Can salary surveys help me negotiate job offer?

Can salary surveys help me negotiate job offer?

Question

I’m going to be talking with a manager who just made me a job offer. I’m going to say yes, but I’m inclined to ask, “Can you do any better?” I want to know how far to push it since my research on salary surveys indicates this is a rather good offer in my industry. Of course, I don’t want them to withdraw the offer, but it seems like I shouldn’t just say yes. I’d appreciate your insight.

Nick’s Reply

salary surveysWhy is it that when people get a good deal, they feel obligated to try and get an even better one? Maybe it’s because all those books about negotiating teach us that only the weak and meek take the first offer; that we can and should squeeze out a few more bucks. “Real negotiators know how to get more!”

Bunk. It isn’t about clever negotiating tactics. It’s about being able to answer the question, “What makes you worth more?”

Are you worth more?

Yes, I’m the same guy that recently advised you to demand bigger salaries. Only you can determine whether you’re worth more. But you have allowed that you already have “a rather good offer.” It’s fair to guess you elicited such a good offer because you performed well in your interviews. Is there something you left out that would support a request for even more salary?

If you posture for more money when you don’t have a leg to stand on, you will fall over. And that’s the crux of this. Unless you can show the employer why — exactly — you are worth more, then don’t ask.

What about the salary surveys?

“But wait — the salary surveys say I’m worth more! I’ll show them the salary surveys!”

Bunk again. Some “career experts” will tell you to use the survey data to support your salary request. What they don’t tell you is that the surveys describe a population of people who have similar titles and credentials. They don’t describe you.

Go ahead — try and tell an employer you’re worth what everyone else gets paid. It will earn you a blank stare, because any smart employer has evaluated you and decided what you are worth. “We don’t hire statistics. What are you going to do for me that’s worth more than I’m offering?”

That’s a tough question, and this is where people usually fall down flat. They think this is a matter of aggregate salary statistics when it’s a matter of one person’s value — yours.

Always negotiate?

Or, as you’ve admitted, “it seems like I shouldn’t just say yes.” Negotiating experts sell a lot of books marketing the idea that we can, and should, always negotiate! Every offer deserves a counter-offer, and only they can teach you how to make it.

If you can offer a compelling answer to the question Can you demonstrate additional value? then you should go for it.  I suspect that if you could, we’d have no question to discuss and you’d already have a higher job offer. But don’t do it only because it seems like you should.

But, seriously, what about the salary surveys?

The experts go further in advocating salary surveys. They claim that employers use the same surveys to establish their budgets and salary scales. So, if the employers use the surveys, you should, too.

Again, I say bunk. If an employer relied on the surveys to produce your offer, what more is there to talk about? Are you going to argue that this survey is better than that survey? Can you crawl out of one salary pigeonhole into another?

It’s not uncommon for a company to withdraw a good offer when the candidate asks for more without being able to rationally justify the request. That’s why you’re so nervous about asking for more.

What’s it worth?

Don’t feel bad. You’re just trying to be as assertive as the next person. But set aside the conventional wisdom and use your own common sense. If you definitely want the job and the offer is a good one, then don’t jeopardize it.

Here’s why. The better the offer is to begin with, the less you’ll be able to goose it up. In other words, you’re not likely to get more than a few extra bucks. Is it worth the impact on the employer’s attitude about you? Is the difference between one salary survey and another going to make a compelling case for you?

I’m not saying job candidates should not negotiate the best deal they can get. But we’re talking about an offer you believe is good to begin with. Part of my aim is to debunk the myths of job hunting, and this is one of them. Not every situation requires negotiating. And negotiating when there’s little or nothing to gain reveals a petty person.

But how can you ask for more anyway?

So okay, I’ve got that off my chest. I’m not trying to beat you up. You asked a valid question and you clearly recognize the pitfalls. What can you do?

First, judge the employer. Will they be offended if you try to squeeze out the last buck? (Some might actually be impressed, but not many.) Second, estimate the tradeoff. Will it affect how you’ll be perceived once you’re on the job? Finally, are you willing to lose the offer altogether if they balk?

Here’s how to ask for more with — I believe — the least risk. You could try to finesse this by first accepting the offer, then explaining that your salary objective is a bit higher. You must be able to give them a specific (and very reasonable) number, and a good justification for it. But be very clear about your intent.

How to Say It

“I’m excited about coming to work for you, and I accept your offer. That said, I’d like to ask if you’d be willing to consider a higher salary. My objective is $X. If you can come closer to that, it would mean a lot to me. If you can’t, I still accept enthusiastically. I want to work on your team.”

You are making a clear commitment to accept the offer as-is, but you’re politely asking if they could make it better.

Be prudent

If this seems like a bit of a stretch, well, it is. But you asked, and this is the best, most prudent and honest approach I know.

If you’re looking for a negotiating secret, here it is. Companies rarely boost an already good offer by much. I’m more inclined to negotiate up a big difference than I am to gild the lily. So it’s up to you — use your judgment. If you can get more money, great. But remember that prudence and good will may be worth a lot more in the long run than a few more dollars now. Congratulations on getting a good offer for a job you want!

Would you negotiate a good offer for a few extra dollars? When you ask for more, do you typically rely on salary surveys? Has an offer ever been withdrawn when you tried to negotiate? What’s your personal rule about negotiating job offers?

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What are stock options worth in a job offer? 2 tests

What are stock options worth in a job offer? 2 tests

Question

Part of the compensation in my job offer will be in stock options. The company is a start-up a few years old that’s backed by private equity. I know this might seem crazy — joining a start-up in this economy. But I’ve made my decision. The company appears to be in a solid position to grow in the coming years. What I need your help on is this: How can I equate stock with straight salary? What kinds of things should I consider when factoring in the stock options to determine if this is the right way to go? Thanks.

Nick’s Reply

stock optionsHey, I don’t knock start-ups. As long as you’ve made your own judgment, and have done it carefully, the decision is yours. So let’s focus on your questions.

Stock options as pay

The best analysis of start-ups and “stock as compensation” that I’ve seen is in Sizing Up A Start-Up by Daniel Rippy, an oldie-but-goody you can buy used. Rippy’s book will be very helpful. But the important point is that you’re “throwing in” with the company. You’re accepting the risk that part of your pay is riding on the company’s success (and on the honesty of the investors and the management team).

What does it mean to accept stock?

Welcome to the lottery!

You can’t equate stock with salary. That’s why start-ups often assign significant blocks of stock to newcomers like you — the value is totally uncertain, and it can take a lot of iffy shares to make up for real dollars in salary.

Now, if that sounds anti-entrepreneurial to you, I don’t mean it to be. Start-up businesses are the economic backbone of our country’s future. I’m all for taking risks. But don’t lull yourself into accepting a job offer because of the stock.

Make sure you’re happy with the job and the income you’ll be earning. Consider the stock your lottery ticket. If you get rich, great. But don’t count on it. Even if you really believe in the company, remember that the value of stock at IPO time is determined by factors that are largely out of your (and the company’s) control: investors including private equity and venture capital firms, the economy, stock market psychology, competition, the weather, which side of the bed the chairman of the Federal Reserve woke up on, and so on.

2 tests for stock options

I’ll offer you two thinking exercises to help you figure out for yourself how to view stock options in your job offer.

First is a test that was suggested to me long ago by the CEO of a start-up. If you were not considering a job there, but this start-up’s stock were in fact available to purchase on the open market, would you buy some at the strike price today? (The strike price is how much you’d pay per share when your stock options are fully vested.) It’s an interesting question that forces us to realize that, if we’re considering stock options as part of salary, to accept those options is to make an investment in the company. Do you believe in the company enough to be an investor?

75% of start-ups fail

The second test forces us to eliminate the stock options from our calculation, as if the options will be worthless. While you could get rich from stock options, consider that, depending on the survey, 65%-75% of venture-funded start-ups fail.

You’ll know the company and the job are right for you if you’d take the job at the salary offered without stock. This helps us see stock more clearly as a reward and a bonus, and the salary as pay for our work. You can spend salary now. You cannot spend stock options.

Do you want to be an employee or an investor?

But don’t think only like an investor. Think like an employee. That company might fail and your stock options might be worthless, but you could win big. Between a good salary and the opportunity to develop your skills working in an innovative, leading-edge business where you get a chance to do work not offered elsewhere — this job might be perfect for you.

If you need help negotiating your job offer, please see Fearless Job Hunting, Book 9: Be The Master of Job Offers.

I believe the bottom line is that you can’t equate stock with salary. My advice is to decide whether you want to be an employee or an investor in this start-up company. You can be both, but don’t confuse stock options with salary. You’ll know the offer is right if you’re willing to accept the salary and put the stock in a drawer and forget about it for now.

Apply those two tests to this opportunity and be brutally honest with yourself about what motivates you.

Would you accept less salary in a job offer if it included stock options? Did you ever receive stock options as part of a job offer? How did it factor into your decision? Have you ever profited from stock options you got in an offer?

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The data say, Demand bigger salaries!

The data say, Demand bigger salaries!

Question

I’m about to get a job offer from a company I want to work for. They asked how much I want. The talent shortage must be producing bigger salaries in job offers, so I’m inclined to ask for the top of the range I’ve researched. But I’m also nervous about going too high and turning them off. Is there a safe middle ground?

Nick’s Reply

bigger salariesLike you, I like the middle ground. Most of the time. But this isn’t most of the time. In fact, I believe we’re living in a time when there’s good reason to take bigger risks to get bigger rewards.

Why? Because on the whole, companies are pulling down unusually higher profits hand over fist. They can afford to pay you more. There’s data to prove it.

Days of bigger salaries

This is the time to ask for more, even to demand it and gently signal that you will walk away from that hard-to-fill job if they don’t meet your salary requirement.

Savvy investors tell us that the big gains are made when we encounter unusual circumstances in which our chances of a big win are somewhat higher than normal. That can make it worth the attendant risk. Of course, only you can decide how much risk you will tolerate.

I would ask for more money. I’d ask for the top of the range or more. Now let’s discuss why job applicants should demand bigger salaries today.

Employers need to hire

I don’t need to link you to 10 articles about employers crying they can’t fill jobs because of “the talent shortage.” And I don’t need to give you an Economics 101 lesson in supply and demand. (Ah, what the heck! When supply of labor is down, wages go up.)

If so many employers are desperate to hire, they must be paying top dollar to get workers like you on board, right? Wharton labor researcher Peter Cappelli suggests that, on the whole, they’re not.

What do you mean, real wages are down?

In an October 2021 report Cappelli writes that “Wages are not rising dramatically, at least on average. A shortfall between a big demand jump and a modest increase in supply should not necessarily cause a shortage in a market economy. It should cause prices — in this case, wages — to rise.”

But despite their posturing about recruiting aggressively to fill those vacant jobs, Cappelli notes employers are not offering competitive market pay. In fact, he says, no matter what anecdotal stories the media broadcast, the data tell us “Real wages have fallen by the largest amount in decades.”

And that’s why you should ask for higher pay. In fact, if you don’t demand a higher job offer, you may be getting lower real pay than you even realize.

Inflation is hurting workers

Cappelli continues: “The idea that wages are rising dramatically just isn’t true…  workers are living in a world where their money isn’t going as far as it used to due to rising costs of goods and services.”

We call that inflation. “Real wages” are wages adjusted to account for rising consumer costs.

And, today, it’s even worse than Cappelli suggested last fall. In its April 12, 2022 Real Earnings Report, the U.S. Bureau of Labor Statistics tells us:

“Real average hourly earnings decreased 2.7 percent, seasonally adjusted, from March 2021 to March 2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 3.6-percent decrease in real average weekly earnings over this period.”

But inflation is enriching companies

Maybe employers just can’t afford to pay higher salaries, eh? Maybe you should bite your tongue and tell that employer you’d be happy in the middle of the salary range. Play it safe.

But you’d be wrong, and you’d be dumber than greedy corporations, says Lindsay Owens, the executive director of the Groundwork Collaborative. In I Listened In on Big Business. It’s Profiting From Inflation, and You’re Paying for It, Owens reviews hundreds of corporate earnings calls she’s listened to — “calls, where, by law, companies have to tell the truth.”

“The Federal Reserve chair, Jerome Powell, said that sometimes businesses are raising prices just ‘because they can.’ He’s right. Companies have pricing power when consumers don’t have choice.”

The examples she cites are chilling because CEOs brag about unheard-of profits triggered by economic factors that hurt consumers and, therefore, workers and job seekers.

  • “What we learned on these earnings calls was quickly reflected in data. Despite the rising costs of labor, energy and materials, profit margins reached 70-year highs in 2021. And according to an analysis from the Economic Policy Institute, fatter profit margins, not the rising costs of labor and materials, drove more than half of price increases in the nonfinancial corporate sector since the start of the Covid pandemic.”

Owens reports one profit brag after another during the earnings calls:

  • “As Hostess’s C.E.O. told shareholders last quarter, ‘When all prices go up, it helps.’”
  • “Executives on their earnings calls crowed to investors about their blockbuster quarterly profits. One credited his company’s ‘successful pricing strategies.’”
  • “Another patted his team on the back for a ‘marvelous job in driving price.’”
  • “The head of research for the bank Barclay’s said ‘The longer inflation lasts and the more widespread it is, the more air cover it gives companies to raise prices.’ More than half of retailers admitted as much when surveyed.”

Corporations can afford handsome job offers

Companies are intentionally jacking up prices to consumers to boost their profits — using inflation for “air cover” — while they pay lower real wages. Is there anything illegal about that? Probably not. Nor is there anything wrong with you jacking up the salary you want if a company is flush. And in this economic climate, it may be prudent to pursue only employers that are flush.

This is why, in today’s economy and job market, you should always be ready to ask for more money. I’m forever telling you to make sure your job delivers profit to your employer. Now I’m telling you to make sure employers that are bursting with colossal profits deliver a concomitant share to you in the form of higher salary. Lindsay Owens might say this is the best time in 70 years to go for the gold.

(See More Money: What to ask for in a talent shortage.)

Find one smart, good employer

Are all employers so greedy that they make below-market job offers so they can hoard profits? For that matter, are all employers laughing all the way to the bank? Of course not. But successful, smart employers see an opportunity to hire the best workers by sharing their good fortune via higher salary offers. Why work among pigs?

Even if, as the data suggest, most employers are killing real wages, a wise job seeker takes refuge — and finds hope and patience — in the knowledge that they need only one good employer to make them one outstanding job offer.

But you have to ask for — even demand — bigger salaries.

Peter Cappelli offers compelling tough love to employers, and advises “looking beyond just signing bonuses and modest wage increases, instead considering what’s possible in compensation in order to attract and retain the workforce you need and want.”

Could following my advice to demand bigger salaries lead a greedy employer to boot you to the curb because they’d like to hire you for less? Could the message in this column cost you a job offer entirely? Yep. So use your judgment and do the best you can.

Me? I’d ask for more because the data tell me profit-rich companies can afford it. If they’re not willing to share their rising profits with their workforce, I’ll go find an employer that will. It’s that kind of economy. The data tell us it’s that kind of job market.

Are bigger salaries a thing? Can you actually ask for the top end of a salary range and get it? What’s your experience? Got any examples of corporate greed and low-ball job offers? How have you gotten more money from an employer?

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HR Background Checks: Where does your info go?

HR Background Checks: Where does your info go?

Introduction

backgound checksWhen you grant employers permission to run background checks and credit checks on you, where does all that confidential information go?

Last year we asked Does Human Resources go too far? Now, a subscriber who is an HR professional suggests that Pandora’s Box has been opened. He points out that in their zeal to protect themselves and their companies, HR departments may be covering up illegitimate and possibly illegal practices.

When HR outsources background checks and investigations of candidates, is HR merely doing its job, or is it ensuring plausible deniability while letting loose an investigative demon that systematically violates people’s privacy and feeds the specter of identity theft? Does HR go too far when screening job candidates? Hold onto your seats. We’re about to take a rough ride through a nasty landscape.

I’m not disclosing our insider HR executive’s name for obvious reasons. I cannot confirm every claim he makes, but we spoke and I find him credible. If some of his insider claims seem farfetched, I’d love to hear any rebuttals. Here’s what he has to say.

An HR insider speaks up

Regrettably, all these [background investigation] procedures and processes are advocated by the Society of Human Resource Management (SHRM), as reading its web site will reveal. And, just as regrettably, many HR people fall right in line, like little ducklings swimming behind the mother duck of SHRM. It’s the latest rage, and every HR person wants to be a part of it.

Background checks galore

With thousands of people applying for each job and the jobless rate for skilled and white-collar workers at a recent all-time high, the applicants, like sheep being led to the slaughter, will subject themselves to almost any practice and jump through almost any hoop to get a job. The theory is that any job is better than no job.

The background-check processes are, the majority of the time, being outsourced to security companies that have turned these processes into a lucrative business:

  • background checks
  • personality testing
  • criminal checks
  • educational checks
  • military service checks
  • employment verification
  • reference verification
  • credit checks
  • drug testing
  • searches into legal agreements
  • scanning of your phone records
  • scanning of your Internet activities and e-mail
  • and so on.

This total invasion of privacy beyond your wildest dreams (actually, nightmares) is outsourced. The worst part is that much of the data and information these outsourced security agents collect is erroneous.

Have you been checked without knowing?

HR will narrow the list of candidates down, and then turn the outsourced security investigators loose on that list. Background checks are often done before the first interview, and before any sort of an agreement, authorization, or disclosure is signed by the job applicant.

You will never know about it until you order a copy of your credit report and find all the inquiries (that’s the first sign) and wonder, who in the devil is that who has run checks on you?

The larger outsourced security and investigative companies have started keeping databases of their own. One advertises they have a database of over 1.5 million people for employers to run their candidates against. If you have signed one disclosure for one employer, the investigations company that did the checks will keep the information about you in their database and then just re-sell the results to their next client.

Do you know where your background checks are?

They start with a name and phone number and e-mail address from a resume or application. Then, they cross-reference information until they get a date of birth or social security number and go from there. When an applicant walks into HR for that first meeting, they already may have been investigated. Never mind that much of the data gathered may be erroneous. The “data” was gathered at arm’s length, but the employer will treat it as absolute fact.

Security and background checking has become a lucrative business. The outsourced investigators are starting to sell that information amongst themselves, expanding their databases and increasing their profit margins. The shuffling around of this data only makes its accuracy even more questionable.

This is an industry that is almost totally unregulated. The multiple levels of outsourcing and subcontracting yield enough plausible deniability to the companies themselves, and their clients, that abuses run rampant.

Nick’s comments

The statement above was submitted to Ask The Headhunter unsolicited. I’m grateful for the permission to publish it. Once again, I cannot present it as fact — but I have encountered examples of many of the claims. If anyone in the investigations business would like to comment on these allegations, please do so below or feel free to contact me. This is worth discussing and researching further.

Where is the accountability in background checks?

When HR asks you to provide information that is confidential to you, or to sign permission for your background to be investigated, or to waive liability if your confidential information is leaked or misused, HR must be accountable to you. Whether or not we have hard evidence of abuse, I am convinced there is a serious problem with this part of the hiring process at many companies.

While some employers may be innocent, we need to ask whether they are being responsible. Others are overstepping the bounds of what is legitimate and ethical – and possibly legal — when conducting aggressive background checks on job candidates. Worse, employers may be putting you at risk because they presume to entrust sensitive information about you to third parties with whom they have only an arm’s-length relationship. Where is the accountability?

Do you know how your confidential information is being used?

Job applicants need to be aware of the risks they take when divulging information about themselves – any information. It seems that even your name, address and phone number might be enough to allow an employer’s investigator to access every nook and cranny of your life without your knowledge. If the law is being circumvented, then the law needs to be enforced – or our legislators need to start working on laws that will protect our privacy.

In this day of heightened sensitivity to security, it’s important to recognize that the problem lies not in checking people out. The problem lies in unethical, unwarranted and possibly illegal procedures conducted at arm’s-length from employers by third parties. In some cases, there’s a cascade: An employer outsources reference checks to Service A, which in turn outsources criminal and credit checks to Service B and Service C. (Read about one third-party investigations company that’s so “arm’s-length” it conducts automated background checks.) Who’s accountable — the independent investigative service, or the employer?

Time out for questions

A responsible employer should have good answers to these questions, and a job candidate should not hesitate to ask any of them before submitting even a resume. If this list seems over the top, perhaps it is. I think every item is legit, but you must decide which ones are important to you.

  1. What kinds of checks does the employer conduct? Are they legal?
  2. Is the candidate notified in advance and given the opportunity to decline to be investigated? Is the permission form clear and easy to understand?
  3. Who is conducting the checks — the employer, or a subcontractor who in turn subcontracts the investigations to yet another firm?
  4. What information is gathered? How is its accuracy determined? How valid and reliable is it?
  5. Does the candidate have an opportunity to review and confirm or contest the information?
  6. Is the information secure? Who has access to it? Is there a risk of identity theft?
  7. Who owns the information and what rights do they have to it?
  8. Is the information maintained in data bases not directly controlled by the employer? For how long?
  9. Is the information made available to any other parties at any time for any reason? Is the information re-used or sold?
  10. Does the candidate have the power to limit or rescind rights they have granted for use of the information?
  11. What responsibility and liability does the HR department accept regarding the collection and use of your private information?
  12. Last and most important, is the employer prepared to sign an agreement to protect you and your private information?

What are the risks if you apply for a job without answers to these questions?

Time for less invasive practices

Maybe the biggest question we’re left with is the one we originally asked: Does HR go too far when screening candidates? It seems that HR routinely abuses the job seeker’s frame of mind — often that of a terrified supplicant — when it indiscriminately demands all plus the bathroom sink before it consents “to proceed with your application.”

Does anyone seriously contend that HR doesn’t ask for more private information than it really needs? Having immense power over relatively helpless applicants is no justification for unnecessarily abusing them. I’ll echo our HR insider’s implied challenge to the SHRM: When’s the last time your august group recommended less invasive practices?

Until HR owns up to its responsibilities, maybe the job seeker’s best protection is to lay their own confidentiality agreement on the table – and decline to divulge anything until the employer signs it and makes itself accountable.

What’s your experience with background checks when you apply for a job? Have you encountered any of the issues our insider enumerates? If you work in HR, can you confirm or deny what he presents? What can job hunters do to protect themselves?

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