Software Developers: how to get a raise without changing jobs
fearlesssalarynegotiation.com
fearlesssalarynegotiation.com
Sounds like typical D-grade manager motivation. "Everyone work yourself to death and I might throw you a bone after one year!" I'd rather give up that 5% to have a sane work-life balance.
It's common knowledge that you must quit to increase your salary. It seems like a stupid practice for companies to follow, but it must make sense economically or they wouldn't do it.
Of course you can do that but you enter another level of negotiation because you are quitting and it might not even count toward the budget at this point. I would not recommend doing that every year as a negotiation tactic either.
I tend to agree with Redwards, and unless you are working in a small company if you do your job correctly it becomes more a political game than anything else.
Pretty sure that in the current era there isn't a "S" at yearS for someone decent (and willingful).
Most companies are perfectly fine to hire/poach from elsewhere whereas most companies are sucking at retention (that is, if not actively pushing people away). The combination is an aggressive environment.
If management truly wanted to "negotiate" then they would begin putting conditions on a raise or something.
I've had success in getting promotions for some people when this sort of thing happens... sometimes it's a wake up call for the execs to light up a back burner conversation with HR.
Other times, I've gotten a shrug.
I am a bit pejorative to that tactic because if answered correctly, it actually harms the salesman: proclaiming you cant give X salaries means that they dont respect market rates and thus an employee is incentivized to leave to someone that does. Their inability to give raises is a showing of weakness not of strength.
While you can certainly try to negotiate increases in compensation outside of this, I've never seen it happen successfully.
I've done it at least half a dozen times in my career. I was told "the maximum we can give is a $7k raise since there is a fixed pool for raises in the department."
I said if I quit and you have to replace me, not only will you have to hire 2 devs to replace me (as I pulled dev and sysops duty) and pay them market salaries, you will have to pay a recruiter 20-30%. They still wouldn't budge, so I got a counteroffer for $30k more than I was making, plus some other perks. They not only matched, they also matched for other devs on the team.
Do not fall for that fixed budget BS...the pie can always get bigger.
It worked out well for all parties, depending on how you look at it.
Management was a little out of touch with market rate salaries, since they weren't tech guys (once the CEO referred to engineering as "black magic" since he didn't understand it). So while they were shocked at an offer I was able to get in a few days, they understood that engineers are in an enviable position in the job market.
This was 2013 and I was making $110k in Los Angeles, and they were offering $117k. The counteroffer was for $130k plus perks valued at about $10k (401k plus match, extra week of vacation, etc). So they matched at $140k.
I stayed there and after a year I got a promotion to director of engineering and a raise to $155k + up to $25k bonus. A few months later I renegotiated to have the bonus removed and the base salary increased to $175k.
During the time after I pulled my stunt I expanded on a pet project using sentiment analysis and that became the core of a new product that is now 40% of their revenue.
In December 2015 I left to work as a remote freelancer, which would have happened eventually regardless.
"During the time after I pulled my stunt I expanded on a pet project using sentiment analysis and that became the core of a new product that is now 40% of their revenue."
This is the most important number you give! Very important to understand the need to point to concrete revenue generated (or costs cut) when negotiating a raise. Otherwise, management will probably just call your bluff.
You don't need some enormous revenue or productivity win on the board to ask for a raise (although it helps). It just needs to be less hassle for them to pay you a raise than to replace you. In most cases it's really that simple.
What was your negotiating strategy here? Did you just say "I'm going to make the bonus anyway, please let's just write it in now", or was it more "I might leave if we can't work this out"?
The new developer needs to familiarise himself with everything and what happens if he's actually worse than you?
Of course no sane boss will ever tell you this. Just nag them and don't accept "no" for an answer.
Anecdote: We had a guy show up, he claimed that we had to do a rewrite. We spent 2 years catching up to the base product. Complete waste of time, had to fire him 1 year into the rewrite. Gained no value from it. He was simply too arrogant, vain, and/or unskilled to bother to read other people's code.
There are two problems there, from what I can ascertain:
1. The guy wanting to rewrite your product.
2. Management that allowed him to do so without proper motivation and/or cost-benefit analysis.
They decided to rewrite the code from scratch."
From the employer point of view, keeping someone aboard who is willing to jump on every opportunity for leverage is also a risk. You might want to have the fiercest of negotiators in sales, but the same thing is not a trait you want to see in developers. Bad for their earnings, but that's how it is. The most capable developer in the world would not be a someone you want as an employee if you suspect that he could use his powers for extortion tactics. (It's bad enough already that the worst developers become "irreplaceable" without even trying)
Getting a counteroffer is not the same as what the OP is suggesting. Using another job offer as a leverage for a raise is not recommended by most experts. Just google "Should i accept a counteroffer?". Mainly because you create bad blood at your current employer and you have to be ready to follow through on your threat. Also, that employer you just pushed right to the edge of hiring you is going to be mad you were just using them. There are entire top 10 lists about why it is a bad idea!
I have pleaded the entire "it would cost you thousands to train a new guy, and you will have to pay him to start what i'm asking for right now!" line to bosses before. They are unmoved by financial arguments. It's as if management just decided to take a hard line against "persuasive" raises across the board, nevermind the damage it costs to lose talent.
The notion that accepting counteroffers is always hurtful to your career is contested to say the least: See this [1] HN discussion from about a month ago.
Nothing personal, just business is the attitude you want when handling something as trivial as a salary negotiation.
If you can bring in more than you make they will pay - management doesn't care about another 10k. They know what the replacement cost is.
I asked a recruiter that placed me and he said he's usually taking 20-35% :D
Which is exactly why any developer in that situation needs to get out as soon as they can find a better position. Such a company is obviously not going to prosper in the long run.
The characterization of management as incompetents backastabbers is as childish as the one that says employees are lazy bums who should be grateful of their salary.
It turns out that deciding what a software developer is worth is a very challenging proposition because deciding which ones are good is an open problem. Probably the central open problem in our industry today. But salary conversations are largely not about that. In sufficiently large organizations they are about how well you, or your manager if they are good, play the game, and in smaller ones its about having the cash flow to back up outstanding liabilities.
In any case, I think its fair to characterize these approaches as a tactic, whether its a negotiation tactic or a real cost limitation varies from organization to organization but its not the employees job to worry about that. If you are in a good organization they are constantly making the value proposition to the company make sense, if not they aren't and you shouldn't feel guilty about either asking for more pay or leaving if it isn't provided.
This is very common. They often justify it with "In this company we're not paying as much, but we have greater freedom/cooler tech/<other benefit>". Well good for you. We have already established that we're a good fit, but I'm not working for 20% less than I can across the street.
The problematic behavior is when the people setting the pay bands get the value proposition wrong or they think they are paying market when they are not.
I also have an OK salary so this is partially about reducing risk and partially about giving something back.
Bigger orgs manage compensation seperately and usually only gives management limited levers to pull to affect changes. They do this to manage costs, avoid internal competition and because they don't trust line management.
Workers are a cog in the wheel in these orgs, and treating shiny cogs better is ultimately worse for the org.
The employee got an offer the next week somewhere else for +30%.
He gave his resignation letter to the manager right away. It didn't even occur to him to ask the company to make a counter offer (even though they may have).
[Just to say that sometimes, negotiation strategies can backfire, but managers don't seem to realize (or care about) that.]
Boss: HR won't give me the money for your raise.
Employee: I quit. I've been offered more money elsewhere.
Boss: No wait actually I can get that extra money
Employee: Too late, kthxbaiYou'll get more pay but you're stuck in the same company run by the same narrow minds.
I've accepted a counter offer twice, and both times I was glad that I did.
There could be many other reasons for a company not paying what you can get somewhere else. A very trivial one is the yearly update cycle: that may happen in January whereas you get an offer in June. Companies that hire don't align to the schedule of your current one.
And hiring companies inherently know asking somebody to quit and somewhere else carries a risk that needs some amount of kind of reward.
Hell, how can one personally even know what he/she is worth? There are so many factors at play. It'd be narrow minded to expect pricing perfection on something nobody really can get right.
You've got 2 companies you can work at. You should go to the one you prefer to work with. Maybe that's the one you already are in, maybe not.
Do what's best for yourself.
If our across the board raise rate is 3% and I give you 5%, I had to give someone else 1%. In practice, I would like take 0.25-1% from more people to spread the pain out some.
If there was someone performing at a level that made me feel it was okay not to give them a raise, I might grab it all from them. But doing this pretty much means they will leave in 3-6mos or I will wind up letting them go sooner. They were likely already on a PIP or we've had serious performance discussions throughout the year.
It's not a tactic, it's simply the way it is. not giving a raise to someone is a signal that puts the wheels in motion for them to be gone. Your relationship with them will be tested, likely broken. If I want to keep everyone on my team, barring extraordinary circumstances, I need to generally even them out. Evened out seems to settle between 2.75 and 3.25%.
What most people don't say is that a good company will have set aside a pool of money for retention. It could be a salary correction because someone got in cheap and we recognize that we need to adjust them up more than a simple raise- most of the time it's the emergency money I can go to the CEO and beg for in order to match that offer you got if I really want to keep you and think you'll be happy to stay.
Double effective because now first line are insulated from negotiations and grunts don't know who are the negotiatiors they need to talk to.
I wrote more about this here: https://fearlesssalarynegotiation.com/do-you-have-to-quit-yo...
Sometimes you have to quit. But it's worth pursuing an off-cycle raise and coordinating with your manager to see what's possible.
Our industry is long overdue for unions.
If you want to stay, come back with a better offer and ask your company to match. Be prepared to leave if they don't want to.
They resell the human dude at a daily rate. Giving a raise is just lowering their margins.
I also get a pool to allocate for "regular" annual raises between the people on my team.
There's a different, bigger pool that can get pulled from if there's a case of a mismatch with market rate (e.g. we'd hire someone new into that position for considerably more than the person currently in it is making).
There's also a pool (possibly the same pool as market adjustments) that can come into play for retention/negotiation if an employee asks for a raise. But at my employer, at least, the point of proactively doing the second is to hopefully prevent this one from being needed - once you're in a "thinking about leaving" situation you're more likely to actually leave.
If you "work harder", you will be compensated fairly. Of course, "work harder" is overrated now that work doesn't involve physical labor. "Work harder" has been replaced by "create more value".
The expectation is after you create more value for the owners, you will be compensated fairly. If you believe that, go talk to engineers who worked on startups as early employees and got screwed by investors, founders, managers etc.
Why? For many reasons:
- the owners didn't think you could do any damage to their reputation and impact hiring prospects after they screwed you
- after the company grew, you were now interchangeable
- needed to raise more money and dilute your shares
- you were no longer as valuable to the next stage of the company
- They didn't believe you could replicate the value you created again
etc.
Of course, founders, investors and friends stick around regardless of the stage of the company or the value of their contribution. Why? Because they OWN it, they have power.
Do not confuse performance for power. The only time I got a significant raise (I mean 4X the pay) is when I had significant leverage. Opportunism, self interest and politics rule business.
People are not gonna give you more money if they can avoid it.
I've found that most seniors have gained their place because they made sure nobody could become better than them. How seniors usually do this is by restricting training, keeping knowledge of things they designed to themselves, and so on.
Heck, where I'am working now, a senior has designed this billing system, and literally nobody knows how to use it and it always breaks, but he will not tell anybody how to fix it, despite me and dozens others shouting at him.
One word that ensures higher salaries...
Protectionism.
Six months later, we got a new CEO and my contract was terminated because I cost too much.
Never had more than a cost of living increase otherwise (2-3%),
My strategy is to move when I stop learning. It maximizes both my enjoyment (learning challenges me and gives me motivation beyond a paycheck which is good for me and my employer.) and my potential earnings.
So, Junior Engineer going from $32K to $60K is totally believable. Senior Engineer going from $150K to $175K is going to be rarer. Super-Senior Engineer going from $190K to $225K seems unlikely (but probably does happen from time to time).
But to your larger point, at the top end of the scale, to make dramatically more money you need to get attached to the business revenue directly, either as a founder, a partner, a solo operator etc.
I don't think either of those are particularly rare. If you're learning and negotiating aggressively, the salary ramp is very steep.
There is absolutely a ceiling, but it's probably closer to $300k than $150k.
The $300k are usually accounting for stock and bonus.
So it proves that it's possible to get decent people at 206% under the market :D
So many variables at play :D
If that's how you do math, the sky's the limit.
206% means x3.06, so (s)he was previously making 1/3.06 of the new rate, which is roughly 32.7% of the new rate. Assuming the new rate was "at market", the old rate was 67.3% below market.
Math like that is why I make the big bucks. (I do not currently make the big bucks.)
Sorry but it doesn't always work like this. Sure, performing well makes it more likely for you to get a raise, but there is no guarantee. Perhaps performing well increases probability of you getting a raise. But it does not guarantee anything nor is it most important factor in computing this probability. Probabibility of raise will depend on variety of factors including your company culture, your manager personality, company financial situation etc.
Personally, I try to give a fair amount of effort to deliver more value than expected. It doesn't mean that I am working 60hrs/wk or anything like that, just trying to be creative and not asking anyone to hold my hand in my explorations.
At the micro level, the way you redeploy resources is by using your two feet. :)
For example, we brought on a front end developer who was about 1 year out of college and hadn't done much. After 3 years, he had devoured basically everything on the front end, but he hadn't gotten much of a raise, but was leading a team in addition to his own work. An internal position opened up that would have been a promotion for him, and when I talked to the person hiring, I got a response of "What are you talking about? He's fresh out of college". Few in the company could see past their mental model of him even though he'd grown past it by far.
He wasn't able to break away from those pre-conceived, and built up opinions. However, he left, got a new position for a quite a bit of a raise, and he's no longer known as 'that college kid'.
In that way, it's like family dynamics. Being a 'kid sister' even though everyone is in their 40s, has 2 or more kids of their own, and the age gap is only 2 years. Replace your own unbreakable family dynamics here.
Happy to answer questions if you have them, and I'll hop into the comments as well.
A _good_ CEO it's worth more than 1 good engineer by the fact the second one needs input from the first one, a good engineer is useless without a goal or an idea to develop. Software Foundations are probably the only places were this tough isn't valid for everything else it should.
I can look at SV salaries and only shake my head. Random 'jump between jobs every 6 month if needed to improve your net worth' advice from single mid-twenties (not talking about the author, no clue about his background. But it feels that this is the general attitude around salary improvement here) is not globally applicable.
And the author basically says 'invest in the company and THEN ask for the reward'. He's ignoring the 'or else' part. I am 100% sure that a healthy portion of envy and fear is part of my rejection, so let's say I'm coming in with a rather negative attitude. But that article is completely and absolutely devoid of content.
"Work harder, then ask for a better salary based on your excellent performance" isn't exactly worth a blog article. Writing down the year over year effects of N percent in salary is trivial maths.
He's followed by Patio on Twitter, so I give the author the benefit of the doubt and believe that he has sound advice to offer, a decent idea about negotiation (with the 'context matters' caveat). But this article seems .. a fluff piece?
IMO. It's actually bad advice. It's wrong to think of salary as something synced to productivity/value.
Working more guarantees pretty much nothing about future money. Only that you're underpaid, and you've made yourself even more underpaid because you put more hours.
"Get offers and negotiate as hard as necessary. Then work whatever you may or wish." That's a way better strategy.
Seriously, the moment you are on a "secret" one-to-one with your boss you have already lost. There's reason why unions have always bargained collectively, and there's also reason why bosses have always tried to avoid this.
If everyone in the union gets X% (with or without a seniority bonus), why would anyone give two shits about putting an effort in beyond the minimum.
You want a taste of what a software dev union is like in the US? Join a government organization where income has almost no correlation with performance and you'll be ready to put a gun to your head after 6 months due to the glacial pace people work at (assuming you want to get things done efficiently).
People don't have an issue with collective bargaining, they have a problem with the other negative effects of unions.
The things that are happening Disney, Edison, and a lot of other places shouldn't be tolerated by software devs collectively.
This strategy can work, but it's a little riskier than focusing on the value and working with your manager to align your salary with that value.
So when an engineer plays this card he tends to assume others will see it as ruthless.
But do management really think this? Do they really drink the kool aide and think less of you? Or do they just see this as part of the game, and only the underlings think like this.
By the time you go out and get another bona-fide offer that you're considering taking, I and our company have already lost the game if that's the first I hear about it. I'd much rather hear about it before you've invested that amount of time and energy into it and don't hold it against you regardless of the outcome. If we're talking about it every 3 weeks, it's a problem, of course.
I've also encouraged some very good employees to go interview and see what's out there. This is typically when a potential new role is fundamentally different from what I can offer. (Higher role at a smaller company perhaps, or a job in their home town, or a brand new startup with some past coworkers.) I've had all four outcomes (employee stays-no change, employee gets offer-we counter-they stay, employee gets offer-we counter-they leave, employee gets offer-we don't counter-they leave).
I also don't buy into the "never accept a counter-offer; they'll just be sharpening the knife to fire you later" line of thinking. If I didn't want you here, I wouldn't counter.
If you think of this whole process as a ruthless move in a game, I think you're thinking about wrong. You bring value to the table; the company brings value to the table; we freely exchange that value, making both of us better off.
Managers and HR don't give a damn about that. They do it all the time, all day along. They are professional negotiators, that's their jobs.
Your line of thinking can only manage to undermine yourself. Get it out of your head.
If I get a promotion every two or three years, am I also supposed to be trying to negotiate a non-promotion raise every 12 months?
You _need_ to be getting a raise every 12 months just to keep up with inflation. If the company is doing fine and you are a top-50% performing employee you should be getting inflation+extra - if not, that is a bad sign. The 'extra' seems to vary a lot by industry, I've seen 1-10% from friends in other industries.
We're talking about yearly review cycles here, so when it's approaching that time you need to be noting all the concrete work you've done, why it was great, and why you need to be in the "above/way-above average" raise bucket. You need to be managing your manager ahead of time so they think well of you and have already allotted a nice raise to you in the spreadsheet. Your negotiation is in the prep work with your manager: generally once the review happens things are already in motion and not much will change course.
I guess, to rephrase my question: am I doing myself a disservice if I'm not negotiating "raises" at my current pay grade but only attempting to earn "promotions" (which of course include pay increases)?
Still, asking will only get you that far. I got $80->$90/hr raise by asking. But then I got a 40% increase by changing jobs.
And if you're consulting, and are confident enough, you can just raise your prices by a lot. I once was very busy, and told the client that I would freeze my other project if they pay $150/hr, and they agreed to it. Win-win. I get more money, they get the product.
Or ask, don't get, stay and hope.
It all depends on your personality.
Well if the average tenure of a software developer at a company is like 2-3 years, you will lose by asking for a raise and should just quit to go somewhere else!
Here's my own person experience in just a few years:
1. Start off as a Grad on 30k GBP
2. One and half years later quit, onto another company at 48k GBP (>50% pay rise)
3. One and half years later quit. Do own thing for a year. Then go onto contracting at equivalent of 75k GBP (>50% pay rise)
So in summary, in the span of a 4 year period, I've gone from 30k GBP to 75k GBP.
There's definitely an upper limit on this of course. I think if I were to get out of startup land again now and focus on my salary I'd have to head to a different market (currently in Australia). I'd either aim for contracting in the UK where I know you can easily get 400-600 GBP per day, or the US where salaries for devs just seem higher.
I'm playing long game though, taking the startup route. So I'll either be collecting change from the streets in a few years, or hopefully I'll be well ahead of the game. Will have to wait and see...
Good contractors can hit 100k+
Basically all the suggestions are low level grass roots value proposals. This article has much better advice (IMHO)
https://www.fastcompany.com/3064513/lessons-learned/im-a-ceo...
What makes you think it's an employer's market? Do you think Google/Facebook/etc. are paying $250k out of the goodness of their hearts?
Just because your personal experience doesn't confirm that it's very much an employee's market doesn't make that false. Keep in mind that the market is very skill-sensitive. Not all positions have intense competition for employees, but there is a huge amount of demand for senior engineers who are well-versed in a web stack.
The need for the tech seems to be rising around the world and I just happened to pick it up on my first job (have been working "professionally" for 4 years). Didn't really start fully understanding the quirks and good ways of doing things with it until this year, but I was charging $80/hr 2 years ago.
Seeing as you're already familiar with monoliths, I don't think it would be a very far jump for you if you were interested in the tech. You can get certifications for <$200USD with Mulesoft (a unicorn startup) which would guarantee you a decent salary, contracting on the other hand is a networking game.
Write a blog, give talks, goto meetups and find companies that need your skills. Don't undervalue yourself, if you set your rate too low - your clients aren't going to like it in a years time when you've realised you're worth 2X and you start charging them 2X.
So lets break down why this 199 bundle might work. Odds are that if your buying this, you lacked the confidence to negotiate upfront. If your low man on the totem poll its easy for me as a manager to get you to the same level as everyone else. That deals with year one, your not supposed to try this again till year three. By then your out side the 60 day window, and your not getting a refund on the BS package.