$67,000. I negotiated a raise at work 30 months ago. And because of that raise, my net worth is now $67,000 higher than it otherwise would have been.
I shared this fact with my Twitter followers. Lots of questions ensued.
“How’d you get the raise?”
“Can you share the negotiation tactics you used?”
This article will answer all those questions and more.
I divided this article into “The Story” and “The Tips.” The story is entertaining. The tips are the important takeaways. Use the Table of Contents above to skip to The Tips if you wish.
In the Spring of 2017, my company published data on “salary ranges.” For the first time, I realized that I was at the bottom of my salary range. Very underpaid. Yet I had glowing reviews from my managers.
What gives? Great work, but low pay? I wanted to change that.
I brought it up with my manager, and she was open and helpful. We went to Human Resources (HR) together, and HR said, “Sorry – we can’t just give away raises to every person who asks for one.”
Hmmm. Stonewalled. I kept the conversation open though. This felt too important to drop.
6 Months Later
Fast forward 6 months and our company had a big hiring spree! Lots of new college grads were coming on board, and word quickly spread about their salaries.
Wait…they’re making $10K, $15K, even $20K more than me?
I’d been working there three years with a Masters’ degree.
They had no experience and less education. It’s not the new hires’ fault…
But what is going on?!?
I went back to my Manager and we went back to HR, and I got the same answer: “Sorry – we can’t give raises just because you ask.”
Time to Rethink – Back to First Principles
To me, the situation defied common sense. So I asked myself, “Well how does someone get a raise around here?”
- Being underpaid isn’t sufficient
- Getting good reviews isn’t sufficient
- Having support from leadership and management doesn’t work either.
These Human Resources people were confusing me. On a whim, I went to Google. “What’s the purpose of human resources?”, I asked.
The answers were eye-opening. Maybe you’re already aware, but:
- Human Resources’ primary role is to protect the corporation from the employees.
- They protect the corporation from getting sued by employees. Makes sense.
- They ensure employees are following Federal and Local employment laws. Makes sense.
- They hire employees to keep the company progressing, but do so at lowest reasonable salaries. Makes s…WAIT!! Really???
I should have realized this earlier. Human Resources aren’t your buddy. Nor mine.
Their job is to work on behalf of the corporation. Not on behalf of individual employees. It doesn’t make them bad or evil. It’s just a fact. They aren’t there to help individual employees, especially when it comes to salary negotiations.
With this new fact in hand, I rethought all my prior interactions with HR. That’s when I realized that HR was playing a different game.
Their Game vs. My Game
What game had I been naively playing? I expected my coworkers—the people with whom I was busting my butt—to be fair-minded. I expected them to say, “Ahh yes. You’re underpaid. You’re overachieving. It’s obvious to everyone that you deserve a raise. And that’s exactly what we’ll do.”
But since HR is part of the corporate vampire squid, they rammed their blood funnel into my salary, eking out what profit they could (thanks, Matt Taibbi, for the metaphor). They were getting a great discount on my labor. A steal, really. I was a profit machine (for them).
I was the victim of my own naïve assumptions. I was patiently waiting for the cream to rise—i.e. for them to realize I needed a raise. And while I waited, they profited.
When I presented my arguments to HR, they even said, “Well Jesse…you’re being paid in the 15th percentile. That means that 15% of your peers get paid even less than you, and are more deserving of a raise. And we can’t even give them raises.”
- I never thought “You’re in the 15th percentile” would be used as an argument to not give someone a raise.
- I’d happily represent the salary interests of my co-workers. But “union” is the worst five-letter word you can utter in corporate America.
- Where are those 15 percent-ers? Are they advocating for raises too? If not, then why is HR bringing it up to me? It was just a deflection tactic.
It was ridiculous. Unfair. Made no sense.
How did this otherwise competent HR professional not realize this lunacy?
And Suddenly I Realized…
And then it hit me. I suddenly knew what was happening. I felt even more naïve – but I felt angry, too.
“She does realize it’s not fair—but she just doesn’t care.”
HR was tacitly telling me, “It’s not about what’s fair, Jesse. It’s about what you’ll accept.”
Up until that precise moment—hearing those foolish arguments in that HR office—I unwittingly played by those rules. To this day, many of my coworkers continue to play along.
As long you accept less than you deserve, we’ll give you less than you deserve. And every day you come through those front doors, you’re accepting it.
That their rule, plain and simple.
I assumed they would be fair-minded.
I assumed they’d give me a fair wage.
I assumed they’d look me in the eye and be forced to change their ways.
Nope. As Upton Sinclair noted: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” A giant corporation isn’t going to think like a fair-minded individual. Their quarterly profits depend on them thinking far differently than little old Jesse.
They Volley, I Respond
So that’s the first volley of their game theory.
As long you accept less than you deserve, we’ll give you less than you deserve.
In response, I asked myself: if this is a game, what move do they not want me to make?
Do you know the answer, reader? Do you know the one chip I held? The one resource of mine that HR really cared about?
It’s me. Me. My presence. My brain. My labor. My attendance.
So, what’s my move?
I had to stop accepting less than I deserved.
In fact, I had to firmly reject less than I deserved.
I needed to find a different job.
So I did. I went and impressed the pants off another company and they offered me a 30% raise. Then I went back to my boss and said, “Thanks for being my advocate, it sucks that HR didn’t want to cooperate, and now I’m leaving.” That’s that.
What Happened Next…
But you wouldn’t believe what happened next. I certainly didn’t.
Heaven and Earth were moved to keep me around. Big wigs called me at my desk. Managers pulling me aside to ask me what I needed to stay. Strings were pulled and same-day approvals were granted. Corporate matched the salary offer that the other company gave me.
That’s great! I got want I wanted. …Right?!
If I’m being honest, HR’s instantaneous reaction made me angry. So many of HR’s previous actions suddenly came into focus. And all at once, I realized how sly their game theory tactics are. It made me realize:
- HR knows many employees will not have the gumption to interview for another job. Some people don’t advocate for themselves. Those people will be underpaid the rest of their careers.
- I felt pressured to where my options were either 1) be an underpaid sucker or 2) waste another company’s time and resources via interviews, flights, hotels, etc. I didn’t want to be a sucker. So I wasted another company’s time and resources. It felt bad. That sucks. It makes employees like me less likely to speak up (not to mention the other company’s resources).
- Rather than choose one of the reasonable off-ramps I offered in my early negotiations, HR opted for a game of chicken. They opted to hold their trajectory until they almost went over the cliff i.e. I was about to quit. Then they slammed the brakes and swerved, praying—as their tires lifted off the ground—that they weren’t too late. And I thought, “Jesus—this is how a cutting-edge tech company thinks? This is the practice of an industry leader?”
I don’t blame the individual humans in HR. But I hold accountable the system they’ve created.
Should I Stay or Should I Go Now?
Was I going to stay at my job with a raise, or go take the other offer?
This was a personal decision for me. There were so many variables. Job duties. Locations. Travel. The devil you know versus the one you don’t. Family and friends. Etc.
I can’t offer much advice here other than, “Do what feels right.”
I decided to stay.
But the biggest lesson I learned has been so important to me. And I hope you’ve learned it now too.
The lesson is: don’t accept less than you’re worth.
Over the 30 months since obtaining that raise, I’ve accumulated $67,000 that I otherwise wouldn’t have had. Not too bad.
Ok—let’s talk brass tacks. What can you implement in your own career?
First, what did I do to get the bigger offer from the other company?
Securing a Bigger Offer
Everyone always says, “When negotiating, don’t say the first number.”
And that’s mostly true. If you’re looking for a line to give HR, one that I enjoy is, “I want to be paid a fair industry rate.” And then ask what the HR rep believes that fair industry rate is. Put the onus on them.
But listen: playing salary tag with HR gets annoying.
You might decide to pull a Bill O’Reilly: WE’RE DOING IT LIVE! A.K.A. you say the first number, breaking the unwritten rule from above.
If you pull an O’Reilly, use anchoring to your advantage. What’s anchoring? It’s this wonderful idea from behavioral economics that says we get attached, or anchored, to numbers we hear. Here’s a great example:
Let’s say you hope to get a $100,000 salary offer, and you think that’s perfectly fair based on industry research. You play some financial footsy with HR, but neither side is budging.
“Ok,” you say, squinting like Clint Eastwood at high noon, “I want $150K.”
$150K? But Jesse, we just agreed that $100K is acceptable.
We did. But I want to anchor that HR rep to a much higher number. Because one of three things is about to happen.
- They’ll give you $150K. You’ll feel amazing for getting $50K more than you hoped for. And then you’ll feel like a dope for not asking for even more. Or…
- They’ll say, “Whoa Clint…that’s a mighty high request. Might’n ya cool your spurs and bring it down a bit. We can’t offer anymore than…$125K.”
- Or they’ll think, “Jeez…we were hoping to pay $100K, but that might be insulting since they’re asking for $150K. So I guess we’ll meet in the middle and offer $125K.”
Boom. If you lead with $100K, they would have accepted it. You might have left $25K on the table.
And you won’t believe how much that $25K could cost you in the long run.
The Cost of Not Asking For A Raise
Do you know the long-term impacts of not asking for raise? Let’s walk through a simple math example.
Alex and Bart are coworkers. They both earn $50,000 a year, and both spend $45,000 a year. Both take their extra money each year and invest in a conservative fund that returns 5% per year.
But then Alex asks for a raise—a 30% raise, like the one I got—and gets it. He’s now making $65,000 a year, but his spending is still $45,000 a year.
How will their futures differ?
After 10 years, Alex will have $327K to Bart’s $102K.
After 20 years, Alex will have $1.05M to Bart’s $385K
After 30 years, Alex will have $2.51M to Bart’s $1.02M
Alex’s “small” $15,000 raise equates to $1.5 million in extra value after 30 years.
Don’t underestimate the value of a raise.
Final Tips from My Experience
Here are a few of the earlier tips, in summary.
- HR employees aren’t evil. But they have incentives that are not aligned with your financial incentives.
- Does something just not make sense regarding how others (managers, HR, etc) perceive your salary? Remember what Upton Sinclair said: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
- How your HR might be thinking: As long you accept less than you deserve, we’ll give you less than you deserve. And every day you come through those front doors, you’re accepting it.
- What options do you have?
- Call their bluff.
- Find a new job with a better offer.
- When negotiating, you should try to make HR say the first number.
- But if they really don’t want to and you’re sick of waiting, then you gotta aim high with your request. Anchor that HR rep to a high number. Force them to divulge what their maximum offering is.
- But once HR sets their salary limit, believe them. A former coworker of mine pushed back after HR set it’s limit, and they called his bluff: “Sorry Chuck—we’re no longer interested in employing you.” Ouch. You don’t want that.
Alright folks – that’s the story and the associated tips. Thanks for reading and let me know what you think!