How to read the Salary Reports

[mlchris2]

So I'm coming up on my temp to hire date and I need to prepare for some negotiations. I have some idea of salaries for my position and the market in the area I live in. Right now I'm being what I feel is taken advantage of, due to my years of experience and knowledge, so I want to prepare myself to get what I want, but at the same time, not risk offending my employer (as I am still on a temp to hire contract).

I've been checking out the Salary Reports online... input the position, zip code, company size, benefits, bonus, etc and they produce figures compared to others in the area.

I am unsure how to read these reports. Most of them have a dollar amount for Salary, Total Cash, Bonus, Hourly rate. I don't know what these mean.

Salary = the base pay you recieve on a annual basis paid monthly, bi-monthly.

Total Cash = salary + bonus

bonus = additional $ recieved on top of salary

hourly rate = recived from (salary / months)/hours worked per month

Are these assumptions correct?Can someone explain to me?

Also, do health benefits play a part in salary negotiations? by this I mean, would the employer take into account they are providing me benefits and in turn expect to pay a little lower annual salary (even though I still pay a monthly premium)?

any help you can provide is surely appreciated



Mark C.

 

[kmcferrin]

Hourly rate may be the salary divided by 2080 (or however many hours you are expected to work per year), or it may just be the rate that you could expect if you were working that job as an hourly rather than salaried position. Everything else seems fairly spot on.

As far as health benefits go, there usually is no negotiation there. You get the plan that the employer offers, or the employer may offer a choice of plan (low deductible versus high deductible). So when you are negotiating you are typically negotiating for your pay (salary/hourly), bonus structure (often times not offered or not negotiable), and vacation time (again, often times not negotiable).

All that being said, it is important to understand the vacation time, sick time, bonus pay, and any other benefit details while you are negotiating. If the company is deficient in one area (no very little vacation time) then you may want to push for more financial compensation. Likewise, if the bonuses are structured in a way that makes them difficult to attain, you may want to ask for more money in your salary.

Generally when negotiating I completely disregard any talk of bonuses. I want them to be available, but don't let them be a deciding factor. A company can easily suspend or modify their bonus program to cut costs, but it's harder to cut someone's salary than to cut bonuses. On top of that, at most companies the bonus is tied to something that you personally cannot directly control (i.e., overall company performance). Bonuses are bonuses, you can't count on them. If you could they would be part of your base salary instead.

While you're at it, find out what their pension or profit sharing plans are like. This includes 401k program and the degree to which contributions are matched. It used to be common for employers to match 50% of your 401k contributions, up to a cap amount (usually several thousand dollars). Some companies still do that, but many of them have changed the program so that the matching contribution is only given IF the company is profitable for the year. They wait until the end of the year to determine if a matching contribution is made, and then decide how much of your contribution is matched. This usually ends up in you getting less money in the long run. I used to be able to count on $5000 a year match in my 401k (which because of its non-taxed status, is like getting a free $7200 or more). The past couple of years it has only been $1000.

________________________________________
CompTIA A+, Network+, Server+, Security+
MCTS:Windows 7
MCTS:Hyper-V
MCTS:System Center Virtual Machine Manager
MCSE:Security 2003
MCITP:Enterprise Administrator

 

[hinesward]

I don't give a lot of credence to salary reports and surveys. Most of them are published by groups that have an agenda.

Also keep in mind that many of these reports only count employed people. If they were accurate, they would also include the unemployed at a salary of zero.

 

[kmcferrin]

Hinesward, everyone has an agenda, yourself included. But it makes no sense to include unemployed people in a survey of salaries because unemployed people, by definition, have no salary. The purpose of these salary reports is to find out on average how much people are making who are employed in those specific roles. They are useful for purposes of negotiation (as in this case), but many employers also use them to determine how competitive their compensation is with the rest of the market.

________________________________________
CompTIA A+, Network+, Server+, Security+
MCTS:Windows 7
MCTS:Hyper-V
MCTS:System Center Virtual Machine Manager
MCSE:Security 2003
MCITP:Enterprise Administrator

 

[FredWagner]

Another thing to consider - if you get hired at a rate that you consider underpaid, and you demonstrate your value over time, come time for layoffs, your value in excess of your cost might well be recognized, and you might survive the layoffs where at a higher rate you might not. Worth considering in today's job climate....

Fred Wagner

 

[kmcferrin]

Call me crazy if you like, but if I'm about to accept a position I'm going to be far more concerned that I am compensated fairly for the next X years of my life than I am about an ability to survive hypothetical layoffs if they were to happen. By the same logic, the pay differential could allow you to set additional money aside as a financial cushion in the event that you did get laid off (which you should be doing anyway).

But most importantly, a decent company will recognize their best assets and make an effort to keep them through layoffs. That's not always enough to protect you, but it probably will help you at least as much as being underpaid will. Besides, what happens if you are underpaid and get let go anyway?



________________________________________
CompTIA A+, Network+, Server+, Security+
MCTS:Windows 7
MCTS:Hyper-V
MCTS:System Center Virtual Machine Manager
MCSE:Security 2003
MCITP:Enterprise Administrator

 

[mlchris2]

Thanks all, good feedback. I know the employer provides bonus, but it is based on company performance... so whether I'd get it or not is another story. Health benefits are provided, but I'm not including that in my salary. they do have 401K, but I dont know what they match.

I've always thought of bonus and health and 401k separate from base salary.

I ask for some additional advice...

When you are negotiating salary or contract; do you base that number off what the "national or region" average salary is or what you've made in the past or do you use a mix of both?

I'm lost on what to do, as I mentioned in my first post, I don't want to offend nor do I want to short myself, but they did pick me out of several 100 applicants in such a tight economy, knowing my background and pay history. Also, I know what they were paying the previous employee in this position (they are a friend of a friend) and know his education, experience levels.

Given that information, I thought to myself... well they have less schooling, less experience and they paid them X. I've got more schooling, certifications, more experience... they should pay me Y. Is this a bad mentality to have?

I know today's job market isn't what it used to be 10... HELL, even 5 years ago. I want to be compensated fairly for my skill set, etc but I don't want to make it so my employer feels like giving my job to someone who would take half of what I am asking.

salary negotiations... suck!!!




Mark C.

 

[FredWagner]

The game is to force the other person to name the first number. Tell them your Y number, and why you're worth it. If you have any other irons in the fire at that number, mention that too. If they make a counter offer, and it's acceptable take it. If it's lower than X your friend was making, you have a decision to make based on the job market in your area. Does the company give raises ? Are you better at what you do than your friend was ? Would you like the opportunity to show your stuff ?

Fred Wagner

 

[kmcferrin]

If they already have your pay history then it's game over. You pay history is not relevant to any potential employer. If I have to provide a number then I tell them my "salary requirements." What I got paid by the last company is none of their business. The point of the negotiation is to determine what you and they think is a fair amount for you to do THIS JOB. What you got paid to do a different job simply isn't relevant.

I think that your problem is probably that you don't know what you're worth. In addition to all of the things that were mentioned previously, you need to consider what you believe you are worth. This includes your skillset, education, work experience, and market conditions. Are you above-average, average, or below-average for the position?

________________________________________
CompTIA A+, Network+, Server+, Security+
MCTS:Windows 7
MCTS:Hyper-V
MCTS:System Center Virtual Machine Manager
MCSE:Security 2003
MCITP:Enterprise Administrator

 

[mlchris2]

The only thing they know is what I was making at the job I had before I took their contract-to-hire position. I'm doing Network Administration for them now, but at the time I was in between jobs and doing construction. They don't know what I was making before in my last 10 years of System/Network Administration positions.

you make a strong point though... Am I average, above-average or below-average???

thanks kmcferrin!!!

Mark C.

 

[FredWagner]

What will be important in the interview is the stories you can tell that relate to the position - problems you solved, situations you found yourself in and resolved - problems you couldn't resolve and why. Those reveal more about what you can do, and how you go about doing it than job descriptions or certifications. and they may trigger a "we've got a problem like that too" giving you a chance to explain how you'd approach it, without giving away the knowledge so they don't need you.
The experiences you can describe will be what shows your true worth to them.

Fred Wagner

 

[mlchris2]

Fred,

I did most of all that already when I did the initial interview. I had 3 interviews with this company and they offered me the positon. I've already got the job... I've been working here for 3 months on a contract to hire basis. We decided on a contract-to-hire till the end of the year.

What's forthcoming is the fact that I need to negotiate a permanent salary. But I will keep in mind that I can use those examples you suggested when finalizing stuff come Jan 01.

Mark C.

 

[FredWagner]

They probably realize that if they go too low on salary, you'll be looking for another job while working for them.
Were you placed by an agency ? in that case the amount the agency is being paid by the company for you gives you the total compensation amount they're serious about - Salary + health Benefits and retirement contribution if any. Back those out from what they're paying the agency, and you've got the salary. If there's no agency involved, you need to talk with your peers at other organizations in your area.
Also, is there anyone else in IT at the company where you're on contract that you can talk to ?

Fred Wagner

 

[mlchris2]

No I was not placed by an agency. I've done alot of research and talked to several other admins in the area. There is only one other guy in IT and that is the Director... the one whom I will be talking to about my salary. lol

I think I'm prepared to ask for what I want, obviously shooting high. Im just worried about them saying here's what were going to pay you... take it or leave it. But you did make a good point... if that happens they risk losing me.



Mark C.

 

[FredWagner]

If the IT director is a straight shooter, he will have checked around and have a fair offer ready for you. and if it's a small organization, there can be bonuses at holiday time. You'll be missing this year's as a contractor, but they'll have had plenty of time to learn your value by bonus season next year. Once you're an employee, learning more about how the company does business, you'll be able to offer suggestions on ways you can help. Spend time listening and learning in various departments -you'll come up with ideas - or they may ask you - "is there any way we can...". The advantage of a small operation - no bureaucracy in your way. Be sensitive to the company's financial situation, offer ways to save money, improve customer service, visibility in order processing - you've got a great opportunity there!


Fred Wagner

 

[kmcferrin]

I'm not sure why it didn't occur to me before, but if they're paying you directly on contract now (you did say no agency) then they know what you make. They're probably paying extra to ostensibly allow you to cover the cost of additional taxes and insurance, so the "employee rate" will likely be lower than the "contractor rate."

You probably should have worked this out in advance when you agreed to go contract until the end of the year, then switch to an employee. The chances are pretty good that they won't be negotiating much at all, unless they really want you to stay and are terrified of having to replace you.

________________________________________
CompTIA A+, Network+, Server+, Security+
MCTS:Windows 7
MCTS:Hyper-V
MCTS:System Center Virtual Machine Manager
MCSE:Security 2003
MCITP:Enterprise Administrator

 

[mlchris2]

that's exactly what I am afraid of. I wont get the salary I feel i deserve and will have to settle.

Mark C.

 

[FredWagner]

One area you might bring up, to set the scene for your 1-year review, is to find out what they've been spending on consultants, and show that you can reduce or eliminate that expense because of your more extensive training and experience. You should accept their offer for now, and be perpared to show how much you've saved them for next year, and go for a fraction of the savings as your first raise. (or they may be very conscious of the reduced consultant use). I cut IT consulting to practically zero when I was hired as Law Firm IT manager back in the 90's - they showed their appreciation every year at bonus time - I didn't have to ask!

Fred Wagner