Accepting counter offer 8

[ukengineer58]

Hi basically I have been offered a job usual story current employer when I said I was leaving matched the offer. Some more details;
New job is smaller company so less fringe benefits
Its more responsibility which is what I want.
If my employer had been paying me this amount to start with I probably wouldn't have looked around.
I know very little about the new company except what I saw at interview
There are only three qualified engineers there
I am generally happy at my existing place but tying to drive my career forward and see if I could get also more money.
Existing is heavily into bim but the new being smaller hasn't really touched I as yet.
New is further away from home so will cost me more in travel to work in money and time.
I have verbally accepted. But not in writing.
If this had happened before I verbally accepted I may still have gone. I truly do not know what I want to do and hard a hard time Accepting first time.
Could I in any way pull out now anyway? I feel I can't even if that becomes my preferred option.
Any thought are welcome.

 

[zdas04]

I recently had a client pay me for a day's work ($1,800) for a recommendation that reduced their project costs by $7 billion (on a $25 billion project). My GasBuster is reducing a wellsite cost for one client from $2.5 million to $125 k. Not bad for a field projected to have 6,000 wells. Is that worth twice the going rate? I would think so, since in both of these examples my client had already paid the going rate for designs that did not honor the realities of the reservoir, so they paid 3 times the going rate to get my solutions.

I charge a lot, my clients keep calling me back, so I must be worth it. People are not commodities and to think that they are is to think wrong. When I hire someone I ask "what will his contribution minus his salary do to my bottom line?" not "can I get him for less than scale?". Average compensation is for average people. I don't hire any of those.

David Simpson, PE
MuleShoe Engineering

Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat

 

[ajack1]

I actually don’t think people are commodities but not for the reason you state. Like you if hiring someone I ask “what will their (no sexual discrimination in my company) contribution minus their salary do to my bottom line?” However if I was looking to buy a piece of machinery I would also ask the same question, obviously after cost is deducted not salary. It still remains a pure business decision and in that sense a person is no different to a piece of equipment, it is how they affect the bottom line not just which is cheapest.

I guess the other place we really differ is how we define worth. To use your example and also make some assumptions that may be wrong. If you can get $1,800 for a day’s work that will provide you with a very nice income if you own the company, take a wage and share of the profits. If however someone is working for you and we say a day is eight hours and you have a 3 x salary mark up, neither of which seem unreasonable to me, then you are paying them $56.25/ hour. Now I don’t know what the going rate is in your field or country but I would guess that is around average.

So is that person worth $56 / hour, $225 / hour or $7 billion? My take is they are worth what someone is prepared to pay them.

 

[zdas04]

None of your assumptions are correct:
[ul]
[li]It I purchase a bulldozer, I have a reasonable expectation that it will perform similar to every other bulldozer of that size that I've ever purchased[/li]
[li]If I hire an Engineer, I don't have any expectation that they will perform like every other Engineer[/li]
[li]My company is a sole proprietorship. I don't have employees. Everything that comes in can go out as owner's dispersal or a business expense. Something like 40% of gross revenue goes into running the business (mostly income taxes and airplane rides, the only office is off my garage). That means that my (after tax) income is closer to $135/hour than $56/hr. Dang, I guess I'm "worth" twice the going rate.[/li]
[/ul]

David Simpson, PE
MuleShoe Engineering

Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat

 

[1gibson]

"So is that person worth $56 / hour, $225 / hour or $7 billion? My take is they are worth what someone is prepared to pay them."

And that someone probably won't be you, and you'll lose your best people because of it.

That might be the missing link that explains the difference of opinion.

 

[ajack1]

I actually don’t think either of my assumptions are wrong.

If you truly believe that all computers or milling machines or example are the same regardless of price and specification then I am probably wasting my time discussing anything with you, however you come across as an intelligent person so I don’t think you do believe that.

I did say if you own the company take a wage and share of the profits then that will provide a very nice income for you, that is my understanding of a sole proprietor, however it may have a different meaning outside the UK in which case I accept I may be wrong. But I thought the point was what employees were worth, if you were employing someone I doubt you would be paying them $135/ hour on $225 revenue? Even if they saved someone $7 Billion.

1Gibson I would only lose my best people to better pay if someone was prepared to pay them that amount, in which case that would be what they were worth.

 

[tbuelna]

When it comes to paying people to perform a job, people are definitely not a commodity. A commodity implies something that is readily interchangeable with any similar good or service. The real value of a person's labor or effort to a business is relative to the amount of revenue or profit it provides.

 

[IRstuff]

"A commodity implies something that is readily interchangeable with any similar good or service. "

That is, I believe, the way 99% of all engineers of a specific discipline and grade are treated. The fact that salary grades exist confirm that, i.e., all Engineer IIs are paid x ± y% within a given company.

McDonnell Douglas was famous for doing something that supports this back in the 70s. Every May, they would send out HR recruiters to do campus interviews, apparently without any input from the engineering departments. One June, we got "assigned" a seemingly good BSCS. major from USC. The only problem was that we were doing semiconductor fab, and couldn't possibly keep a programmer from getting bored out of their skull. So, McD agree to find a different home for this person, and assigned us a BSEE from UC Berkeley, with GPA > 4.0. But, as it turns out, they had the all the ambitions and drive of a lump on a log. So, obviously, McD seemingly felt that a BSEE was a BSEE, and our engineering needs and requirements were irrelevant.

TTFN
faq731-376

Need help writing a question or understanding a reply? forum1529

 

[1gibson]

1Gibson I would only lose my best people to better pay if someone was prepared to pay them that amount, in which case that would be what they were worth.

Ajack,
So if someone else was willing to pay them more, then that is what the employee is worth.
You are willing to pay employees what they are worth, the employer is just as interchangeable to you as the employees?

If I worked for you and figured that out, I'd interview, email you the highest offer, and ask if you would be matching it for the current pay period, or if it would have to wait for the next one. I guess the trick is not letting your employees figure out your system.

If you don't assign any value to a stable team, and don't assign any cost to training new employees, then it all seems to add up. No system is perfect, but those are some big holes.

 

[ajack1]

1gibson everything has a worth and it is what someone is prepared to pay for it, you learn that pretty quickly if you run a business. That is the same if you are employing someone, negotiating a contract or buying a commodity.

What something or someone is worth to me will not be the same as they are worth to someone else. If I have a contract and you have a specific skill I need you become very valuable to me, if you are the best in the world but I have no need for the skill set you offer or cannot get in a contract that requires that you have less or no value to me, in a business sense.

Of course things like a stable team and training come into the equation as well as loyalty and many other things but only up to a point a business still needs to make money and nothing can cost more than it generates, well okay some things can, but overall they cannot.

If I am bidding on a contract I put in a price someone will decide what I am offering is worth that price or not. If I am looking at employing someone I will make them an offer they will decide if they want to work for that. If someone I offer a job to says I want more than that I will decide if they are worth that to me. If I go and buy a house I will put in an offer and someone will accept it or not, it has nothing to do with the cost of building the house or what they paid for it, it is all down to how much I want it and how much they want to sell it.

Everything is worth what someone is prepared to pay for it.

 

[1gibson]

I understand what you are saying, I was just trying to translate here.

Your position is that people are only worth what you pay them when they hire on. You both agreed to it, why should it ever change? That can't be very good for retention unless you have "standard" raises that are significantly higher than COL. Maybe it isn't an issue if you only hire experienced people who can immediately jump in and take care of business. In that case, your strategy is basically "I can hire anyone to come in and do this at fair market rates" so it would indicate that you do consider employees to be a commodity.

I'm not arguing that it is good or bad, just that everything about your position points to employees being interchangeable.

 

[MacGyverS2000]

Ideally, a person gains experience the longer they work in their field. Yes, a contract was made in the beginning for the employee's "worth", and if they were stagnant, than a COL raise would be acceptable... this might hold true for blue-collar jobs, like someone who loads steel plate into a press and stabs a button to mold it, but it certainly doesn't hold true for engineers who are continually pushing the boundaries of their knowledge and able to implement shortcuts they've learned along the way. Any raise above the COL is based upon the new "worth" of the "improved" employee.

Dan - Owner

http://www.Hi-TecDesigns.com

 

[ajack1]

1gibson it really isn’t that black or white. When you take someone on you have both agreed a price however the worth will change more often than the agreed price. There will be times when you make handsomely from them and there will be times when it costs money to have them in your employment. Basically if you make well over a period of time they become more valuable and you try to reflect that in what they earn. If they are costing you money over a period of time they need to go or be paid less.

One of the hardest decisions is when to let good people go, both in a business sense you don’t want to lose good people and as a person it is horrible to have to make someone redundant when you know it will cause them hardship. However the flip side is you are probably saving other peoples jobs by doing this. If you just keep paying more than someone is worth the company goes broke.

I really don’t think it is easy to just replace someone, in fact I know it is not. That doesn’t however change the fact that they cannot dictate conditions to you. People will always leave no matter how much you try to make their working conditions the best you can, people have road accidents and heart attacks or sometimes will leave to be in a different location or to do something they have always dreamt of, the company still needs to function whoever leaves, so in that respect people are commodities.

The COL rise is interesting, it has pretty much been a given and each generation has been better off than the last for a good while now. I think that may have come to an end, but that is probably another subject.