the case, everyone will share the glory; if they lose, the partners will take the blame. The partners shoulder the most responsibility, so they make the most money.
A classic example from the seventies: Lee lacocca’s decisions won or lost millions of dollars for struggling Chrysler corporation in an instant, and his salary reflected that colossal responsibility. Experienced securities analysts, too, earn six figures, but only because their decisions make seven or eight figures for the portfolios they direct.
The Universal Hiring Principle Is Make Me a Buck
The employer’s third principle is very simple. The “universal hiring principle,” as careers author Tom Jackson terms it, is Make me a buck.
This principle seems to say that, if you show employers you’ll make them even a dollar more than you cost, they should hire you. In actual practice, however, when you add up telephones, desk space, support staff, equipment, hiring costs, training costs, medical benefits, FICA, standard perks, vacations, and other expenses, your decisions and labor must gross a company several times your salary to make hiring you worthwhile.
I’ve often had clients tell me, “Oh, I don’t know if I could ever take one of those commission jobs. I need a secure income.”
Hey, I’ve got news for them! We all work on commission. We all earn only a percentage of what we make for the company. Take a look at 1982 and 1991 and post 911, when recessions hit everyone’s sales. Who lost their jobs? Commissioned salespeople? No, they just worked harder. It was the middle management, support staff, and CEOs who were no longer cost effective and got their pink slips.
Either you make more for your employer than you cost, or you go. Even charitable, nonprofit agencies pay on a type of “commission.” Either their employees contribute work that other people believe in and “pay” for with charitable donations or they, too, become nonprofit.
Would you believe it’s true in government, too? Government is more nearly immune to the profit principle because it’s supposed to provide public services, not make a profit and if it runs out of money, it can just levy and collect more taxes. How does Make me a buck apply there?
Elected officials’ salaries depend on the support of the voters. They will continue to get paid only if they are reelected, which is their reward for delivering or promising services that the people appreciate. To deliver those goodies from the public coffers, however, government must either more or less balance the budget or raise taxes. And raising taxes can be the easiest way for politicians to fire themselves. If an official pushes for something the voters notice and don’t like, poof! He or she is gone.
So the political Make me a buck is more accurately expressed as Make me a vote to make me a buck. Unless an employee is doing work that is cost effective, within the budget, and likely to get the boss reelected, bye-bye!
When it comes to putting an actual dollar figure on a government employee’s contribution, the federal government and most other governmental units have very rigid step and grade systems for compensating their bureaucrats. Since public-service employees do not produce money but merely transfer it from one citizen to another, there’s no profitability to determine for them. So government typically looks to the profit-making sector, compares duties, chooses a salary, and locks it in. Therefore, even those in the nonprofit sector get paid by the Make me a buck profit-making principle.
Example 4 illustrates the employer’s need for employees to generate more money than they cost.
Million-Dollar Blunders
Example 4: Mr. Greedy Gets What He Deserves
Mr. Greedy has a technical and managerial decision-making background he thinks is worth $85,000 a year. His education supports that assessment, too. But he clearly has the potential to handle work worth $150,000 or more in the long run, and he was hard at work on his job search.
He approached a high-tech manufacturing firm to explore a very competitive position. After a thorough discussion, the head honcho said, “You aren’t qualified for the big-buck positions yet, but I think you have potential.” He further hinted that, if Greedy was willing to come aboard at a lower level and get some exposure and experience, perhaps he would gain a competitive edge for future openings. “Of course,” the president misguessed, “this lower-level production position would not pay you what you’re worth, because we could do only $95,000 to $100,000 on it, but you could consider it.”
Greedy, of course, was ecstatic. The position paid $10,000 over his fondest hopes, for work that seemed very doable. Instead of being cautious at being overpaid, he let it stand that the seventies was the range for him.
Greedy’s further interviews with the firm’s senior managers left them less convinced of his long-term potential than the president had been.
Why, they reasoned, should we hand over $100,000 for a $85,000 production job when we don’t know if this guy will really work out in the long term? They might have been willing to pay him $75,000 to $80,000 and judge his performance over time. However, the president had boxed the company in by committing to at least $75,000, and Greedy had boxed himself in by agreeing too soon to be overpaid. So instead they sent Greedy a TNT (Thanks, no thanks) letter saying, “We do not see a match between your career goals and our firm at this time.”
Greedy, saying that he’d consider anything to get into that field, tried, of course, to defuse the salary issue, but it was hard to do without sounding desperate. These people had no time to review the five-person decision further. So it goes.
Greedy should have defused the salary question right away instead of operating on a get-all-I-can principle. A quick comment to keep the potential job alive might have gone like this: “Well, it’s really too early to discuss salary. I just want a fair salary for whatever responsibilities I handle. Let’s first discuss how I can help you.”
The Basic Principle of Effective Salary Negotiations
Three presuppositions for this principle are:
• Labor is an intangible
• Salary relates to level of responsibility
• Employees must make more money for the company than they cost.
We’ve also noted that being greedy can boomerang. The answer to the question “How much am I really worth?” is “Only what’s fair and competitive for the quantity and quality of work you contribute.” And since your contributions can be greater or less than another person’s in that “same” job, what’s fair and competitive is not a fixed price, but a range. You should aim for the top of that range.
When you examine your present compensation or look at a new salary, hold this attitude: “When I’m paid the very best my skills can get in this company in this market, I’ve made a good bargain.”
That’s the basic principle of effective salary negotiations. It helps insure that both sides will be happy. Good negotiations, after all, are always win-win negotiations.
In Chapter 5 you’ll learn a formula and method to research your market value so you’ll know exactly what range to request for a specific position. We’ll discuss all current e-resources and others, for researching your range. Now, however,
