Think You Have to Take a Pay Cut? Think Again
I started my career after college in a low-paying industry before making the move "client" side, thus receiving a large bump in pay.
Now, I am back looking at the agency side, and pay is significantly lower than what I was making, with more responsibility, two reports, and longer hours.
What are my options for getting a salary I feel comfortable with?
—Ready to Move
Before we begin, it’s important to remember that no one “deserves” the compensation they receive. Although there are many reasons to pay some people more than others, the explanations given are usually as easily punctured as a child’s balloon.
Take this justification: “CEOs make more money because people with their skills are rare.”
True enough. But people with PhDs in sociology who have written a dozen books that significantly advance knowledge in their field are also rare. They do not, however, make anything close to what a corporate administrator with a bachelor’s or master's degree in business make.
Here’s another example: My next-door neighbor is an astral-orbital engineer (he puts satellites into space). He has degrees in astral engineering from Purdue (undergrad) and MIT (grad). He’s extremely rare and highly skilled. Still, he makes far less money designing satellites than the guy responsible for the company’s finances.
With that in mind, let’s go back to your problem of client-side employees making more money than agency employees. There are probably dozens of rationales for paying client-side workers more than agency employees, but that doesn’t mean they’re fair—or that you can’t reasonably challenge the status quo.
Every negotiator’s plan starts with research. If you hired me as a consultant, I’d want to know what industry you’re working in, why the client side is considered more valuable than the agency side, whether you agree with how this compensation structure works, and if not, why not.
So, do a little research. Go to GetRaised, Salary.com, or Glassdoor to get an idea of the current market for client-side and agency-side compensation. After gathering data on the internet, begin to make innocent inquiries at your current employer’s shop about the way in which it measures revenue generation or “return on investment” (ROI). In other words, try to determine the relationship between your and your peers’ salaries on the one hand and revenues generated on the other hand.
Then, make an effort to ascertain the same information about agency work. Is there a rational relationship between salaries paid and revenues generated? If not (and there often is none) the field is wide open for you to frame your value to an agency based upon your own rationale. If there is a relationship, that’s OK—you’ll just want to re-frame your value to an agency as delivering more than your peers.
For example (and I’m making assumptions here—because I’m not sure what industry you’re in), let’s say that client-side work is more lucrative because you are currently required to generate business, something you won’t need to do for the agency. If that were the case, I’d base my argument for better pay based on your proven ability to generate business as a result of your time working on the client side.
In any case, you’ll want to focus on the primary reasons for the salary differential. Then, re-frame your value to the agency in a way that demonstrates your ability to increase productivity, lower overhead, or develop business as a result of the skills you deployed and the network you built while working on the client side. I’d think that your experience on both “sides” of this business creates unique value to your prospective new employer. Stress the many ways in which your value exceeds that of your presumptive peers.
Now, there’s some good news here: You don’t need to back this with research. There’s only a 1% difference in motivation when people are given a good reason rather than when they’re given a nonsensical reason. (Unsurprisingly, when no reason whatsoever is given, compliance drops by 40%.) In other words, your rationale for getting paid more than “what’s standard” doesn’t have to make any more logical sense than your industry’s compensation scheme does. You just have to believe it yourself.
The next step in your strategic negotiation plan is to create a strong anchor, or starting place, based on your present compensation. But first a word on anchoring. A nautical anchor sets a firm hook beneath a boat to establish and hold its location. A negotiation anchor behaves in a similar manner—it sets a firm hook beneath your end of the bargaining range. Anchoring has been shown to drive the bargaining session in the direction of the anchor throughout the entire negotiation session.
Set that anchor as high as is reasonable not only to influence your bargaining partner, but also to give yourself room to make concessions—or to go back and forth with your employer. Because America’s business culture is not a bargaining culture, business people tend to become uncomfortable after two or three rounds of offers and counter-offers. Your best bet is to plan two or three concessions in advance.
Principles of influence also come into play in your negotiation strategy. People are greatly influenced by arguments grounded in equity, and they’re also strongly motivated by the status quo. Frame the status quo as your present salary, not as the salaries of your peers on the agency side. Reinforce that by appealing to principles of equity: You’ll be working just as hard, with the same skills and experience, in your new job as you were in your old job. It would be unfair for your new employer to get those skills and that experience for a reduced price. The simple statement that you shouldn’t be paid less in exchange for taking on greater responsibilities is an excellent way to strengthen the existing anchor of your current salary and benefits.
Because I have so little information about your industry, job duties, and the like, I’ve made a tremendous number of assumptions in answering your question. Please write again to supply more details if this answer doesn’t help you negotiate a fair price for the value you’re able to provide to your new employer.
Want to learn more about negotiation? Join She Negotiates and Take the Lead for the TTL Launch Challenge with Sheryl Sandberg and other negotiating women online or physically live at the University of Arizona on February 19 to learn more about negotiating your way to leadership and economic well-being.
Victoria Pynchon is an attorney who practiced commercial litigation for 25 years. Since 2004, she has been mediating and arbitrating commercial disputes—the former with ADR Services, Inc. in Century City and the latter with the American Arbitration Association in Los Angeles. In 2010, she founded She Negotiates Consulting and Training with her business partner Lisa Gates. In 2006, Victoria earned her legal masters degree in Dispute Resolution. She has been teaching negotiation and providing negotiation consulting services to lawyers, executives, professionals and entrepreneurs ever since. She is the author of two books, The Grownups' ABCs of Conflict Resolution (2010) and Success as a Mediator for Dummies (2012).More from this Author