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yiLiTeQu
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Joined: November 20th, 2002, 5:48 pm

A tricky situation

March 29th, 2011, 2:29 pm

A friend of mine is interviewing with a hedge fund. Things are going really well and they have shown a lot of interest. She feels she's a final interview away from an offer. She had been asked about her recent pay history by the hiring manager and she'd given him that. What she did not say was that she had been extremely underpaid (not hard to see given the data points in job boards and the work she has done in her position). I suggested her to bring this up in the final meeting with the manager, tell him what she thinks and ask them to ignore the pay history and pay her market rate, but she believes it is a bad idea to talk about pay before an offer is made and it may work against her. I told her that it would be hard for them to raise the offer significantly once an initial one is made. She likes the job and it does have a lot of upside potential than the current one. But she does admit that it would be disheartening to receive an offer that is significantly below her value and that she's not a junior anymore and what she's getting paid now does matter. She got the interview through a headhunter who also knows the pay history. She believes the HH will be on the hiring's side. I know banks usually do not want to deviate too far from the last pay when hiring (a stupid idea I believe as you pay what the guy's worth) but do hedge funds not have greater freedom?
 
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quantmeh
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Joined: April 6th, 2007, 1:39 pm

A tricky situation

March 29th, 2011, 2:43 pm

QuoteOriginally posted by: yiLiTeQuShe had been asked about her recent pay history by the hiring manager and she'd given him that. too late, the damage is done. she should have not released the info.
 
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yiLiTeQu
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Joined: November 20th, 2002, 5:48 pm

A tricky situation

March 29th, 2011, 2:54 pm

that's what I said after she told me about all this. but she told me the hiring firm would not look at any resumes with such info and she liked the job description. So let's say we are in a damage control mode, what would you do?
 
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Hansi
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Joined: January 25th, 2010, 11:47 am

A tricky situation

March 29th, 2011, 3:18 pm

QuoteOriginally posted by: yiLiTeQuSo let's say we are in a damage control mode, what would you do?I don't have any experience with the situation myself but I'd assume that it's best to just do nothing at this point. Dwelling on the issue will most likely only annoy the hiring people. Best to just not mention it and if she feels underpaid by the offer then decline the offer on those grounds. If they really want to hire her on her merits they'll counter with a higher offer.
 
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quantmeh
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Joined: April 6th, 2007, 1:39 pm

A tricky situation

March 29th, 2011, 3:22 pm

QuoteOriginally posted by: yiLiTeQuSo let's say we are in a damage control mode, what would you do?it's a game. if she wants a big delta, then she probably should indicate it first, before they offer. they may ask 'why', then she'll simply say that she felt she was underpaid and explain why. reasonable explanations would be considered.
 
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yiLiTeQu
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Joined: November 20th, 2002, 5:48 pm

A tricky situation

March 29th, 2011, 3:30 pm

Hansi, that's along the line of hers. But my concern is that once an initial offer is made it is unlikely it will be significantly upped. Otherwise it would make them look bad: shows either they don't know what they are doing or they intended to take advantage of her. I thought it's better to work some expectation into the hiring manager's head.
 
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Costeanu
Posts: 189
Joined: December 29th, 2008, 5:33 pm

A tricky situation

March 29th, 2011, 4:32 pm

The labor market may not be perfect, but it's not completely irrational either. It's supply and demand. If she gets any other competing offers, then her current pay is irrelevant; her MTM will be decided through an auction. If she doesn't, then the potential future employer has to compete only with the current employer, hence they'll make an offer that is only slightly above what she gets now.
 
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yiLiTeQu
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Joined: November 20th, 2002, 5:48 pm

A tricky situation

March 29th, 2011, 4:43 pm

Costeanu, I agree with you to some degree but there is a big difference between a human and say a bond that is being bid/offered. A bond would not be upset by what was paid for it and decides to go look for a better bid. If they decide to low ball her they are taking a risk as well.
 
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quantmeh
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Joined: April 6th, 2007, 1:39 pm

A tricky situation

March 29th, 2011, 4:54 pm

QuoteOriginally posted by: yiLiTeQuIf they decide to low ball her they are taking a risk as well.no risk at all. there's many other candidates
 
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yiLiTeQu
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Joined: November 20th, 2002, 5:48 pm

A tricky situation

March 29th, 2011, 5:13 pm

quantmeh, yeah there are always many other candidates but what about the replacement cost? are they going to be "lucky" again (bid well below market)? Plus, she told me that her profile was a "perfect" match that I think partially explained the fast progress so far and she's really good at what she does.
 
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mrmister
Posts: 225
Joined: August 15th, 2009, 4:33 pm

A tricky situation

March 30th, 2011, 3:25 am

QuoteOriginally posted by: yiLiTeQuquantmeh, yeah there are always many other candidates but what about the replacement cost? are they going to be "lucky" again (bid well below market)? Plus, she told me that her profile was a "perfect" match that I think partially explained the fast progress so far and she's really good at what she does.A hedge fund has to pay a "hedge fund salary". Assuming your friend is not in Ops or something which screams support, there is a compelling argument to be made before an offer is on the table. A standard lie from HHs is that they require your current pay package. Complete bullshit. Nothing much is lost. If the fund makes a low offer, decline it and remember never to give out a number first in the future, regardless of what somebody might tell you. Regardless of demand and supply, you will only weaken your position if you show your hand.
 
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DominicConnor
Posts: 11684
Joined: July 14th, 2002, 3:00 am

A tricky situation

March 30th, 2011, 8:15 am

If they ask about your pay, then it's really rather awkward to not answer that without souring the process.However in her case that was the point where it would probably have been optimal to say something of the form "so although I enjoy the work, they're just not in a position to pay the market rate", which is a nice way of saying "the bastards won't pay me properly".Of course at that point it's 50/50 that they ask you what you want, so be prepared for that question.The damage is minimised by speed of action in this case. as it is much harder to get an offer raised then to get a better first offer, so she needs to get her bid in ASAP.So yLiteQu is right to ask about "damage control", and the best option now is to program the HH to do the dirty end of arguing for you, it's his job.She needs to explain to the HH that if the hedge fund wants to hire her, that he needs to get the market rate, or the deal does not go through.She also needs to be quite clear what that pay level is, and ideally offer some reason why she believes it to be true, since the HH will want ammunition for the argument, because he will expect the hiring manager to ask "why does she think she's worth 150K ?" That's a fluid situation and with skill a good HH can get a number that both sides are happy with and equally importantly she will get a "soft landing". That's a term I use for the fact that after all this is done, she's going to have to work with these people, and so she wants them still to like her.She may believe that the HH is on the "hiring's side" but frankly the HH is on the HH's side, if she doesn't take the job, then he gets nothing so has a strong incentive to do the negotiation well.quantmeh is entirely wrong when he says there is no risk for the hiring firm in a low-ball offer, this is in many ways the riskiest kind of offer to make....1: If you pay a lot below market, the chance of them leaving is high, and there are serious costs, both visible and invisible in staff churn. Not just recruitment fees, but the hassle in hiring a new person and the lost time in bringing two people up to speed.2: People who feel they are underpaid often underperform, there's studies on this that are pretty conclusive. Very occasionally their 'underperformance' is quite spectacular.3: They may accept the offer, but just at the last minute renege when a decent one turns up, which causes a lot of pain.Mrmister says :"A standard lie from HHs is that they require your current pay package. Complete bullshit. "It is a standard lie, but it is also often true.As a headhunter I get asked "what is this guy on" ? and if he refuses to tell me then I have to pass that refusal on (or make it up as happened to me once long before I was a HH)That refusal makes selling you harder which is usually a bad move.
 
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ArthurDent
Posts: 1166
Joined: July 2nd, 2005, 4:38 pm

A tricky situation

March 30th, 2011, 8:39 pm

Hiring manager, headhunter and HR deal with numbers all the time. You change maybe 5 jobs in your lifetime - makes you very bad at negotiating pay. Better to let the pros handle it. Make the headhunter earn his commission - tell him you won't join if the pay is below $X. Don't tell the manager anything, if pressed tell him to speak to the the headhunter about the numbers.
 
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ArthurDent
Posts: 1166
Joined: July 2nd, 2005, 4:38 pm

A tricky situation

March 30th, 2011, 8:44 pm

QuoteOriginally posted by: mrmisterNothing much is lost. If the fund makes a low offer, decline it and remember never to give out a number first in the future, regardless of what somebody might tell you. Regardless of demand and supply, you will only weaken your position if you show your hand.The Noel Smith wenkle salary negotiation method.BATNA
 
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katastrofa
Posts: 9574
Joined: August 16th, 2007, 5:36 am
Location: Alpha Centauri

A tricky situation

March 30th, 2011, 8:48 pm

I had to handle my negotations myself, because my HH (actually her boss) was squarely on the hiring company's side and tried to convince that I'm a moron for insisting on a higher base. It's an interesting experience.
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