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Sunday, May 23, 2010

negotiating an offer to keep existing job

A reader writes:

When a business comes under new ownership and employees receive offers to keep their current jobs, can one negotiate? In this case a larger company has purchased a small business. I'm managing my expectations and trying not to count on even being offered my current salary.

However, when I took this job I took a substantial pay cut (almost 20%) versus my previous position. If I do receive an offer from the new owners, I'd like to request that they match my prior salary. I was told at hiring that because the company was a small one they couldn't match what I was making before. I ended up taking their offer without trying very hard to negotiate. Now that a larger company that has plenty of cash on hand will potentially be employing me, I'd really like to get back to my previous salary level.

Is explaining this and negotiating with the new ownership acceptable, or would I just be marking myself as difficult from the start?

It seems pretty unlikely to me that you're going to get a substantial raise simply because the new owners have more cash.

The way they're going to see it, you've already shown that you're willing to do the job at your current salary, so what incentive do they have to significantly increase it? The only way I can see this being likely to happen is if (a) you're an absolutely fantastic employee, rock star quality, (b) they know this, (c) they think you're going to leave without the raise, and (d) they're highly motivated to hold on to you. 

(One exception to this would be if they raise salaries across the board to bring the company in line with their overall corporate salary structure, which does occasionally happen.)

It's not typical for people who can command a significantly higher salary to take a job at a major pay cut just because the company can't afford more (except in the case of nonprofits, where people have other motivations); most people aren't that altruistic. So the new owners are likely to assume that you took the pay cut for other reasons -- that you just didn't care about the money that much, that you really wanted to do this job or work for this company, that you found the market wasn't willing to pay you what you were earning previously, or whatever. 

So you're not in a very strong negotiating position; you've already shown your hand, that you're willing to do the job at your current salary. 

Furthermore, once you're already on the job, your negotiating power comes from the implied possibility that you might look elsewhere if you don't get the money you're asking for here. It sounds like these are relatively risky circumstances to be making that implied threat; the new owners, who don't know you, probably aren't going to be as highly motivated to keep you as a manager who knows your work would be.

This doesn't meant that you absolutely shouldn't try; you know your circumstances and the nuances of this situation better than I do. But the best thing you can do is to put yourself in their shoes and figure out what a compelling argument to them would be, if there is one; the fact that they have more cash than the old owner isn't it.


Anonymous said...

Thanks for answering my question. To give more background in case any commenters have other advice--taking the pay cut was my own fault, I was panicked by the recession and my first real brush with unemployment and I got bamboozled by an experienced negotiator. If I could go back in time and reject their initial offer to see if they'd come back with a better one, I would, but here I am and I don't want to leave and risk being seen as a job hopper. I later discovered almost everyone on staff had taken large pay cuts to be there, except for the executives.

I do know that the company is doing research on salaries for similar positions locally and intends to offer in the high-mid range for the area, but my job is an unusual one and they aren't likely to find much to compare it to.

If anyone has been through this type of situation, do you have any strategies that could lead to staying with the company and being able to earn enough to live fairly comfortably? I wouldn't mind earning even 10% less than my previous job, but right now I've had to do some odd jobs and freelance writing to make ends meet as the head of my household of three in which two work.

If they don't appear willing to raise salaries, would the new ownership be a mitigating factor in "job hopper" perceptions if I chose to start looking elsewhere? Or, what about trying to work with the new management to transition into a management track immediately?

My biggest fear (aside from losing my job) is getting lost in a larger company whose management is mostly out of state and finding myself earning the same salary and doing the same job until I choose to quit. It's a perfectly decent job, but it's entry to early mid level and not one I want to do without advancement or raises for years and years.

Charles said...

"I do know that the company is doing research on salaries for similar positions locally and intends to offer in the high-mid range for the area, but my job is an unusual one and they aren't likely to find much to compare it to."

Right there in your own words is one of your tactics - do your own research. They will find something (even if it is not accurate) to compare to what you do now; you should try to find the "something" before they do. Maybe you can find two (or more) jobs that encompass what you do. In a polite way let them know that they will need to hire two or more people to replace you (or in the very least spend time and money to cross-train others already on staff)

Presenting what value you bring to the company is always the way to ask for a raise. (But in this job market a "bad" job is still better than no job.)

Rebecca said...

It really seems risky to me to ask that the new owners pay you more. I'm not arguing that you don't deserve it. I'm saying that, in this economy, they'll have no difficulty replacing you tomorrow with someone who'll work for even less than what you're making right now.

I'd try to stick it out for a little bit and then ask for a raise later. If that goes badly, you'll at least have a job while you look for another one.

Anonymous said...

As soon as I read your comment, I thought exactly what Charles did. Do your own research so you have something to back yourself up when you do discuss/negotiate salary. If it's a unique position, you may be educating the new company about why they would want to *keep* your position in the first place.