Contract to Hire - Negotiate the Full-time Offer? 2

[NewCTH]

Hello all,

I'm currently in (what I think is) a unique position for myself. I'll give some background. I graduated with a mechanical engineering degree 3 years ago. It took me a few months to gain employment, but I worked for an EPC Oil and Gas company for approximately 2 years up until June in which I started being courted by a new company (via a headhunter). I was unhappy with my current position so I took the interview and eventually received an offer. The offer was for a contract-to-hire position at another EPC company and I was able to choose any contract time from 3 months to 12 months. I opted for 6 months to get my to January 1st of the new year so I could begin benefits at the start of the year and in the meantime realize a higher hourly (this was actually recomended by the company I'm contracted to - I'm currently receiving $38/hr).

Knowing that the position isn't permanent and nothing is garaunteed at the end, I made it a priority to accept as many responsibilities as possible and to make my value to the company known.
-There are two mechanical engineers here other than me. There are also two software packages that we utilize frequently and each of them know one of the packages. I've taken it upon myself to learn both softwares to the best of my ability so that I'm now the person in the office that they each ask questions to regarding both packages.

-The other mechanicals excel at client-to-engineer relations. They've been at the company longer so they both have broader networks of potential clients, so I've been working to widen my network and to start marketting myself. From this, I've become a point of contact for a couple clients and have already starting proposing on jobs and been awarded work for the company.

-I've begun to re-learn CAD software. A major bottleneck in our office is the designing/drafting of projects. We are actively pursuing new drafters - so I don't worry about being pidgeonholed here - but I'm certainly helping to smooth the interface between the two parties by being capable of picking up my own redlines.

-My technical abilities have increased drastically in the last few months of being here. My previous job had me working on non-technical project work for thebetter part of 2 years. Although I had the title of mechanical enginer, I certainly wasn't practicing it. So coming in to this new company I was essentially coming in as a "new-grad", with a small amount industry knowledge. Now I feel as though I'm much more prepared to function as an engineer.


My question is: When it comes time to discuss full-time positions in the following months, what is the protocol for negotiating? My feelings are that the contract-to-hire system is a two-way street: They get to test my capabilities and I get to try a new job with minimal strings attached. Am I wrong here? I really do enjoy the job and the people I work with, so I'm eager to accept a position, but at the same time, I feel that I provide a much higher value to the office than before I accepted the contract position. I'd essentially be coming in to the company as a new employee that they would not have to train (or worry about my value), and also as an engineer who exceeds expectations. How hard should I press for increased compensation? Is it unethical to expect evaluation at my current point of hire (January 1st rather than my level in June) since this company is the one who did all of my training?

Anyone have experience with this situation?

Thanks in advance!

 

[IRstuff]

"Is it unethical to expect evaluation at my current point of hire (January 1st rather than my level in June) since this company is the one who did all of my training?"

I don't think there's even a remote wisp of "unethical." It really ought not be any different than if you came in off the street and interviewed in January for a position. However, you need to do some analysis to determine whether your current wages are a fair compensation for a full-time employee at your level, which is still pretty much a starting engineer. The company may consider actually reducing your pay, assuming that they provide benefits heretofore unavailable to your current position. $79k is not that unreasonable, but given your perception of your improvement and accomplishments over the 6-month contract, it wouldn't be that different than a mid-year raise opportunity. Have you gotten feedback from your management as to whether they got more than they expected?

TTFN
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Of course I can. I can do anything. I can do absolutely anything. I'm an expert!

 

[NewCTH]

It's been mentioned to me several times that they are VERY interested in bringing me on full-time and that I "should not worry about an offer coming and to plan accordingly." I've also received several really nice reviews since working here (some I was supposed to hear and others that I've heard through the grapevine).

You are correct. My current compensation is approximately $79,000/yr if I work all 2040 hours, but with no benefits (no 401k, insurance, PTO, etc...), so I've been told that I should expect my salary to be lower. I would tend to agree that 1 to 1 - my salary starting in June, between contract or full-time salaried, that the salaried position would be lower. At this point though, I would expect them to be at least more similar due to the gain in experience and proven value to the employer.

I suppose I'll know more once I actually receive an offer and can negotiate from there. I just didn't know if I should have some sort of loyalty to the company. I've learned a lot from working here. Partially from my own self-determination, but also from their training and mentoring. I'd say at this point both parties have gained a lot from each other.

Thanks for your input IRstuff!

 

[miningman]

None of us get what we deserve... we get what we negotiate. Go for it but be carefull not to overplay your hand

 

[IRstuff]

"I just didn't know if I should have some sort of loyalty to the company."

There should be some, but not to the detriment of yourself or your career. Certainly, you could stay on as a "permanent" employee for another 6 months or a year to bulk up your resume, assuming you don't have anything better to switch to. There's a "quid pro quo" inherent in a salaried position, so they've gotten a fair deal in the amount of work you've put it.

TTFN
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[GHartmann]

There are a number of factors to consider. First is that if you are being paid a rate of $38 per hour, the ultimate employer will be paying your "agency" 10 to 15 % more.

I saw a simplified rule of thumb to convert salary to hourly rate (you can reverse the process). Take the annual salary and divide by 2000. Then add 15% to cover the benefits. Example: for $100,000 per year the equivalent contract rate is $57.50 per hour.

The other aspect is if you are getting the $38 as a consultant 1099 fee or as W2 wages. There is a higher difference for the 1099 wages.

As for negotiating this is tricky. I once negotiated myself right out of a job offer.

For your situation an offer may not be negotiable. Are you working with a contract agency? If so they could steer you in the right direction. They may receive some compensation for converting you from contract to permanent (a form of fee paid for bringing in a candidate).

As far as being loyal, you have to decide whether the offer is fair (it more than likely will be) and whether you are happy there (you seem to be). One thing to consider is that the company will make an offer according to its own salary structure. They won't pay you more than someone they have on board with say 2 years experience.

Depending on your geographic location your salary seems to be appropriate for your level of experience. There are all types of places on the internet to find salary surveys.

Good luck.

G.Hartmann
BS ChE NC State University

 

[MacGyverS2000]

Your final employer is paying the agency 80-100% more than your current salary (I'm not sure where Hartmann got his 10-15% range). The employer loses their ability to call the agency up and tell them to no longer send you in, but they gain a decrease in out-of-pocket expenses because the agency is no longer a middle-man (even after benefits are added in) and hopefully more employee stability (but that's debatable).

Dan - Owner

http://www.Hi-TecDesigns.com

 

[kingnero]

I've worked through middle-men before as a consultant, and know/heard of situations where both ranges above (10/15 % and 80/100 %) were accurate.
Most are somewhere in the middle. But it's going to be hard to find out the exact amount.

Your best best is, but this is only my $0.02, to ask your boss what he is paying now for you, and go from there. Your mileage might vary of course.
As said before, no harm in negotiating, but don't overplay your hand. Even though I don't know you, I doubt you're unique in your abilities. And I certainly don't mean that in a negative way.

 

[davidinindy]

I also once negotiated my way out of a job...
Chances are the employer doesn't see half of what you see in yourself.
My current position, they pretty much gave me the same salary as I got from the recruiting agency, but added benefits. Essentially giving me a raise as a full time employee.
Tread lightly... It's still an employers market. There are a lot of people that will take your job for much less pay.

David
Check out my professional profile and connect with me on LinkedIn.

http://lnkd.in/fY7-QK

 

[CivilEngAus]

2.5 years experience and on 79k contract rate. I think you are already doing well and any full time offer (with benefits) is going to be significantly lower (sub 65k) than that 79k figure you are on currently.

 

[miningman]

CivilengAus... carefull with statements like that........ we don't know where the OP is geographically and where I'm at we are paying new graduates $70k+ excellent benefit package

 

[NewCTH]

I'm located in the Midwest (very broad answer), but yes, my current compensation is well within (or above) the average for the area. That said - I'm not really willing to settle for average.

I really appreciate all of the responses. I like the idea of asking for what my boss is currently paying (with the inclusion of the contractors bill rate) to get a starting point for where I'd like to be.

Thanks everyone!

 

[GHartmann]

I don't know that your boss, HR, or anyone in your organization is going to tell you what they are paying the employment agency. Most of this type information your company will want to keep confidential.

Because you are already "on board" (even as a contract employee) you really don't have much leverage to negotiate as if you were coming from "outside" the company.

The offer may be the "offer" (take it or leave it). You can label yourself as "ungrateful" if you then start negotiating.

You have seen a number of opinions in this thread. My strong suggestion is to tread lightly.

 

[davidinindy]

Asking what they are currently paying the is most certainly going to get you a "None of your #$^*% business type reply.
I am in the midwest also, not that it matters. Most of the companies I (and many friends in the industry) have applied and/or worked for pretty much have a "take it or leave it" attitude. There are more engineers than jobs, so they can pay what they want.
As has been said alreaady. Tread lightly...
Let us know how it goes, for sure.


David
Check out my professional profile and connect with me on LinkedIn.

http://lnkd.in/fY7-QK

 

[CivilEngAus]

" CivilengAus... carefull with statements like that........ we don't know where the OP is geographically and where I'm at we are paying new graduates $70k+ excellent benefit package"

The mining industry and salary packages is not comparable to the civil industry. Anyone paying 70k+ for a graduate civil engineer (remote FIFO work excluded) is paying too much.

 

[CivilEngAus]

"I'm located in the Midwest (very broad answer), but yes, my current compensation is well within (or above) the average for the area. That said - I'm not really willing to settle for average."

If it is already above the average then your employer will also know this and is unlikely to go much higher.

"I like the idea of asking for what my boss is currently paying (with the inclusion of the contractors bill rate) to get a starting point for where I'd like to be. "

They aren't going to pay more than the contract rate was costing them total.

Do let us know how it works out for you though.

 

[MacGyverS2000]

NOTE: If you expect more than the average in pay, you had better be a better-than-average employee.

It's easy for the more green employee to consider themselves to be "better than average", but from the top-down view of the manager, the grass may be a somewhat different color (especially if his bonus is tied to your salary... cue Snorgy and the MBA dancers). Maybe you are one of those folks, but you had better be sure about that...

Dan - Owner

http://www.Hi-TecDesigns.com