Salary Negotiation

I dont see what the big fucking deal is about pay. I freely and openly tell my friends down to the penny what I make every week. I don"t go around bragging about it, but if they ask I have no qualms telling them. Maybe the difference is that I understand that two people are not the same, and there are reasons that one person gets paid more than another. I do have access to payroll for my job, and I understand that it is confidential, I don"t talk about other peoples pay, but if they want to talk with me about it im fine with that

Lyrical said:

And I bet they screw with you once they get good and trained, eh? They know it takes that long to train them, and you aren"t going to easily fire them.

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Typically if they have any business sense to go with their estimating knowledge, they"ll either expect to be able to buy in to the company, or at least expect a share of profits. Failing that they"ll start their own company. But that"s not really any different from a good project manager. That"s just how construction is. Despite hearing about massive companies like Halliburton, PCL, Fluor etc etc they typically don"t do a whole lot of the actual work. They just oversee it. Most of the actual work is conducted by much smaller subcontractors, most of which are privately and/or family owned.

Our company has only had 3 main estimators in the past 15 or so years. Myself, my bro before me, and a guy before him that had bought in to the company and then left to take over another one (we still do lots of work with him as he took over a sheetmetal/HVAC company and he"s easily the best to work with, but he literally taught me and my bro what we know about estimating and he"s good at playing the games inherent in it).

etoille said:

eomer - i seriously hope you can find estimators who can do all that crap by hand. software"s a nice sanity check but when i do that shit id much rather do it by hand in excel. makes incorporating bids a fuckton easier.

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Our estimating is 90% by hand. Most of the time spent is "taking off" the material, equipment etc. We literally draw out isometrically most of the systems that can"t easily be counted on the plans. Once that"s all done the bill of materials is input in to a 20 year old estimating program that applies material prices and labor values to everything. We play around with discounts, input quoted prices for the equipment, fixtures etc, take our best guess at what the labor will be (80% of what the labor book says? 110%? Fuck if I know!), add in a bunch of other misc. costs like accommodations, permits, travel time etc in to the software package and that tells us what the plumbing number is. Then we do a spreadsheet with our plumbing number and the various subtrades with the various markups.

It"s a very manual, paper oriented process. The biggest fuck ups happen within the estimating software, typically from input/keystroke errors. That"s been the biggest thing training a new estimator to take over most of what I was doing, is hammering in to him that a single wrong keystroke in the "right" place can be tens or hundreds of thousands of dollars. As an example a few years ago I botched the pricing for some pipe we were to use a lot of on a job. Instead of $11.80 a foot, I had input $1.18 a foot and didn"t catch it when reviewing the pricing summary. It was about an 80k hit on the job (total contract with subs and markup was 9m). Thankfully I also goofed up on the price of some expansion tanks, with the total being 64k instead of the intended 6400, so that offset most of the error, and it was in the salad days of 2007 when we were marking things up double or triple what we are today.

We"ve got a new estimating package that we bought and I received training for 5+ years ago. We"ve never moved over to it because it attempts to automate a lot of the manual take off process, so it requires a ton of initial implementation and for your own sake you should use it in parallel with your old system for at least a year or two to ensure it"s set up properly and giving you consistent, correct results. I just never had the time to bid every job twice using two very different methods, but hopefully with the new guy learning fairly well we"ll be able to give it a shot, and in the end it should reduce the time it takes us to estimate a job by 1/3 to 2/3. But it does so much shit "under the hood" it"s fairly terrifying to contemplate what could happen if something goes awry.

TheCutlery said:

I just find it hilarious that it"s okay for you to know what your competitors pay their guys, but god forbid any of your guys know what anyone else is making.

That"s fucking gold, right there man. If you can"t see it, I don"t know what to tell you.

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You are comparing apples to oranges.

Its Business 101 to benchmark yourself against your competitors inallareas. If you don"t you go under.

Employees of the same company aren"t competition, moreso in my industry. We do everything in teams, and if the team doesn"t meet its goal, their individual pay goes down (we base bonuses on the team hitting its goal).

Also, I am not using it as a negotiation tool to lower their pay, if I was, it would be a fair comparison. They find out what each other makes for the sole intent of stirring "it" up.

I"d certainly love to see you manage some people, and have to deal with it yourself. You are only looking at this from the employee"s perspective, look at it if you were the owner. Some employees go absolutely nuts that someone parallel to them is making more. And since everyone thinks they are more clever than their peers (surveys show this), it creates some perfectly dysfunctional behavior.

Eomer said:

Typically if they have any business sense to go with their estimating knowledge, they"ll either expect to be able to buy in to the company, or at least expect a share of profits. Failing that they"ll start their own company. But that"s not really any different from a good project manager. That"s just how construction is. Despite hearing about massive companies like Halliburton, PCL, Fluor etc etc they typically don"t do a whole lot of the actual work. They just oversee it. Most of the actual work is conducted by much smaller subcontractors, most of which are privately and/or family owned.

Our company has only had 3 main estimators in the past 15 or so years. Myself, my bro before me, and a guy before him that had bought in to the company and then left to take over another one (we still do lots of work with him as he took over a sheetmetal/HVAC company and he"s easily the best to work with, but he literally taught me and my bro what we know about estimating and he"s good at playing the games inherent in it).



Our estimating is 90% by hand. Most of the time spent is "taking off" the material, equipment etc. We literally draw out isometrically most of the systems that can"t easily be counted on the plans. Once that"s all done the bill of materials is input in to a 20 year old estimating program that applies material prices and labor values to everything. We play around with discounts, input quoted prices for the equipment, fixtures etc, take our best guess at what the labor will be (80% of what the labor book says? 110%? Fuck if I know!), add in a bunch of other misc. costs like accommodations, permits, travel time etc in to the software package and that tells us what the plumbing number is. Then we do a spreadsheet with our plumbing number and the various subtrades with the various markups.

It"s a very manual, paper oriented process. The biggest fuck ups happen within the estimating software, typically from input/keystroke errors. That"s been the biggest thing training a new estimator to take over most of what I was doing, is hammering in to him that a single wrong keystroke in the "right" place can be tens or hundreds of thousands of dollars. As an example a few years ago I botched the pricing for some pipe we were to use a lot of on a job. Instead of $11.80 a foot, I had input $1.18 a foot and didn"t catch it when reviewing the pricing summary. It was about an 80k hit on the job (total contract with subs and markup was 9m). Thankfully I also goofed up on the price of some expansion tanks, with the total being 64k instead of the intended 6400, so that offset most of the error, and it was in the salad days of 2007 when we were marking things up double or triple what we are today.

We"ve got a new estimating package that we bought and I received training for 5+ years ago. We"ve never moved over to it because it attempts to automate a lot of the manual take off process,so it requires a ton of initial implementation and for your own sake you should use it in parallel with your old system for at least a year or two to ensure it"s set up properly and giving you consistent, correct results.I just never had the time to bid every job twice using two very different methods, but hopefully with the new guy learning fairly well we"ll be able to give it a shot, and in the end it should reduce the time it takes us to estimate a job by 1/3 to 2/3. But it does so much shit "under the hood" it"s fairly terrifying to contemplate what could happen if something goes awry.

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heh - my new company is learning what happens when you DONT do this the hard way.

im still a noob pricer/estimator but i just feel more confident in the numbers when i can see behind the curtain so to speak and can check the formulas instead of this input numbers the magic happens and you get a price so to speak.

Evelys said:

The trump card, however, is an offer letter from another company. You have one of those with a better salary than you"re currently making on it, and then you"re negotiating from the position of power. My last employer, after turning down my raise/promotion requests without that letter, immediately offered me a 10k raise and guaranteed promotion to stay with the company when I gave my notice with an offer letter attached to my letter of resignation. Had we not already been set on moving out of San Antonio (really, both the husband and I hated it there), I probably would have taken it -- but I didn"t get that offer until I proved to them that I was ready to walk and had a better-paying opportunity waiting for me.

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This situation is interesting to me as I am in a similar position. Due to the typical Overworked/Underpaid tech industry at the moment I am shopping around a bit to see if I am getting what I feel I am worth. I have this feeling if I come back with an offer letter I would get a raise/work less hours, etc.

However, the question is, how does this tactic affect your relationship with the company? It would seem that once you pull that card they will start looking for a replacement that will work for what you previously made and find some crappy reason to can you.

TheCutlery said:

And the main difference between me and you is that I"m not driven by the thought of packing as much money into my wallet as humanly possible. So yeah, I"m gonna go out on a limb and say I would manage a bit differently than you, because I don"t fucking need to bring home 24k a month to make myself, or anyone else happy.

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Try not to show too much class envy there.

Ubiquitrips said:

This situation is interesting to me as I am in a similar position. Due to the typical Overworked/Underpaid tech industry at the moment I am shopping around a bit to see if I am getting what I feel I am worth. I have this feeling if I come back with an offer letter I would get a raise/work less hours, etc.

However, the question is, how does this tactic affect your relationship with the company? It would seem that once you pull that card they will start looking for a replacement that will work for what you previously made and find some crappy reason to can you.

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The impact to the relationship with you and your employer is exactly why I wouldn"t recommend going to your employer with an offer letter from the other company. In the short term you might be successful with a salary increase but in the longterm it is likely to work against you. There are better ways to maintain a positive conversation with your boss/employer and achieve the same objectives without as much negativity. I posted some suggestions earlier.

As far as lyrical"s discussion of how he run"s his business, I have a hard time seeing the douche aspect. My assessment is that he pays people above market and expects people to behave accordingly. It sounds like a win-win for people who are who are willing to put in the effort. I didn"t notice any unethical or dishonest business practices either.

The offer letter trump card should really only be used if you can"t come to a satisfactory resolution otherwise. More often than not, by the time I"m looking for another job, I"m fed up with the place that I"m at, so I really don"t have an interest in them matching or beating the offer -- I just want to GTFO and move on to the next gig.

It also depends on the size of the company. A lot of the time your immediate manager would love to pay you more, but he can"t justify it to upper management. In that case, an offer letter wouldn"t hurt your relationship much, especially if upper management has a lot of people under them.

I can kind of see the point of people not sharing their salary information but sometimes it can really help turn around people who keep an open mind on things.

A while back I thought that I was getting an average salary for my job (Japan middle management type stuff 45k to 55k a year depending on bonuses) but after talking with a few people in the same position as myself but in different locations I found out that I was making a bit less than they were (50k to 60k).

My manager at that time was very vague about reasons why and not open to discussing these type things with me. So even though I was hitting targets the same as everyone else and things seemed to be going smoothly I was making less than those other guys. So I was getting frustrated and a bit depressed because I couldn"t see what I was doing that was different than them.

Come a year later I get a new senior manager who is very open and frank with me and would tell me straight out that so and so does this and you don"t....that"s why he makes more and so on.

Once someone actually told me in detail where I was lacking and things that I needed to do to catch up, things went much better for me and I am now in a better position in the company and have surpassed most of my peers.

If I had never talked with others about salary I would still be wallowing in mediocrity without a clue that anything was wrong and no idea on what I should have been doing all along. I mean I was hitting targets and showing good sales and other performance indicators were all good.... but it was that extra bit that I was not taking into account.

TheCutlery said:

You"ve gotta be a pretty big dick

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Just wondering, how many businesses have you run for yourself? I"m curious from what standpoint you"re coming from. You certainly seem eager to dish out your expert advice on how to properly run a business while making friends with everyone, so please let us know.

Unfortunately in business, you sometimes have to be a first class dick. We just let go 4 guys today, a couple of which have been with us for almost their entire apprenticeship. Unfortunately now that they"re making full journeyman pay we can"t afford to keep them around, as they will never by the type of plumber that can run a job on their own, they"ll always need their hands held. Hard workers, show up on time, reliable, all that kind of thing. But incapable of assuming much more responsibility than what most second or third year apprentices can.

But unfortunately we constantly need to turn over apprentices otherwise our labor rates will end up 50% higher than our competitors, unless we somehow manage to maintain exponential growth of the company indefinitely. Did it feel good to lay them off? No, of course not. Does it feel good that we"ve lost 250-350k the past 6-9 months, nope not so much. But unfortunately both of those things are part of the realities of owning a business.

Are there not a lot of businesses that use a standardized system? I recall the hospital I used to live near used the Merck system which equated experience and skills training, in order to avoid lawsuits. It was a fair equitable way to calculate pay scales. Or so they claimed.

joeintokyo said:

I can kind of see the point of people not sharing their salary information but sometimes it can really help turn around people who keep an open mind on things.

A while back I thought that I was getting an average salary for my job (Japan middle management type stuff 45k to 55k a year depending on bonuses) but after talking with a few people in the same position as myself but in different locations I found out that I was making a bit less than they were (50k to 60k).

My manager at that time was very vague about reasons why and not open to discussing these type things with me. So even though I was hitting targets the same as everyone else and things seemed to be going smoothly I was making less than those other guys. So I was getting frustrated and a bit depressed because I couldn"t see what I was doing that was different than them.

Come a year later I get a new senior manager who is very open and frank with me and would tell me straight out that so and so does this and you don"t....that"s why he makes more and so on.

Once someone actually told me in detail where I was lacking and things that I needed to do to catch up, things went much better for me and I am now in a better position in the company and have surpassed most of my peers.

If I had never talked with others about salary I would still be wallowing in mediocrity without a clue that anything was wrong and no idea on what I should have been doing all along. I mean I was hitting targets and showing good sales and other performance indicators were all good.... but it was that extra bit that I was not taking into account.

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A few years ago we had a guy going around trying to ply salary information from everyone on my crew at work. I lied to him about how much I made, mainly because I was making quite a bit more than the range he was talking about and also because a couple of other people had come to me saying he was inquiring about how much everyone made. Needless to say, but he was laid off at the next opportunity (more for performance than being in people"s business). He got a job a few weeks later and almost immediately was bragging about his meager 5K salary bump, which was still quite a bit less than our top people make here. Some people never learn.

Where I work is a huge DoD operations contract (Contractors run almost all technical operations here) and some people are more secure in their positions than others with the budget cuts and contract issues. We also have about 6 different companies on the contract (all the big defense contractors, LM, GD, NG, BAE and so on) and rates can be very different between companies. A while back we had a few more companies, but because they refused to lower their rates (hourly per employee to govt) those entire companies were cut from the contract.

I"m not sure if my company expressly forbids discussing salary with other employees, but I do know we have had memos about not discussing salary with employees of other companies. I don"t really discuss my salary with anyone but friends if the subject comes up, mainly because I do know for a fact that the senior tech people where I work make a hell of a lot more than the crews and the shit storm that would emerge if someone tried to get a 40k a year raise would be epic.

I"ve only asked directly for a raise once, when I first got out of the military. I found out how poorly I had negotiated when I found out how much the guy sitting next to me was making when he kept buying everyone lunch at work. My boss really had no choice and I got a very healthy raise that year. My boss actually laughed and said he was kind of shocked at how low of a salary I was willing to take, and had no problem bumping me up, since the company made a lot of money off of me for six months either way.

So all this derailing aside....

I am expecting an offer letter today or tomorrow. They asked me what I am currently making, to which I honestly replied. I immediately commented that given the level, location and requirements of this new position I would be expecting a fair bit more (about 20k more than my current salary) which was based off my own research of similar positions in the area.

We"ll find out if it worked pretty soon.

TheCutlery said:

Just wondering, how many businesses have you run for yourself? Oh, just the 1? So there"s possibly other ways to do things other than the way you do them?

Okay, thanks for that. That"s much clearer now.

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So none then. Thanks.