Negotiating a retention bonus
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@lhatsynot said:
Should I negotiate now or wait for something in writing and then negotiate?
Wait. They are testing the waters right now and any information that you give to them puts you on the defensive. If they know that you want more that gives them months to plan to replace you before they mention it to you.
This is how I would approach it:
- Assume there is already a value mismatch and they don't think you are worth what the market says that you are worth and the chances of staying there making sense are low for that reason alone.
- Assume that they will not back down.
- Start job hunting in earnest. Get offers if possible. Try to get an offer so good that the bank could never hope to convince you to stay.
- Don't give the bank leverage to replace you unnecessarily. Make them wait to negotiate. The longer you wait the more panic that they are in and the less that you are in. Increase your leverage.
- Remember that they have no more say in your pay than you do. This is an equal peering. They say what they are willing to pay, you say what you are willing to accept.
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My first point there is an important one, though. If they have to be pressured or cajoled into paying you what you are worth then likely the relationship is going to be sour. They feel that you are overpaid and will resent you - and possibly look to hurt you long term through fewer benefits, fewer raises or whatever. They know that the longer you stay the harder it is to job hunt externally and that they can slowly "boil the water" so that you don't notice that you are getting cooked. If they are not serious about the relationship a good negotiation is only a stop gap at best. And make sure that the paperwork is iron clad. Lots of firms agree and then pull "at will" to lower the rates to what they wanted a week later or just fire you or whatever.
Likewise, they should know that making you a 10% bonus offer is a joke and insulting and to me it implies that either they truly believe you can't find work elsewhere or they don't care that it won't actually convince you to stay and they fully expect you to leave after a short period.
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Make sure to read The Fallacy of Bonuses. There are so many ways that bonuses can be used to screw you. Legally a bonus is an optional payout. So look for all of the loopholes. Maybe the rate can fluctuate at their will. Maybe they can fire you the day before bonuses get paid and you get zero. Maybe they can claim that you were not at expectation and not pay it. Maybe they can claim that the bank did not do well enough to pay bonuses. "Bonus" is what someone says when they have no intention of paying it.
Logically, if the boss will give you a bonus but not a raise.... the only reason would be because he doesn't intend to pay it out either because he loopholes you out of it or because he convinces you to quit before it would get paid.
Bonuses are great for companies because they make the pay sound great but they know that you won't be quitting on the exact day that the bonuses comes out so even if they pay bonuses on average they sound far better than they are.
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The only style bonus to consider is a "signing bonus." That is you negotiate the amount that you want and it has to be payable before the start of the period. When I went to work at a small financial firm they paid me $20K for showing up the first day. If they decided to fire me that afternoon, the money was still mine to keep. The only way I would have to pay it back is if I quit within the first year. If you get the money in hand, up front and the amount is good, then a bonus would be considerable. If not, it is probably a scam.
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I haven't spent enough time with the new boss for him to know me and my work ethic or for me to know what kind of boss he is and how he deals with wages. I will be meeting with him and their team at least weekly so I'm hoping that he has time to see the value I bring. Can they survive without me? Absolutely, nobody is unreplaceable. My knowledge of our network and systems is more what they need to get through the merger, then after that, who knows. When they get me something in writing I guess I will start the negotiations.
I have my resume out there and have one very interesting job I'm hoping to get a call back on soon. I guess I will get more ambitious in searching. I'm willing to travel, work remote, and possibly move (myself, not my family) for the right price.
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@lhatsynot said:
My knowledge of our network and systems is more what they need to get through the merger, then after that, who knows. When they get me something in writing I guess I will start the negotiations.
From an employer side there is something very large as well - the known versus the unknown.
When you are first hired you are a risk, a big one. A huge one. The company has no idea if you can do the work nor do they know if you will do the work. They take a massive gamble on your and your salary reflects this.
Now you are negotiating fresh but you are no longer an unknown. The value that you bring might not be more than someone else that they could get for a similar salary. But what they can't do is know what they are going to get. So even if you had someone just as good as you in every way, they still can't know that and there is a big risk. So today you are worth a lot more to them than you were when they first hired you because now that risk is gone. So you bring something to the table that no one else can bring. You are unique and worth more than basically anyone else in that case. They should be paying you a lot more than they would pay someone equal but unknown.
Also, there is a huge cost to hiring someone. It takes time, effort and money. Companies face massive churn penalties and that is something that they need to think about when they decline to pony up and pay you something reasonable.
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Thanks Scott. This is my first merger or acquisition that we aren't the surviving managing entity so it's all new to me. It's going to be a long stressful 5+ months if I stick this out.
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@lhatsynot said:
Thanks Scott. This is my first merger or acquisition that we aren't the surviving managing entity so it's all new to me. It's going to be a long stressful 5+ months if I stick this out.
Mergers are rarely fun for the entity being consumed. Generally you want to bail if possible unless the merger is for the purpose of acquiring you personally (NTG has bought companies to acquire staff, but it is a rare thing.) Being the lingering person from a disappearing company rarely plays out well in the long run.
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They've acquired quite a number of other banks (that's how they've grown so fast in their 15 years of existence) and they retain staff if possible, even in the IT department.
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@scottalanmiller said:
@lhatsynot said:
Thanks Scott. This is my first merger or acquisition that we aren't the surviving managing entity so it's all new to me. It's going to be a long stressful 5+ months if I stick this out.
Mergers are rarely fun for the entity being consumed. Generally you want to bail if possible unless the merger is for the purpose of acquiring you personally (NTG has bought companies to acquire staff, but it is a rare thing.) Being the lingering person from a disappearing company rarely plays out well in the long run.
I can speak to experience about this. What was even worse, the company that bought us had zero MS people on staff as consultants, and they still failed and ended up letting us go. Funny thing, 6 months later we had old customers (some had become customers of us directly) contacted us asking if we were waiting on paychecks from the old consulting company. the reason for the question was that the old company was 6+ months behind in billing for our services.. and were claiming that we were waiting to be paid until the customers paid - which was a load of BS, we were salary with the consulting company.
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@lhatsynot said:
They've acquired quite a number of other banks (that's how they've grown so fast in their 15 years of existence) and they retain staff if possible, even in the IT department.
hmm.. they retain the staff? Makes me wonder if you want to be there even more so. If they aren't shedding redundant staff sounds like they are possible wasting money.
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@Dashrender They retain staff if possible before hiring new people is what I meant. Naturally there are people who dont want to make the transition or relocate so the over staffing kind of takes care of itself. They've just about doubled in size with each acquisition with our merger being no different.
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@lhatsynot why doubling? That seems like you're not getting the best bang for your IT buck unless the number of servers is going up many fold with each acquisition?
If economy of scale hasn't kicked in already to allow for the reduction in staffing, when will it?
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Not doubling IT staff... doubling in assets, branches, total users, and computers. Servers aren't necessarily doubling but migration to more robust software and hardware is.
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@Dashrender said:
@lhatsynot said:
They've acquired quite a number of other banks (that's how they've grown so fast in their 15 years of existence) and they retain staff if possible, even in the IT department.
hmm.. they retain the staff? Makes me wonder if you want to be there even more so. If they aren't shedding redundant staff sounds like they are possible wasting money.
Yeah, it is a big concern regardless of what they do.
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@lhatsynot said:
@Dashrender They retain staff if possible before hiring new people is what I meant. Naturally there are people who dont want to make the transition or relocate so the over staffing kind of takes care of itself. They've just about doubled in size with each acquisition with our merger being no different.
But presumably the merger would mean doubling staff already. But the value to bigger companies is increased efficiency. A company of 200 people only needs ~10% more IT than a company of 100 people. If you run a company of 100 with three people, they can probably double in size without adding a single additional person. At most, they might need one more. Not jump to twelve.
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@lhatsynot said:
Not doubling IT staff... doubling in assets, branches, total users, and computers. Servers aren't necessarily doubling but migration to more robust software and hardware is.
But they are acquiring double staff. If they aren't shedding excess staff, they must be over staffed dramatically.
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No, they are not doubling staff. They currently have 7 on their team and we have 4. They are willing to keep all 4 of us but in reality they will end up with 2 if I stay (maybe 3). We organized our department differently than they do and they have systems that we "outsourced" to our datacenter that they have in house so the staffing levels makes sense.
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That's still doubling, it is just that some of your staff is consultants or outsourced. Still basically doubling. If they already have seven people to do the same workload that you guys are doing why would they want to keep more than one of you, if even that many? Other than transitioning over and having someone who knows the background during that period, it seems totally redundant.
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I dont get your math (and were getting off topic a bit).
They have 7. We have 4 + our data center takes care of some systems so you say that were essentially at 7 too.
Our two banks merge effectively doubling assets ($1.2 B + $1 B = $2.2 B ), users (250ish + 200ish (after we drop about 50 operational staff that aren't needed) = 450ish), and devices (500ish + 500ish = 1000ish) to support except for servers because we will really move onto their systems but they will need to be expanded to handle the more users. Take their 7 and add in our 2 or 3 that are being kept and you end up with 9 or 10 IT staff. Am I understanding it wrong?
