Alexandra Levit's Water Cooler Wisdom

What No One Tells You About Getting Raises

According to Tribe HR’s  Pay Raise Index, women received more pay raises than men during 2012, but men earned larger pay raises. TribeHR analyzed salary and workplace recognition (“kudos”) data from 20,000 employees at 2,200 small to medium-sized companies between Q1-Q3 2012, and found that, 7.4 percent of women received raises while only 6.2 percent of men received raises.

Overall, the Index reported that average salary increase for employees at small and medium-sized businesses grew by almost 11 percent between Q1 and Q3 2012. The size of the average salary raise grew from 8 percent in Q1, to 13 percent in Q2, but then dropped to 11 percent in Q3.

Peer Recognition: An Under-the-Radar Influencer

More interestingly, however, the study also examined the correlation between salary increases and employees who had received documented recognition for a job well done. It found that 85 percent of documented recognition was given by peers, and that employees who received recognition from peers were two to three times more likely to earn a pay raise.

So it’s recognition from peers rather than recognition from managers that matters most.  Go figure.  In any case, it has always been important to purposefully raise the visibility of your terrific contributions within the organization.  But given this new information, it’s now essential.  If you want a raise this year or next, it’s up to you to document as much positive feedback from your peers as possible.

How do you do this?  Find out more over at Intuit's Fast Track blog.

Raise Your Income Without a Salary Increase

When you’re underpaid or not earning enough money for some other reason, a common solution is to find a new job.  Yet, this still isn’t totally practical given the job market’s slow recovery.  Until things improve significantly, you may well be stuck where you are.

However, this does not mean you’re helpless.  I asked Laura Vanderkam, author of the new book All the Money in the World: What the Happiest People Know About Getting and Spending, how one should go about increasing income without making a drastic career change.

Laura's first suggestion is to bump up yours hours.  If you’re paid by the hour, this will obviously increase your income.  Also, if you work part-time, transitioning to full-time will also help your finances a lot. But even if you’re salaried, putting in just a few extra hours per week of focused work will often, over time, pay off in quicker advancement.  These don’t necessarily need to be face-time hours.  If you normally watch TV at night after dinner or after your kids go to bed, try spending two nights a week thinking through your organization’s problems instead.

For more of Laura's tips, head on over to the Fast Track blog.

Managers: Do You Know How to Use Rewards & Recognition?

I have mixed feelings when I walk into a small business and see an “Employee of the Week” sign. On the one hand, I want to commend the owners for recognizing their stellar employees. But on the other, I’m hoping that the culture of appreciation goes a little deeper.

The one-on-one nature of many small businesses provides an excellent opportunity to build a culture in which employees are consistently and thoughtfully recognized. If done correctly, they’ll be more likely to outstay and outperform their counterparts in similar organizations.

Creating such an environment, however, requires a multi-pronged approach that touches many components of the employee experience.  For specifics on how to create a recognition-based culture, check out my column at the AMEX OPEN Forum.

 

Are You Entitled to Severance?

Are You Entitled to Severance?

A WCW reader asks:  I am about to start a series of job interviews.  Should I bring up severance during the process?  How much should I get, and is there any way to negotiate a better-than-average package?

You can and should talk about severance during the interview process - it will not affect your standing.  When the employer brings up the topic of benefits, ask about the company's official severance policy then.  If they do offer severance, then a month of pay is around the minimum you should receive.  If you're at the middle management level, it's probably closer to a year.  Keep in mind that continuing healthcare insurance is just as important – if not more important – than the cash you will receive.

Severance is part of the total compensation package and should be negotiated just like anything else.  As with any negotiation, you have to prove why the skills and experience you bring to the table and the contributions you will make to the organization are worth more than the money you are asking them to shell out in the form of salary, benefits, severance, etc.  When you start to talk money and benefits, you should phrase your comments in the context of what you offer that no other candidate does, rather than what you simply deserve from a financial standpoint.  You should also have done your research to determine that someone at your level typically receives X amount of severance and be able to communicate that to the employer. 

Severance may be used as a bargaining chip in the event that you don't get the salary you want, or something about the benefit package is not ideal.  You could say, for example:  “Well, my market value is really closer to $90K, but I can make $85K work if you would be willing to add an extra two weeks of severance pay."  Good luck!

 

If You’re Underpaid, Do Something

GetRaised.com is a new online service that helps people get raises by determining if they are underpaid and then giving them the tools to do something about it.  Here’s my interview with GetRaised team member Dave Clarke:                           

I wish I’d thought of this.  Where did the idea come from?

Our behavioral psychologist Matt Wallaert was walking to work and trying to think of ways to narrow the gender-wage gap.  We had been thinking about that issue, and how to help people increase their income more generally.  The gender-wage gap doesn’t have to exist - we have the tools we need to solve it, or at least narrow it.  It was one of those “well if we have this, and we have that, and we hook them together...” moments.

So much financial advice is about spending less and saving more of what you make, but it was clear to us that we should help people make enough money in the first place.

What is your philosophy on fair pay?

Fair pay is important because it really does affect us all.  When people feel underpaid and undervalued, they aren’t good, productive workers.  They still go to work, but they go feeling miserable, and they make other people miserable.  And equity is a right that everyone has - pay shouldn’t discriminate on gender or race.

How does GetRaised Work?

First, we need to find out if you are underpaid, so we ask you where you work, what you do, and how much you make, and then we can tell you if you are underpaid or not. This is completely free.  If you are underpaid, GetRaised will give you the tools in the form of a custom raise request for $20.   We guide you through the process of using the raise request kit, keeping track of how things are going while providing information, tips and techniques on what to do at each step and how to deal with all sorts of things, from what to wear to a raise meeting to how to answer some common questions your boss might ask. If the custom raise request doesn't help you get a raise in six months, you get your $20 back.  

So GetRaised recommends to the user whether or not a raise is worth pursuing.  How does it do/know that?  Where does the information/data come from?

For determining whether you should ask, we use three basic things: whether your salary is far enough below the median, the amount of time that has passed since your compensation was last increased, and the amount of time that has passed since you were hired.  In reviewing how your salary compares, we use a variety of sources, including government data from the Bureau of Labor Statistics, information from current job postings in your area, and anonymous data from other users near you who have used GetRaised.

Thanks, Dave.  This is fascinating stuff, and in my opinion well worth $20!

4 Financially-Savvy Career Moves

Even in the most prestigious and well-paying professions, job security is hard to find. Instead, financial stability now comes from treating yourself like your most important employee. That means investing in yourself, paying yourself well, and otherwise making sure you’re operating at full speed.

Here are four tips, adapted from Generation Earn: The Young Professionals Guide to Spending, Investing, and Giving Back by my friend Kimberly Palmer, for taking your career to the next level:

Invest in yourself. Professional coaching can turn you into the star podcaster you’ve dreamed of being, or it can teach you how to be a better leader. Sometimes, a career coach or development course can help you get “unstuck” from a career rut. Less formal advice can come from meeting with more experienced colleagues and mentors over lunch or coffee; they will often be happy to talk with you.

Raise your rates.  Chances are you’re not getting paid as much as your worth. Do some research on salary comparison websites, such as salary.com or payscale.com. If you’re close to a coworker, then ask that person what he or she thinks the pay range should be for a variety of jobs at your workplace to get a sense of how you stack up.

Get a second job. Diversifying your income is the best way to create job stability. Could you start selling your crafty inventions on etsy.com? Do you enjoy organizing other people’s desks, or designing T-shirts? Or do you have an unusual skill, such as woodworking, that you could advertise on Craigslist.org?

Free up your time and energy by outsourcing chores. Think of money spent on a cleaning service or getting your grocery as investments in your career, because they free up more time (and energy) for you to focus on your day (or night) job. Instead of vacuuming the living room, consider scheduling a creativity session: Block out an hour on the weekend or evening to dedicate to exposing your mind to new ideas.

Interviewing? Choose a Strong Company

Countless individuals were laid off or fired in the last two years due to their companies’ dire financial situations.  Whether you are currently unemployed or employed but thinking of working somewhere else, you should know how to avoid this scenario in the future. 

Your safest bet is to select a new company with a high profitability ratio.  In short, companies with high profitability ratios take in more income per unit sold than businesses with lower ratios.  Businesses that have stayed profitable over the long-term will continue to make money even in unfavorable conditions because they know how to limit costs and maximize profit potential. 

If a company of interest is public, monitor its stock price, forecasts, executive turnover, and paperwork submitted to the Securities and Exchange Commission (SEC).  You can also do a Google search for recent financial news, and read the releases on the company’s investor relations website. 

Additionally, your organization should allow for rapid income growth, so determine whether it has profit-sharing and stock purchase plans for employees, whether you would be eligible for performance bonuses, and whether the company will match your contributions to your retirement fund.  Those of you who are startup-minded should not jump into a job situation without a healthy knowledge of the company’s business plans and the market demand for its products or services.

Finally, consider the geographic location of the company.  Organizations based in expensive urban cities like New York and Los Angeles are the hardest hit when the economy takes a nosedive.  If you are willing and able, work for a company in a more affordable area where skyrocketing rents and other forms of overhead won’t crush the bottom line.

AMEX Study Shows Small Business Optimism

For the first time since September 2007, the majority (55%) of small business owners have a positive view of the economic environment and its impact on their ability to grow, according to the American Express OPEN Small Business Monitor.  Concurrently, more firms are at risk of going out of business (17%) than six months ago (11%), due in part to personal funds being tapped out: one-third (32%) say they are using personal or private funds to manage cash flow challenges.

While there appears to be a widening divide between healthy and struggling businesses, even the healthy businesses are proceeding with caution. Fewer firms have hiring plans than at any point in the eight-year history of the Monitor and plans for capital investments equal the record-setting low from Spring 2009 (42%).  Other findings include: 

• Nearly seven-in-ten entrepreneurs (68%) are “stressed out” by the economy and three-in-ten (31%) say that the current economy has caused them to question their decision to become an entrepreneur.
• Gen Y is least concerned about the economy: 48% expect their business to grow regardless of the economy vs. 27% of Baby Boomers, 22% of Gen Xers and 28% of SBOs overall.
• Manufacturers are the most positive: 33% see the economy improving and expanding opportunities for their business vs. 26% of SBOs, 28% of business services companies and 22% of retailers.

Social Security for Gen X and Gen Y

My friends and I have been lamenting the demise of Social Security for years. "It's not fair that we have to pay so much when the baby boomers are going to drain it dry," we say.  "There won't be a penny left for us."

According to CNN Money, this isn't exactly true.  Apparently, we CAN count on Social Security to be around in some capacity.  Says CNN:

"Despite what you may hear about the system going broke, the funds from workers' payroll taxes will cover all retirees' payments until 2016 even if no changes are made to the current program. After that the Social Security Administration can cover full benefits until 2037 by cashing in its Treasury bonds from the Social Security trust fund. And when the bonds run out, income from payroll taxes would be enough to cover about 75% of payments for decades.

That said, the government is looking at ways to shore up the system. President Obama has talked about imposing Social Security payroll taxes on income over $200,000 (currently, earnings over $106,800 are exempt). Other possible fixes: upping payroll taxes, raising the retirement age, and scaling back payments in some way.

The good news for anyone in or near retirement: "People 55 and over are likely to see no change or just a marginal change in benefits," says actuary Bruce Schobel, who worked on the commission headed by Alan Greenspan nearly 30 years ago that fixed the system (at least until now). But younger workers can rest assured that drastic cuts are unlikely."

Good news!

7 Tips for Negotiating a Better Severance Package

With companies such as Chrysler and GM announcing major closings nationwide and results from a recent survey showing that 45% of 228 of the largest employers are planning further layoffs in the next twelve months, hundreds of thousands of US workers can expect to receive pink slips in 2009.   Still, US workers are clearly not doing their best to take care of their self interests.  It turns out that in a global study about severance pay, US workers received the least amount of severance pay of 28 countries worldwide regardless of level or tenure.  But it doesn’t have to be that way.  Maury Hanigan, founder of Layoffcoach.com and severance negotiation expert, offers these 7 tips for negotiating a better severance package.   

1.  Assume you will be laid off and plan for it.  Regardless of how secure you believe your job is, think through the severance package that would feel fair and appropriate for you.  You never do your best thinking under duress.  Approach it like career insurance – have it ready just in case.
2. Signers remorse.  You need time to be sure you have your best deal.  Also, if you are over 40 years old, federal law requires employers to give you seven days to consider your package.  Don’t feel pressured. 
3. Approach the negotiation positively.  Tell your employer that the package offered is good, and you would just like to add a few more things.  If your demands seem overwhelming, or your attitude is contentious, your employer may not negotiate at all.
4. Don’t focus on the weeks of severance pay.  The formula for severance pay is often the least negotiable item in a severance package.  To increase your cash compensation, focus on pro-rated bonuses, extended termination date or contract work.
5. Finding a new job is top priority.  Identify the resources your employer has that will help you find a new job.  Information and contacts can be more valuable than cash if they help you find a new, steady paycheck.
6. Confirm every interaction in writing.  Within a few hours of each meeting or phone call, send an email confirming each agreement and listing the actions each side will complete prior to the next meeting.
7. When you have most of what you want, fold.  Employers are genuinely facing tough times and are not in a position to be overly generous.  That doesn’t mean you should walk away with a thin package, but this is not the environment to be greedy.