Unreasonable expectations???

[jetmaker]

All,

I am currently a contract engineer, employed in a skill which is in high demand at present. I am considering a direct position with my current employer, but their offer in terms of salary seems to undervalue my ability.

Currently I am being paid 53% more than what their salary offer is. There are benefits and some other perks associated with being direct, but it does not add up (even close) to the difference in contract pay.

It is not the amount of money itself which is the issue, rather I feel it seems to undervalue my worth to the company (I was expecting about 15% higher than the offer). Additionally, according to their internal salary charts, they have me below what they deem as the market rate by about 10%. I know my work is good and I contribute well to the company as my managers are all happy with my work.

I'd like to hear from others as to what their take on this situation is. How would you feel if this were an offer provided to you?

Thanks.

jetmaker

 

[ivymike]

I'd counter.

 

[Twoballcane]

I think the diffecnec is that they now have to pay for your healthcare and liability insurance and so forth. Before you worked as a contractor, you were responsible for that. Why don't you just stay as a contractor?

Tobalcane
"If you avoid failure, you also avoid success."

 

[ash9144]

You would be surprised how much insurance, 401k, other benefits adds up. 50% additional to your hourly rate seems same ball park as numbers I've seen before.

If you feel they are valuing below fair market value, then interview some other places and see what they offer. If it is in line with what you think you should get then yes your current employer is low balling.

Usually the benefit for you is insurance and stability. The benefit for the company is fixed cost versus variable and reduced overtime usually.

If you just want to maximize cash earned stay a contractor.

 

[TheTick]

If you are contract, they are probably paying your contract house about 1.75x your hourly rate. Based on that, there is no reason to accept an equivalent lower rate with the "benefits smokescreen" reasoning.

I am a perennial contract creature. I pay my own insurance and have my own IRA, etc. Not easily snowed by offers of benefits. I know what mine are worth, since I pay for them myself.

I've gone contract-to-direct three times. Never taken a downward step in pay in the process.

 

[IRstuff]

Certainly, if you think that you're being undervalued by 15% you should counter to reflect a more equitable valuation. That almost seems like a straight negotiation ploy on their part. You counter at slightly above your desire, and eventually, you'll get close to even.

Beyond that, I wouldn't think there's much to get excited about. The company should always try to get a good deal, as should you. Had they offered 30% more, would you have given back 15%?


TTFN

FAQ731-376

 

[30osk]

My employer generously breaks down their benefits costs to ensure that I am aware of their investment in me. According to them, they invest an an additional 28% of my base salary in benefits, but I assume it would cost me more than that to purchase the same benefits on my own.

 

[salmon2]

28% percent of base? That is a good data point, but I guess it will depend on the employee age.

 

[TheTick]

My oversimplified take on contract-to-direct...

More money means they place value on your skills and consider you a great catch worth luring. they are actively seeking to attract and keep you.

[!]Less money[/!] means they have an empty square on the org cart and a budget to keep. You are not truly valued. What's attractive about less money?

Nothing says more about what a person or company values than what they are willing to spend money on.

For where your treasure is, there your heart will be also.

 

[jetmaker]

All,

Thanks for your inputs. I was planning on countering with a 20% bump and then if they don't come up to the 15%, I'll stay contract.

I agree with Tick and 30osk in that benefits, at least what I accounted for are about 25-30% more on my salary. But also, there is the premium that the company pays to my contract house (typically 30-40% in my industry), basically paying the vacation and company portion of the social security/medicare payments plus the salary and profits of the contact house.

As previously said, the money is not everthing, as a direct exempt from overtime pay, I can not recoup the amount lost in the overtime hours. But I would gladly trade that money for more time with my family.

I think Tick really has nailed my feelings on this offer. If they truely consider me a valuable asset, then the salary offer should have been more in line with the contract pay (less 20-30%) IMO. Salary negotiation is no different than buying a car or house or service... everybody wants the best deal for them...


jetmaker

 

[mechmama]

My perspective is from the other side of the fence. I make in the $40/hr range. Contract engineers in my industry w/ my experience make $70 or more, w/ per diem if not local, and w/ paid OT (which I don't have). One day, Mr. Boss was discussing one of the contractor's rates with me, and said it should be ~ 30% more than a salaried guy. It was 70% high, but guess what, no raises for us salaried people. Based just on $/hr, this guy was making much more than even my boss, who reports to the VP directly. If you can tolerate the risk of lay-offs and relocating, stick with contract. You'll never get what you're worth as a full-timer. The flip-side is if your industry has a crash, you will also get paid what you're worth as a contractor, which is $0, when there's no work. I got to sit around collecting my middle-of-the-road salary till the work picked back up. (Personally, the contractors still got the better deal).

 

[Kinsrow]

In my experience, when the industry crash they get rid of the contract first. few months after that, they kill the salary people if the work don't pick up. When the work picks up, the contract gets in first then the salary people to follow. This depends on the industries. In the new product development this doesn't happend much, but in the design and manufactuing, I've seen this happening many times, both in my current and past employment. We are "at will" both in getting in and out.

 

[IRstuff]

I think you're confusing "worth" with the offer. Your "worth" is tangible to the people you do the work for, but they're often not the ones putting out the offer.

TTFN

FAQ731-376