You did what Mr. Widget?! Are you nuts?! The company or prospective boss must have been horrible! Actually no and no. I turned down a great raise with a great company and from what I could tell, great management. Why would anyone do this?
This is going to be my first post in a two part series on seeking new employment and increasing income at your current company. These posts are geared (haha get it?) towards the engineering field since that is what I know. Though the underlying principles should be applicable to other fields as well.
A few years back I was at a crossroads in my career. I had bounced around between a couple of different groups within my company and my compensation began falling behind my peers.
The first change was to get out of a less than ideal working situation, that perhaps I will detail in a future post. The second was about eight months later when the program I had just switched to was cancelled.
I began to think these might be signs that I should see what other opportunities were available outside of my current company. What followed was a great career learning experience.
Fortunately throughout my career I had been great at working with others. This made reaching out to former co-workers for job opportunities that much easier. I started by making a list of people I knew that would probably help me if I asked. Trying to stay in the same geographic location was very important, so I ended up with about five contacts working at companies meeting that criteria.
Next I began researching the companies that my contacts worked for. One was a startup and the others were larger and well established. After speaking with the person at the startup, I realized it would not align with where I wanted to be in my career at the time.
I was also looking for a company that I could stay with for at least five years. Job hopping never really appealed to me or my personality.
One of the other companies had a great reputation for being employee focused with great benefits as well. I reached out to the contact I had there and asked him if he knew of any available positions. He asked for my resume and the ball was in motion.
Within a few days I was contacted by the HR department to setup an interview. This was my first experience utilizing my career network and I was amazed at how effective it was. When I graduated and had no network, I did what most people do and applied to jobs on company websites. Sometimes I would hear a response but more than likely I would not.
This was definitely a case of who I knew rather than what I knew.
At first I was excited to have an interview! Then it sunk in that I had not interviewed with a company in a while and I needed to start preparing (check out this post over at ESI on how to ace an interview). I came up with questions I thought they would ask and practiced responses to each one. I nailed this part of the interview. Every question they asked I had practiced for.
Unfortunately I did not completely nail the entire interview. I made two clear mistakes. The first was I did not come across as a confident as perhaps I should have. This was mainly due to lack of interview experience. In retrospect I wish I would have had an interview with one of the other companies I was less interested in first.
The second mistake was an even bigger one. They asked what my current salary was and I told them. Do not tell another company what you currently make, especially if your salary is at or below market value. Laws are in place in some states barring companies from asking this question. This is mainly to combat the gender wage gap, but will help anyone who is currently compensated below their market value.
As of today, there are only a few states with this law. If you are in one that doesn’t have it, be prepared to answer this question with a rehearsed statement. Something like, “I have done research on your company and see that you compensate fairly. I am sure if you think I am a good fit for the position you will do the same for me.”
They did ask what my salary expectations were and I told them a value that was based off my market research (and what I knew they paid). He was surprised by how large a jump this was from my current salary, but I stated this was in line with my market value to which he agreed.
I thanked them for the interview and waited to hear back from them.
Within a week of the interview I had a contingent offer in my inbox. It was a contingent on the company finding me a position on a project, which they said could take up to a couple of months. The offer was an 18% increase in base salary with a higher 401k match and better healthcare benefits.
I tried to negotiate the base salary up further using research I had performed but they would not budge. The HR person asked if I stated my salary requirements during the interview and I said yes. HR person’s response? “Oh it only has your current salary listed in the notes.” Once again, do not tell a prospective company your current salary.
My negotiation leverage was gone. I probably also came across as greedy asking for more than 18%. It is important to put this number in perspective though, which I will do down below.
So now with offer in hand it was decision time.
On the surface the offer was a great one that appeared to have no downside. Did I take it? Of course you already know I turned down the offer. So why on earth would I turn down such a great offer? There are two main reasons I turned down this offer: uncertainty in the work/boss situation and the compensation/vacation time.
I had some interesting work that I had just been assigned at my current company and my boss was great. The work would serve my career well in the future, and in my experience having a great boss is pretty rare.
I mentioned earlier how my compensation had fallen behind my peers, but I have not said how much. After doing my market research I determined I was 35-45% below market value. Yeah, that 18% raise is not sounding too great now is it?
Now some might say (and they did) who cares if it is below market, it is more than you are making now. This is true, but I did not want to start a new job thinking about how I would have to leave in a year to get another jump in pay. That is not very motivating and not how I wanted to go into a new job.
I was also expecting a promotion in a couple of months at my current company, so this 18% raise would have been closer to 8-10% by the time I switched.
The new job also offered less vacation time each year and no paid paternity leave. Over the first five years with the company this would have amounted to 53 days less paid time off. Multiply that times eight hours a day, then again by the hourly rate and it further ate into the raise percentage.
Often today there is a great urge for instant gratification. It is important to look at the big picture and long term effects of decisions like this. In the end though, if this company would have offered me a market rate salary I would have accepted. I may be dense at times, but I am not stupid.
I notified the company that I decided to decline the offer with a nice thank you letter.
Wow, I just turned down a large raise at a great company. Uhhh can I change my mind? What do I do now?
I decided to work to fix the compensation situation at my current company. Part of me saw this as a great challenge and I was also curious if this was even possible. I decided to give it a year to see what I could change while gaining some great work experience along the way. I was also empowered by how easy it was to utilize my network to find another option, so I was less concerned about having to do this again.
Overall this process was a great learning experience that may end up helping me in the future. Going in, I expected the company to offer me a competitive salary if they were interested. But this is business, and that is not how things work. Did I mention that you should not tell another company your current salary?
So how in the world did I end up compensated so far below market value? Well come back next week for those details, as well as the steps I took to increase my compensation at my current company and what the end result was.
Readers: Do you think I was nuts to turn down the offer? What percentage raise would it take for you to make a change? Have you made mistakes during interviews that hindered your negotiation position?