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In any large organization, there will always be good performers who are horribly underpaid. There are many reasons such as they took a lowball offer out of school or maybe were in a bad job for years. It's obvious to me that they are worth keeping and need to be paid more. Yes, I might be able to get a small out of cycle raise, get an earlier promotion, higher reviews, etc. But, these are small and take very long to show any major progress.

One day they come in with an offer. I can't blame them. Someone came in today with an offer almost 50% higher! Yes, you can factor other things like OT pay or benefits or whatever. But, the offer is much better no matter what. I know the cardinal rule is to not negotiate in these circumstances but it may be the only way to get them paid what they are actually worth. I actually want to say, "I'm sorry you've been screwed for so many years. It's a great offer and good luck." Should I? Or do I make a hard final run at HR and try to get that counter offer? Help!

Tom

lou's picture

I've been on both sides of this. I say that yes, you should fight with HR to see if they can develop a valid counter-offer. If they can't, don't even propose it to the candidate (it's only going to make them feel even more undervalued). Otherwise, wish them good luck and treat them well on their way out. If they're really a star you might want to rehire them at another position in the future.

lmots's picture

Is it in the company's best interest to keep this person? Is it in the person's best interest to stay?

Your responsibility is to the company's interests first, and secondly to the individuals. In my case, I have been working to improve pay for those who deserve it, both from a performance perspective and a pay equity viewpoint. When I assessed my risk of losing my key folks, I saw that on some important measures we were not being competitive. (Fortunately my company is not a "pay for performance" one so we have a bit more flexibility.) But I feel that it is in my company's best interest to have a package that exceeds the industry...not only pay and benefits but also in having good co-workers/teammates, working conditions, etc.

Even if my current manager could match an offer 50% better, I don't think I would stay, because the change that would interest me would be not more of the same but some new challenges, money would be the icing on the cake. But I have folks who I believe would stay, no matter what. A person's aversion to change would definitely play a part in their decision. So would the work environment.

I had a manager once who counselled me to take the offer because there was no way she could match it. It's funny but a small increase in money and some changes in responsibilities and challenges probably would have been enough to keep me interested for another year...because the work environment was so good.

Larry

ctomasi's picture

Larry,

You touched on the "change factor". I would like to highlight it a bit more. That is one factor that has kept me at my current company (on more than one occassion). Mark mentioned it in one of the casts (how to resign part 1 I believe). I know the players and politics of this company. I would have to spend the first year or two relearning all that for another company to be truly effective. By taking the IT Manager role here I know I don't have to prove my integrity, execution, or many other leadership competencies. That's a big advantage.

tplummer's picture

This is a good performer and I'm willing to go to bat a bit. I agree it will only take a moderate amount to keep him. He likes his job. He lives in the area. His wife works at our company. He has a degree of responsibility and respect. So, maybe I need 20-30% increase. I don't think that's achievable though. This person is good but not ultra critical. But, this is just one case. I do have others who are critical and very underpaid and looking. Again, probably needs 20-30% to keep in the long run. I'm making another run for this individual now but I'm not hopeful. Thanks for the advice.

Tom

Mark's picture

All-

Great discussion.

It's too complex to deliver this all here and now... how about we do a show on this? (like, soon). :wink:

Short answer: I'm not a big fan of counteroffers, for lots of reasons. Keep in mind, though, that he probably didn't know how high the offer would be, and so you probably don't HAVE to match the 50% to keep him. But that entails knowing how to pitch him, and all against someone else's deadline, and dealing with HR.

Would I make the effort? Maybe.

But regardless, I wouldn't behave the way other managers do, where it's about just staying or going. Think about the RELATIONSHIP!

If 20% is unlikely, focus on the relationship.

Mark

Mark's picture

Tom-

Ahh, the true (non)value of counteroffers!

I may be reading too much into it, but "he'd be willing" doesn't sound like a desire to come back. I'm all for him coming back, but what he wants - if I read it right, a 50% increase - well, NO.

This is where relationships make a difference... you don't have to have this conversation all at once.

See what you can do, because he's good (though certainly not a LOT better than before). Then, offer him that. If he turns it down, that's fine. Maybe disappointing, but there are limits to things in organizations.

If he acts insulted, he's not worth it. It's silly for him to think that what he made somewhere else should dictate what you would pay him. His value is determined by the hiring company, not the losing company. And, look, no offense, but neither he nor the losing company have a lot of credibility right now when it comes to value in the marketplace.

Mark

lou's picture

Tom, I believe Mark means that if you've kept in contact with this person and have a good relationship with him then you can have parts of the necessary conversation over time, allowing you to make a better offer.

Why does he want to leave / come back?
What was so much better about the original offer, was it just money?
What doesn't he like now that he sees was better (maybe he really misses that extra week of vacation you guys offer).

By taking it slower you are more likely to be able to find a great offer to get him at the price you can afford.

Correct me if I'm wrong Mark.

Mark's picture

Tom-

What Lou said. ;-)

Lou-

Unlike your resume post, this one's dead on. ;-)

Mark

Mark's picture

Tom-

You've got your head around it well. Best of luck.

Mark

tplummer's picture

Ah, HR declined to counter offer. The reasons are a) his current offer was so high that they did not feel they could come close, and b) he was not a star performer within the org.

Good news of the day is that another employee who I know is underpaid and casually looking, I was able to get an extra couple thousand. Not much but it shows we care and are looking after him. He also received a promotion earlier this summer so the two definitely show we have a commitment to him and find him valuable. So, I think we've staved off his looking. A few months ago I gave the chance of him staying past the end of the year at about 0%! He's a good guy and I hope to retain him for the long haul.

Tom

Mark's picture

Tom-

I can understand HR's position here. One worry they have is that if they go to level X and it's turned down, they don't get the person and NOW level X is "possible" in future discussions.

This whole scenario is a reminder that money is not what people think it is.

Mark

ctomasi's picture

I've got a peeve at our place. Now that I've seen our pay grade and know my direct reports' salaries, I need to make some corrections. One, in particular is a senior IT person who has been with us for 13 years. He's my ONLY Sr. IT member and he's a top performer, yet he's "under the bar" shall we say. To get him where he needs to be is greater than our max payout for that position this year. If I give him max this year he'll be happy, but I won't. We're not paying this guy what he deserves (and within the pay grade.)

My beef is that over time, the scale goes up, and his salary goes up, but he never "catches up". How can we get him the one-time correction he needs to be where he deserves to be? That's a discussion for my boss... later this week.

The hard part is that I've got a maximum group percentage. I CAN correct this one person but it would mean giving everyone else a poor adjustment as if they were poor performers, which they are not. I was told by our Director of HR/Controller "Put down what you think they deserve and we'll talk about it." I did that, and also submitted my reasoning. I'll let you all know how it goes.

lou's picture

Chuck,

If that doesn't work, make sure that you communicate what's going on to him. Let him know how valuable he is and do what you can. Let him know that you're limited by HR but you're doing your best to work around it.

ctomasi's picture

Thanks Lou. I am communicating my desire to adjust his salary more accordingly, but I cannot make any promises. He's been here long enough to know the drill on approvals and what not. I'm just hoping (perhaps beyond all hope) that I can do something for him.

Did I mention this is also a personal friend of mine for 25 years? We've learned to keep professional and personal lives separate... OK, we talk shop when we get together personally, but that's our geek side showing itself.

Afro Boy's picture

Perhaps the "maximum group percentage" needs a once off adjustment.

With the organisation I am in, we recently merged with another company. Suffice to say, similar roles were being paid differently. We did a whole of organisation re-allignment of salaries. Perhaps this is what you might want to propose for your team/department?

Cheers,
Af.

chaser's picture

Is there no option available for a market adustment? Often in the past I have worked with HR to perform a salary study for the position and used this for the justification of giving a one time increase that doesn't affect the normal cycle.

I actually look at this every 6 months, especially in the market here for oil and gas technical staff, often salaries increase faster than you expect.

Ryan

WVH's picture

There's been a few times where I've had to go to some fairly senior HR folks and laid out the case for someone to get a salary correction. I made sure my boss was on board, and put a presentation together for HR, and the HR types agreed to make the correction. It's my opinion that senior HR folks WANT to see line managers involved in the process -- they knew when the salary increase processes were created that there were going to be exceptions.

Walt