll offer this caution again: Withholding salary history could cost you an interview or a job. Judge for yourself before you act. Saying NO ain’t for everybody.)

Which brings us to a bigger matter. The real reason employers want your salary history.

Now, I don’t accuse employers of conspiring to defraud job applicants of decent job offers.  (Though, I do think some companies — including the one represented by the HR manager we all heard from — are indeed defrauding applicants.) I think the problem is far bigger. In most cases, I think companies demand salary information because they don’t know how to run their business for profit.

When they’re trying to fill a position — and put a value on a job applicant — I believe employers just plain don’t know how the job contributes to profit. They have no idea how to judge your ability to do the job or how the work will contribute to profit. In other words, they have no idea what you are worth. The job is just a line in a budget, and the number is right around what it was last year.

So for most employers, hiring is a crapshoot. They don’t know how one additional employee hired today will affect profits. Think about that.

When was the last time an employer showed you a business plan for the job in question — with a number in it that shows what you’re expected to bring to the bottom line?

I contend that this is the problem. Employers want your salary history because they need to start somewhere. If they knew how the job in question contributed to profit, and if they could figure out how you will contribute to that profit, well, then the entire hiring process changes. We want only people who will boost our profits significantly. In fact, we’ll pay based on how much extra profit we think you will bring to the bottom line. So here’s the business plan, here’s what this job brings to our bottom line. Show us what you think you can do — that’s what we really care about. That’s what we base offers on.

I contend that the only way a company can rationally determine a job offer is to first put together a business plan for every position the company fills. Then it must measure an applicant against that plan. Otherwise, hiring is a crapshoot. In fact, hiring is a crapshoot and employers want your salary history because they don’t know the value of the job in question. They have no idea how much profit it can produce. So they’re flat on their asses, using what your last employer paid you, to predict their own future.

That’s a woo-hoo! big problem.