Consulting: Should I trade my fledgling business for a real job?

On September 25, 2017

In the September 26, 2017 Ask The Headhunter Newsletter, a reader asks whether it’s worth trading a budding consulting business for a “real” job.

Question

consultingI’m an avid follower and have found Ask The Headhunter positively inspirational. I especially enjoy pushing back on senior executives for their lame hiring practices and nonsensical rejection methods.

Anyway, here’s my situation. I set up my own consulting practice while job hunting. It’s been 15 months and the business is growing, but I’m also finally getting close to a job offer. The role is in my field of expertise and it’s as full-time internal consultant for a huge multinational.

I’m toying with the idea of pitching an outsourcing (consulting) arrangement for my firm in place of taking the job they’re interviewing me for. It makes sense as they would gain extra manpower, and I know we could do a better job for the same cost. But I’m concerned this proposition might derail the process. What do you think?

Nick’s Reply

Ask The Headhunter is largely about helping people get jobs, because few people are capable of doing what you’re doing – starting and running their own little business.

I make no bones about preferring to see people run their own show rather than get a job, but it’s not for everyone. Neither option is very secure, and when you work for yourself you usually come to realize you work for a slave driver who’s often a jerk. (Believe me, I know!)

But when things go perilously wrong in either scenario – having a job or a business – it’s only when you’re your own boss that you get to make the critical choices. You always have the chance to right the ship.

There’s a twist on this “job vs. self-employment” issue that some readers might like to consider: Want a job? Threaten to start a business!
Only you can judge whether suggesting a consulting arrangement will jeopardize the hiring process in this case. Because your question seems to be about making a choice, I’m not going to get into how you might make your pitch to this company. I’m going to offer some thoughts about how to approach the choice.

Consulting yourself

It sounds like you have some employees in your little firm, and you may be willing to let them all go. But regardless, I think  the bigger question to ask yourself is, Does it really matter if turning your interviews into a sales presentation does derail the hiring process?

This leads to more good questions. So start consulting yourself:

  • If you pitch a consulting option to the employer that turns them off, can you replace the lost job opportunity with other new clients?
  • Even if you try to switch this to a consulting gig and fail, will you learn enough from the experience to make you a better salesman the next time you try?
  • Can you afford to give up this job opportunity and continue what you’re doing on your own? That is, do you need the kind of security a job offers more than the benefits your own business provides?
  • Is this job opportunity worth giving up the progress you’ve made with your own biz?

What’s the risk?

You’re worried about the risk of losing a job offer which, by the way, you did not say is a sure thing. All I see is an expected bump in the road for someone who is growing a little consulting business.

It’s hard to shake the idea that you need a job. If you accept a job offer, will you be able to shake thoughts of what you might have accomplished with your own business?

I offer you no advice. I just don’t know enough about you and, besides, this is a choice you must make. If you need the salary and “security” a job offers, I’m the last guy to criticize you if you decide to accept it.

Songwriter Paul Williams wrote during the Viet Nam War that, “Peace is just the impossibly high first step.” So is taking any risk if you have a worthy goal.

I wish you the best, and I’d love to know what you decide and how it turns out. Thanks for your kind words about  Ask The Headhunter!

Have you traded a job to start your own business? What questions would you tell this reader to ask? Has anyone out there made the move to start a business, and then gone back to a regular job? What did you learn that might be instructive for this reader?

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When a headhunter has to fire a client to save a candidate

On September 18, 2017

In the September 19, 2017 Ask The Headhunter Newsletter, a headhunter screws up.

Question

headhunter

I read your PBS NewsHour column, Job interviewers shouldn’t be asking for your salary. Here’s why. I am a new headhunter and I agree with everything you said in that article.

I recently had a deal fall apart with a client in the northeast who was ready to pay up to a $220K base salary. My best candidate was making $150K in the midwest. He checked off most of the boxes on their wish list, was in a niche, and there are not a lot of people doing what he does. He was willing to move his family, but the company only offered $185K despite a $30K cost-of-living difference. He wanted at least $195K to make a move but the company wouldn’t do it because they were stuck on the 30% increase and thought it was too high.

Everybody in the company that met my candidate loved him. He was nearly perfect for the role but they wouldn’t budge because of his prior salary.

So my question to you is: How do you persuade your clients not to ask about salary history in states where it is allowed? I understand that you might not want to give out trade secrets but thought I would ask. Thanks in advance for your help!

Nick’s Reply

There’s no trade secret here. Just common sense, fair play, and good business. Your client is demonstrating none of those qualities. When a company pays a headhunter for help finding a top-notch hire, our job is to tell the client the truth and help them make a good deal.

But the problem here is not just that your client got stuck on your candidate’s prior salary. It’s also that you fostered the problem by disclosing your candidate’s salary to begin with. Get out of that habit. Learn to push back and say no. Part of telling your client the truth is telling them the candidate’s salary is none of their business — and not the basis for a sound offer.

When the client gets in its own way, the headhunter must take control — or fire the client. You can’t win when you do your job, deliver a great candidate for fair pay, and then let your client kill the deal so stupidly.

A good headhunter doesn’t run a bargain basement

What’s stupid is that your client is not recruiting your candidate for what he’s worth to them. They’re trying to get an unfair bargain by offering an excellent candidate only what he’s worth in the midwest. What’s going to happen is a competitor is going to snatch him up for what he’s really worth in the northeast.

The way to persuade your client to judge a candidate’s worth for themselves, without looking at salary history, is to tell them what I just told you. (Check the boldface in the paragraph above.) If they don’t respond well to that, then you tell them something like this:

How to Say It
“If you aren’t willing to pay someone what they’re really worth, then I won’t be referring candidates of this caliber to you any more. Your team loved him. He was highly motivated to take the job and do great work for you. We both know he’s worth at least $200K. If he was from the northeast, you wouldn’t hesitate to pay him $220K. So while you wasted his time and mine, you’re the losers. Lotsa luck when word gets around that you don’t know how to judge a person’s value to your business.”

If you can’t control your client with the first message, you have to fire them with the second. Do you want to go through this with them again? You’re not in the bargain-basement business.

Fire the client

Yes, I’d fire this client. They just cost you several big fees, because the candidate probably would have referred several other great candidates to you over the next several years if this had worked out.

This client has probably damaged your credibility with the candidate — and he’s going to tell people. While any headhunter’s fiduciary duty is to their client (the employer), the headhunter’s reputation rests on the experience of candidates, too. If you can’t negotiate a good — not just reasonable — compensation package for a truly good candidate, you’re hurting yourself.

A good headhunter controls clients

To other clients, I’d make your policy clear. Your job as a headhunter is not to disclose salary; it’s to negotiate it!

How to Say It
“I don’t disclose a candidate’s salary because it’s irrelevant. I’m working with you under the premise that your company has a competitive edge and is thus able to attract the best people. If you’re going to judge candidates by what other companies pay them, then where’s your edge? If you don’t have a competitive edge, why would my candidates want to come work for you? Why would I want to recruit for you? I’d be happy to invest whatever time is necessary to help you assess this candidate’s value to your company in this market and in this locale.”

Job seekers: See Should you disclose your salary to a headhunter?
A good headhunter controls candidates by teaching them how to manage their expectations reasonably and intelligently. But sometimes you also have to push back hard at a client, or you lose control – and that’s the end of any headhunter. When you disclosed your candidate’s salary, you forfeited your ability to negotiate a good deal for both parties. Everyone lost.

A good candidate becomes a client

I’m sorry you had to experience this. It’s a hard lesson. I’d fire the client, but I’d then quickly try to pick up some new clients — among its competitors. Can you get a similar assignment from them? I’m not suggesting peddling this candidate around town — that’s not what real headhunters do. (See Headhunters find people, not jobs.) But you’ve found one great candidate who will likely lead you to more, so work with what you’ve got.

If you can place him, I’d call back Lowball, Inc. and give them a heads-up.

How to Say It
“It looks like you’ll be working with Mr. X after all – but as a competitor. He’s a really talented guy, so I wish you luck! No, I can’t tell you where I’ve placed him — that would be unethical until he’s settled in. But you’ll know soon enough.”

And remember one other thing. When you fire a client, they become a source of candidates. And a good candidate can become a great client!

A good headhunter is a good broker

Job seekers: Learn how to negotiate salary through a headhunter
The best job seekers routinely encounter lazy, thoughtless, unscrupulous headhunters. So show this candidate you’re different. Build a relationship. I’d do all I can for a candidate who did such a great job to make me look good and to earn an offer, even if the employer blew the deal. If you can’t place him elsewhere, invest a few minutes to make some useful introductions for him in the northeast. He’ll remember it. That’s where new client companies come from!

A good headhunter is a broker who doesn’t just bring two parties together. A good headhunter educates, manages and guides them to a successful outcome that makes them both happy to work together. Sometimes you have to take charge to do that. And sometimes you have to fire a candidate or a client. In this case, your candidate may be more valuable to you in the long term than this particular “client.” If you can’t negotiate a fair salary with your client, fire the client and save your future relationship with the candidate. Don’t be any less than the best broker you can be.

I know some of my suggestions may seem a bit snarky, but employers that can’t get out of their own way aren’t good clients. I wish you the best.

My PDF book, How to Work With Headhunters… and how to make headhunters work for you is designed for job seekers, but it’ll show you how to be a good headhunter, too.

Dear headhunters in the audience: Do you disclose a candidate’s salary to your clients? How do you manage your clients? Did you ever fire one? Job seekers: Do headhunters help you get a better salary or do they let their clients roll over you (and them)?

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Revealing my salary earned me a lower job offer!

On September 11, 2017

In the September 12, 2017 Ask The Headhunter Newsletter, a reader succumbs to an employer’s demand for his salary information and pays for not keeping his mouth shut.

Question

salaryNick, I need your help. I’m in a very tough spot with salary negotiations. HR told me the salary range for the position ($65K-$70K) on the phone before our interviews. They also asked for my salary expectations, and I told them $65K-70K. So we had the interviews knowing we were all on the same page. Or so I thought.

After the first interview, I was contacted by the HR rep and was explicitly told that I would need to provide my current salary or we would not be able to proceed further with the process. So I reluctantly gave my salary away ($53K, which will be $55K in five months when my annual merit kicks in).

After the second interview, which I knocked out the park, they made an offer. It was only $60K. On the phone, I told the HR rep that there is no deal but I would like to continue to try to negotiate the best compensation package, and we will revisit the offer in a couple days.

What do you suggest I do here? I don’t want to turn away more money, but they are $5K-$10K below my expectations. Is my only recourse to risk the offer as a whole? Thanks.

Nick’s Reply

You ought to charge them $5,000 for helping them negotiate a lower salary, because that’s what you did. Congrats on getting an offer, but I agree with you – you ruined your negotiating position by strengthening theirs.

Never, ever, ever disclose your current salary to an employer. (See Keep Your Salary Under Wraps.) They will use it to put a cap on any offer they make to you. Now you’re stuck.

You must decide one thing: What’s going to make you walk away from this deal? That is, what’s the least amount of money you’ll accept and still be happy?

They may offer you a bit more, or they may stand pat. If they raise the offer, my guess is it will be by one or two thousand dollars, to make you feel you won a concession. But that’s no concession. It’s still lower than the range they agreed to. They will still save money, and you’ll lose money. You have already made a concession, by considering less than the top of your range ($70K). The kicker here is that both parties plainly agreed to the same salary range before proceeding with interviews.

They screwed you.

What they did is bait-and-switch. They agreed to one thing but switched to something else. They screwed you. Now you must recover or walk away.

Once you decide what is the minimum acceptable offer is, the rest is easy – even if it’s not a happy thing. You cannot negotiate unless you know in advance what will make you walk away. Then you tell them this:

How to Say It
“I can do this job profitably for you, and I want to join your team. I make that commitment. But I told you very clearly when you asked me what salary range I would require: $65K-$70K. And you told me your range was the same. On that basis, I did the interviews with you. If you can meet the range you committed to and that I asked for, I’m ready to accept.”

The rest is up to them. Just be ready – they may say $60K is as high as they’ll go. Are you ready to walk away? If you agree to the $60K at this point, be prepared for lower-than-promised raises in the future, and other broken promises. These people have made it clear from the outset that they say one thing but do another.

The offer is based on your salary.

“HR logic” about salary goes like this. If you make $A, you don’t deserve more than about $A + X%, where X is some small percentage. Why does HR do this? Here’s what one HR executive wrote to me in response to my advice that job applicants should never disclose their salary to employers:

“Employers want your salary information because they believe that if you apply for a job that starts at $50,000, but you made $30,000 in the same sort of job at your last company, they’d be overpaying. They’d want the opportunity to buy you for $35,000 to start, saving them $15,000.

“The HR person who does that gets many kudos for their shopping moxie from their boss, and gets to keep their job and go on many more shopping trips.

“I’ve been a vice president of HR, a recruiter, a labor negotiator and a candidate, so I know from which I speak… I am so dismayed that someone pays you to hand out this kind of information.”

[Excerpted from Keep Your Salary Under Wraps]

If they try to “explain” that their offer is based on your old salary, your response can be only one thing if you want to negotiate with strength.

Tell them to go pound salt.

If HR gets pushy or threatens to “end the process,” tell them I said they should go pound salt. Your salary is none of their business. Will they tell you their salary?

Here’s what an Ask The Headhunter reader posted recently on LinkedIn:

“To anyone who wants to maintain their salary history confidential in a way which no prospective employer can hold against you, I utilized Nick’s technique at one point in my career and was very successful — including getting the job I was interviewing for. Nick has a foolproof technique on how to address previous salaries which actually makes the company respect the candidate.”

Here’s what another said:

“The hiring manager more or less offered me the position on the spot and indicated a salary range that is roughly 40-50% more than I make now. Your two biggest lessons (at least for me) at work in the flesh: (1) Never divulge my current salary, and (2) Talk about what I will do, not what I’ve done.”

You can decide for yourself how to proceed. Here’s my advice:

How to Say It
“My old salary is irrelevant. I told you my required range and we agreed to do interviews based on that. Will you make an offer in the range we agreed on?”

Once you decide your position, the rest is up to them. If they insist on judging your value on what your last employer paid you, it’s their loss, not yours. Move on. This is a company that admits it doesn’t know how to judge value for itself, or that cheats.

But please – this is your decision, not mine. If you decide $60K is good enough, then do what you think is right for you, not what I think is right. Only you have all the facts about your life and needs. I’d never criticize you.

Also keep this in mind: You killed the interviews. You impressed them. You pulled it off. Don’t let their negotiating tactics make you question your attitude, behavior, or worth. Do you think you can impress another employer? My guess is you can. But you must make that judgment for yourself.

We have of course discussed this topic many times before. See Goodbye to low-ball salary offers and Salary History: Can you afford to say NO?

How do you negotiate? Do you disclose your salary? What should this reader have done, and do next?

Coming next week

In the next edition, we’ll discuss a topic that may have headhunters (and their clients!) up in arms: Why a headhunter should never disclose her candidate’s salary to her client.

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