
The Software Engineer’s Guide to Negotiating a Raise - mgadams3
http://www.mgadams.com/2015/06/30/the-software-engineers-guide-to-negotiating-a-raise/
======
harryh
As a manager of engineers I would add one thing to this generally good advice:

After you negotiate the raise, make sure you live up to it.

If you kick ass at your job, your manager will very rarely worry too much
about what they're paying you, they'll just be thrilled to have you on the
team. But if you're not living up to the high expectations you set for
yourself then they're really going to regret paying you that extra 5k (or 10k
or 20k or whatever).

~~~
dpweb
Agree, as a manager of 15 people, there's 1 or 2 superstars I would say pay
them almost whatever they want - if they demanded it (which they don't).
They're worth it. Only true for the highest performers however.

~~~
throwaway151
Throwaway cause I'm a lurker and don't really care.

Just sharing a contrarian experience...

As a manager of 7, formerly 10, those 'non-superstars' can easily go find a
job elsewhere as well. Remember, these are engineers. "Superstars" or not,
they're not stupid. The demand is there.

When management balked at requests to bump pay (not even that much, and only
to bring it in line for the region) for people they didn't think were
'rockstars', they walked off to better offers (I don't have authority here to
bump pay without approvals).

It's created a bit of a headache. Not only do we have to find replacements,
which is time consuming, folks are concerned they may not be considered a
superstar (it hasn't been stated so succinctly, but the conversations have
that vibe).

And in the long run, it was decided to raise pay across the board to reflect
the increase in the area.

Be fair to your employees as a whole. Assess their overall contribution to the
company. Not just number of commits, LOC, or that the wrote some really cool
but useless feature in no time at all (really hate when my boss beams over
having folks like that here, fortunately they're not on my team).

~~~
seiji
Fun related story: a few years ago, Google was hiring entire teams from
Microsoft away to work on Google-only projects. After noticing the ongoing
pattern, Microsoft just doubled the salaries of entire teams over night. 90k
-> 180k. 110k -> 220k. That stopped the Google drain for a while.

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rsp1984
> 1\. Establish your track record as a top engineer. > 2\. Lay out your
> specific future plans to solve their burning problems and objectives.

As someone who's been into raise negotiations on both sides of the table I
think the entire article could be distilled to these two points. It's all
about solving critical problems and getting s__t done.

If you as an engineer can establish yourself as the one who 'gets it' and who
consistently makes annoying problems and complexities disappear your
negotiation position is unbeatable because then you're probably amongst the
top 5% or 10% of engineers and any good company would do _anything_ to keep
you.

Most of the time some percent more or less salary for a top performer don't
make a difference in the scheme of things but missed deadlines and key
projects do.

------
dpweb
I would downplay 'market rate'. That's fine for commodities. Are you a
commodity? You are in a certain role and that does put you in a range of how
much value you are adding/are capable of adding (although at a startup this
would be a wider range than an established co.) Your only justification for an
increase is that you are adding more than you're currently being compd for.

There's other factors too, perks, travel demands, how fulfilled you feel, how
much you like/hate your boss. You can determine what you are happy with and
accept that, but if you can't get it, think about leaving if you can get more
elsewhere. But don't stress too much about - am I getting 100% of what I could
get.

Know that - that doesn't define your worth as a person - and there are many
people making much less than you, and many making much much more. Some of them
incompetent. Are you happy is the question.

~~~
npkarnik
I've always framed it as "the market rate for me." The nice thing is that
things like Hired and AngelList actually let you put a $$ figure on it.

------
secfirstmd
Complementary reference: Negotiation Advice from Silicon Valley :)

[https://www.youtube.com/watch?v=N6Zz-
Nkkaxc](https://www.youtube.com/watch?v=N6Zz-Nkkaxc)

~~~
mgadams3
One of my favorites!

------
ryanackley
Seems like solid advice.

One challenge in asking for a raise at larger companies is it can be difficult
to find someone who can actually authorize a raise. A lot of times your
manager is a tech lead and his manager has no budgeting responsibility.

~~~
vosper
This is an excellent point.

Additionally, even if you do find out who can give you a raise, it may be
impractical to get due consideration. I've experienced a situation where the
CEO of the (large, listed) company personally reviewed all compensation
changes and hiring offers. He was so busy (doing CEO stuff, presumably) that
he'd often miss meetings with his direct reports (no-one would even know what
city he was in) so imagine what it was like trying to get a resolution for an
underpaid engineer on your team.

After a while of repeating "we're working on it" you start to look either
disingenuous, ineffective, powerless - or all of those.

Edit: a word

~~~
dpweb
That's interesting. I was in a small/mid size co. where the CEO had to approve
all raises. I would think it makes more sense to have bands for each position
and only hiring or going outside those bands would need approval.

------
sudeepj
Article like these make me wonder whether I work in a different world
altogether :)

Where I have worked (which are considerably big companies) we are "told" the
salary raise during appraisal cycle. It is never open for negotiation. At the
most, you can "express" disgust and thats about it. Hopefully this "disgust"
will be taken into account during next year (depending on the manager).

The only time I have seen someone from software fraternity negotiating is when
he coming into the org or leaving the org.

Note: my experience is limited to working in UK and India.

------
cookiecaper
Most companies are inclined to think of raises as tiny annual percentage
gains, which may keep in step with cost of living increases only if you're
lucky. If you ask for more than that, managers are _trained_ to save the
company money and not honor the request. They're expected to call your bluff.
If you show up with an offer from another employer, they _may_ counteroffer,
but may just as well let you go because of your "disloyalty". People can and
do often suffer retribution when they ask for raises.

The business world sees things completely differently than the engineering
world.

------
gshx
It's a good post. One thing great companies get right, is to value the
engineers that are working on the codebase. If an engineer is or feels under-
paid and they get a competing offer, it's already too late to try and retain
them. There's always someone out there that can/will pay 10 or 20% more, so,
expecting to retain top engineers at the 70th percentile salary is going to be
a futile exercise.

~~~
rokhayakebe
_One thing great companies get right, is to value_ EVERYONE, regardless of
their position.

~~~
gshx
Completely agree though as history has taught us, socialism doesn't scale very
well. Better results merit better rewards. The term "Rewards" is broader than
monetary benefits. Holds true not just for individual performance but also
collective performance at a higher abstraction of entity - team, org, company,
city, state, country, etc.

~~~
collyw
And capitalism is doing such a fine job of scaling at present?

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meesles
I hardly ever post, but I had to for this one: your post is riddled with
typos.

Useful information, but the mistakes were quite distracting. Proofread before
publishing please!

~~~
mgadams3
You were totally right, thanks for the heads up so I could fix them :)

------
saryant
I was recently on the job market and read _Secrets of Power Negotiating_ by
Roger Dawson. I'm relatively inexperienced and that book gave me a huge
confidence boost. I can directly attribute 15% of my compensation to reading
it.

Even just the "flinch" he talks about netted me an extra 5k right off the bat.
I had always been too afraid to directly ask "what is the compensation range
for this position?" but now I ask exactly that, forthrightly and without
confrontation. Nobody refused to answer.

~~~
balls187
> I had always been too afraid to directly ask "what is the compensation range
> for this position?" but now I ask exactly that, forthrightly and without
> confrontation. Nobody refused to answer.

My opinion is you should just ask for what you want, rather than asking what
the compensation range is. You will get an answer, but you're unlikely going
to get an actual meaningful band.

~~~
eropple
I disagree on this, but with a caveat. The "top" of the band is usually 10-20%
below their actual top, and I can triangulate from there.

~~~
saryant
Yeah, that was what I was assuming as well. I would ask the range, they'd give
one, I'd flinch at the top-end of it and inevitably they'd come up 5%ish
percent right away. From there I was generally able to wind up 10-20% above
top of the original band.

------
TTPrograms
Question to HN: How do you negotiate for a raise when cash value is below
market rate but plausible equity value goes moderately above (risk adjusted)?
It seems that in the negotiation you have to take a pessimistic view regarding
company outcome. Or would you negotiate for higher equity instead of salary?

~~~
npkarnik
First decide why you want the job. There are good reasons to work at an early-
stage startup, the pace of work will stretch your capabilities exponentially
more than a stable job will (from personal experience). The skills I developed
working at a startup were worth more in hard $$ after I left than I made
working there.

If your primary motivation is financial, you need to think carefully. You are
taking an irrational and outsized risk as an early employee if cash
compensation is below market. But people play negative expected value games
all the time at the casino.

Even if the expected value of the equity is "above" market, the variance on
that projected equity is significantly worse for you than getting it in cash.

Either way, you should push for roughly market cash compensation, framing it
as "your expectations." I have said these exact words before: "The salary
figure is definitely below my expectations (which is $___), I'm worried this
won't work out." And then pause to get more information from them. Remember,
your expectations are framed by your alternatives, which makes it easier to
walk away. Best thing is to have another offer, if you don't it's not the end
of the world though. They still have to fill the position, which is leverage
for you.

------
programminggeek
For the record, it is believed to be in the company's best interest to lowball
an employee and use a temporary information advantage to "save money".

This is why some good people probably change jobs more than mediocre
performers. If you have skill, at some point you figure out you are being
taken advantage of.

------
jrs235
"It doesn’t really matter when you have the raise conversation, what matters
is that you’ve done extensive research and tht you are prepared going into the
negotiation. You can either be proactive and set a time with your manager or
you can wait until your normal performance review. "

I disagree with this advice for a few reasons... waiting for the normal
performance review time is bad if your company's budgeting process doesn't
line up. We budget on the calendar year, we review after 1st quarter. If we
didn't have your raise in the budget it's much more difficult to get it
approved.

Know how you company does its budget. The best time to ask for a raise is
before we do the yearly budget.

ADD: But doing extensive research and coming to the table prepared drastically
increases the likelihood of getting the raise you ask for.

~~~
mgadams3
This is a great perspective that likely rings true for a lot of larger
companies.

------
text_and_cases
I work for a US company via outsourcing site, at $22/h full-time. Was one of
the first developers, pushed their dead product up to the finish line almost
by myself, now leading a tiny team. Even though I put in a great job for 2
years now, my repeated questions for a review which would (hopefully) lead to
a raise ended up in silence. Outsourcer offered to "try and squeeze" $0.50/h
more, that was in January.

What's even worse, I am locked in with the them so I can't bring up the
financial questions to the client directly. Other than raising stakes and
possibly risking my position, which wouldn't happen probably, which makes it
even more awkward.

In few months I'll move from Eastern Europe where I live now, to a western EU
country, so taxes and cost of living will put me slightly above welfare.

FML

~~~
mattm
Like the commentator said above, get another offer. Obviously you can't get it
from this outsourcing site so you'll have to find it somewhere else.

What's the outsourcing site? They're probably billing you out at $100+/hr.
They don't want to pay you more because they don't need to. You've stayed for
2 years at that rate. They don't need to "try and squeeze" anything from the
client. They are the ones that don't want to pay more.

------
richerlariviere
Your article is quite interesting. Only one thing annoyed me: the text color
doesn't contrast enough with the background, making your article difficult to
read. It seems to be your first article on this blog this is why I wanted to
give you this advice. Keep working hard.

~~~
mgadams3
Thanks, great suggestion. I've adjusted it to have a stronger contrast.

~~~
richerlariviere
It's better now :)

------
kmonsen
I agree with step 1: Go kick ass, but I would make it a bit more specific.

Make your managers (and if possible his managers) life easier. Use your skills
to solve their problems. If he knows he can count on you, and you do work that
make sure he can do his job he will be in your corner.

I don't mean to suck up, just when your are doing your magic make sure it is
on something that everyone else considers a problem that needs to be solved
now. I have seen a few people who have done really clever stuff, but it was on
things that wasn't critical for the success of the project.

------
choppaface
How about equity that's the same quality (not magnitude) that the company
gives investors? I.e. instead of these 10/20/30/40 (non-uniformly-vesting) ISO
grants, the company issues the employee monthly debt that is convertible into
stock and has a preference on the company's assets if it goes under?

How do we negotiate more meaningful equity?

------
mikekchar
I wish I could say that I can't believe the conversation going on, but alas, I
have been here before. Here is some friendly advice for those of you who were
not working in the 90's:

1) This is HN and a lot of people here have drunk a lot of the start up
Koolaid. I can understand that; especially in the kind of market we have right
now. I should warn you, though, that some day the arbitrary measurements used
for evaluating the worth of a startup will change dramatically. Yes, it seems
like crazy talk right now, but some day the startup you work for will be
evaluated based on sales, revenue and profitability not by how big your burn
rate is, or how "disruptive" your technology is.

2) Some day aquisition and IPOs will be difficult and capital for companies
without an amazing track record (of making money) will be hard to get.

3) There will be a time when stock prices will persistently go down; even if
you work for the big amazing company whose shares have made X number of people
millionaires. Some day you will find yourself working for the IBM of the mid
90s or the Microsoft of the early 2000s. You might even work for a Nortel and
have a $100 per share price drop to 0 (as well as losing your job) over a year
or two.

4) You can over price yourself. I know that seems stupid because obviously you
can just price yourself to the market. That 30% increase you got from moving
to another company can't be bad, right? Until that company tanks because they
are paying stupid money to employees and nobody will hire you because you are
too expensive. And when you realize it, and cut your expectations you've been
out of a job for 6-8 months and nobody trusts that you can be any good because
otherwise, why haven't you been snapped up by somebody else?

4) You can price yourself into a layoff. Sure your company is going amazingly
well today. Your company got a $200 million cash infusion just last year,
bumping the valuation up to $2 billion. There are 250 employees and your
technology is super-awesomely-disruptive. But wait... there is a downturn in
the market. Nobody will fund an IPO. You're running out of cash. No angel
investors are showing up and revenue can only handle 100 employees. Let's look
at the price/performace ratio of the current employees! Wow, Bob is good
but... are we really paying him _that_ much???

5) I'm sorry to say it, but IMHO programmers are not underpaid as a general
rule. Money you don't negotiate into your pocket is not "left on the table".
It's not like the money is piling up somwhere. Money that isn't spent on your
salary is spent somewhere else. Companies have slim profits these days and
concentrate on growth. Even large companies tend to tune their profits to
about 5% and don't even pay dividends! R&D expenses in a company range from
about 2-30%, but often hover in the 10-15% range of expenses. For a company
whose revenue is driven by technology, that means that the 10% activity pays
for the other 90% of the company. _Some_ people are worth the extra 30% pay
raise because it _will_ drive the appropriate amount of revenue. I'm just
going to have to say it, though: most people are not. If salaries go up 30%
across the board, a lot of the companies you work for will tank. I'm not
saying that _you_ aren't worth the 30% extra. It's just that the attitude of
"We're getting the shaft" is going to kill a lot of companies (as it has done
in the past). There's a reason old timers joke about Aeron chairs and foosball
tables.

These things I have seen and I'm sure I will see again.

~~~
thoman23
> "Money you don't negotiate into your pocket is not "left on the table". It's
> not like the money is piling up somwhere."

You're joking, right?

EDIT: Google, 60+ billion cash on hand. Microsoft, 90 billion simoleons.
Oracle: 45 billion with a B. Apple: 180 billion dollars American "piling up".
So why exactly am I being downvoted?

~~~
mikekchar
These companies are exceptional. In fact, one could argue (and it has been
argued) that these companies should divest themselves of their cash because
almost by definition they are being inefficient. Although there are 10's of
thousands of people who work in companies like these, there are millions of
people who do not.

I have some experience working at a large company where many of the employees'
main motivation was to lay claim to a piece of the company pie. I'm fairly
certain that my cautionary advice is not misdirected even in that
circumstance.

YMMV and if you never experience the problems I write about, then I will be
very happy for you ;-)

------
tnorthcutt
Also relevant, by Patrick McKenzie:
[http://www.kalzumeus.com/2012/01/23/salary-
negotiation/](http://www.kalzumeus.com/2012/01/23/salary-negotiation/)

------
focusaurus
Here's my similar long-form article based on advancing in a large enterprise
software organization.

[http://peterlyons.com/leveling_up](http://peterlyons.com/leveling_up)

------
sul4bh
Just letting you know, this needs a fix: [http://www.mgadams.com/contact-
page/](http://www.mgadams.com/contact-page/)

~~~
mgadams3
Thank you.

------
s73v3r
Step One: Go find a job at a competing firm, because that's the only way
you'll get a meaningful raise.

~~~
lquist
This is what Ben Horowitz has to say about matching competing offers:

 _An excellent engineer decides to leave the company because she gets a better
offer. For various reasons, you were undercompensating her, but the offer from
the other company pays more than any engineer in your company and the engineer
in question is not your best engineer. Still, she is working on a critical
project and you cannot afford to lose her. So you match the offer. You save
the project, but you pile on the debt.

Here’s how the payment will come due. You probably think that your
counteroffer was confidential because you’d sworn her to secrecy. Let me
explain why it was not. She has friends in the company. When she got the offer
from the other company, she consulted with her friends. One of her best
friends advised her to take the offer. When she decided to stay, she had to
explain to him why she disregarded his advice or lose personal credibility. So
she told him and swore him to secrecy. He agreed to honor the secret, but was
incensed that she had to threaten to quit in order to get a proper raise.
Furthermore, he was furious that you overcompensated her. So, he told the
story, but kept her name confidential to preserve the secret. And now everyone
in engineering knows that the best way to get a raise is to generate an offer
from another company then threaten to quit. It’s going to take awhile to pay
off that debt._

For what it's worth, most competent managers I know agree with this idea.

Edit: I should mention that I am NOT advocating paying people less than market
wage, but as managers know, sometimes you end up in this position with some
employees for periods of time without meaning to.

[http://www.bhorowitz.com/management_debt](http://www.bhorowitz.com/management_debt)

~~~
famousactress
"...but the offer from the other company pays more than any engineer in your
company and the engineer in question is not your best engineer. Still, she is
working on a critical project and you cannot afford to lose her. So you match
the offer."

Jesus that all sounds so ridiculous to me. That's a funny shell game around
admitting that someone was more valuable than you were paying them, and then
guess what - lots of other people are.

If the argument is "But she isn't _always_ this valuable.. she's just this
valuable on this project" then attach a financial incentive to the project.

Sadly, I don't get the sense that Ben is suggesting that there's a problem
with not compensating commensurate with value here or with depending on the
employer-preferential taboo of the secret salary. He seems to just argue you
should let this engineer walk and the project die.

~~~
Retra
If I were the engineer, I would also walk and let the project die. Because
when that project is over, you're going to be the "highest paid but not best
person on the team" and there's no reason they shouldn't be looking to release
you for that anyway.

~~~
EGreg
If you threaten to leave to another company and that's how you get a raise,
the relationship's been poisoned and it's just a matter of time until you
leave.

This is just another reason why I love project based consulting more than FTE.
The incentives are properly aligned. Adam Smith would smile.

~~~
recursive
Nope. I took a generous counter-offer over a year ago. I've only increased in
critical responsibilities since then.

~~~
saiya-jin
This can be a double edge sword. you enjoy your new responsibilities? good for
you. not everybody wants to get more and more on their shoulders until the
point of realizing that there ins't much time for that little thing called
life. Also, most people who get promoted/raised around me end up working much
more compared to raise they've been given.

Personal experience - in every single work I've done (roughly 10
customers/employers, perm+consultant) in 3 different countries, there was/is
always room to grab more responsibility, more tasks etc. State of IT usually
just a variation of a term MESS, with some technical debt here and there,
everywhere. You work harder, solve more, take more responsibility and your
career progresses along (or you go to place where it does faster).

But with this might also come 9-10 hours at work instead of 8 (plus lunch),
company phone which is there just to remind you of the work when you're not
in, maybe more weekends screwed up and so on. Even in otherwise very work/life
balance oriented employers.

Want another advice? When having a formal talk with your boss, tell him you
want a raise, but you don't want it for free, rather bringing added value.
Define clear terms what is expected from you to get there, fulfill them and
watch the magic happen :)

~~~
recursive
Yes, I got the extra responsibilities I asked for. I don't have a company
phone. Everything is actually good.

