How NOT to get a Salary Increase!
There are effective and ineffective ways of getting a salary increase. Unfortunately, for a Wells Fargo worker employee, Tyrel Oates, he has likely chosen the wrong way.
Oates emailed both Wells Fargo company head, John Stumpf, and 200,000 of his colleagues, to propose spending $3bn per year of Wells Fargo’s money on giving every employee a $10,000 pay raise.
This email subsequently went viral on Twitter and Reddit.
The fate of Oates is yet to be seen, as Stumpf has currently not responded to the email (as of 15th October 2014). However, there are certainly lessons to be learned from Oates’ actions about effective and ineffective ways of getting a salary increase.
So Where did Tyrel Oates Go Wrong?
1) Not understanding Risk Reward
Oates is not the owner of Wells Fargo, and clearly doesn’t understand the concept of Risk-Reward.
The joy of being an employee is that there is basically no risk. Job security aside, as an employee, you’re guaranteed a pay cheque at the end of the month. You can enjoy your fixed working hours, and your evenings and weekends.
Business owners often don’t have that luxury. In fact, starting a business almost certainly means risking all of your money – plus the additional debt-, not getting paid any money – while still having to pay your employees – and having to work very long hours, seven days a week.
The flip side of the coin, though, is that the employer gets to decide how much employees will get paid, based on market values. In other words, the employer has a certain amount of control and power. What is more, the employer will likely make a substantial amount more money than their employees not only from an eventually higher salary, but also from healthy dividends paid out at a lower tax rate.
The employer deserves this financial reward, because they took the risk.
Oates fails to appreciate this, because he seems to be evaluating the quantity work that he and his employer do, rather than considering the blood, sweat and tears that went into making Wells Fargo into the large, profitable company that it now is (nevertheless, below we discuss the role that employees play in company growth).The simple argument to anyone that criticises wealthy business owners is ‘if it’s so easy, you do it’.
2) The Same Applies to Investors
There are many parallels with business owners and investors. While being a business owner is considerably harder work than being an investor, investors also take financial risks – often for substantially higher amounts of money than even the business owner. Additionally, these investors have limited control over what happens to their money, other than significant shareholders, which further increases the risk. Despite their investment, there is no guarantee of a financial return.
More importantly, public businesses have a legal obligation to make as large a profit as they can. If paying employees higher salaries should increase company profits, then a company can legally do this. However, a public company cannot increase salaries just because it wants to be kind. This may be unethical, but it’s the law.
3) Return on Investment
If Oates is equating what someone should get paid based on how much they work, then this is a flawed belief.
One’s salary should be based on Return on Investment (ROI). One day’s work by a business owner or a senior manager could generate more money for a company than an entire year’s worth of work for an average employee. As such, it is only fair that the owner/manager gets paid more money than the average employee, regardless of hours worked.
ROI is NOT about how hard you work, how long you’ve worked for the company, or how many hours you work. That’s just perceived entitlement. Instead, it’s about how much money you make for the company (versus how much you cost). One could easily argue that Oates’ actions have harmed his ROI.
When Oates states that all employees should get paid an extra $10,000, he is clearly acting illogically. Can he – or has he – prove that all 200,000 employees are worth that exact same additional amount? How can he? Everyone’s roles, abilities, and experience give them greatly varying impact on ROI. Maybe some people deserve more than $10,000. Maybe some deserve to lose their jobs. Does Oates know all 200,000 employees well enough to decide that?
4) Putting Faith and Focus on the Wrong People
Without question, the greatest mistake that Oates has made is sticking his neck on the line for 200,000 people that he doesn’t know and who never asked for his help.
No matter what they say, people hate change. It’s sad, but true. So, the average Joe Bloggs will not risk losing their jobs because of the benevolent actions of a fellow employee who has their best interests at heart.
The kind of change that Oates is trying to bring about, i.e. a company-wide salary increase, requires a collective effort by the vast majority of the employees. It requires 200,000 heads on blocks, not one.
Oates is very naive to think or even hope that people will support him. If he succeeds, sure people will be thankful. Yet, if he loses his job, you won’t hear a peep out of a single employee (cue ‘silent street / wind blowing’ audio), not even those that he considers close colleagues. 99% of the time, people’s selfish interests will destroy any notion of collective job action.
Effective Ways of Getting a Salary Increase
1) Don’t Just Think About Yourself!
Think about you AND your employer. Show some empathy (even if your employer normally doesn’t). You may think you deserve a certain amount of money, but what does your employer get in return?
This comes back to the Return on Investment issue mentioned above.
Too many employees fall into the trap of looking purely at quantity (i.e. time invested) or past performance, but not enough at quality or current or future performance. By this, I mean that an employer will equate your previous efforts with the pay you received for that. In other words, you can’t expect to earn more money for the same results. Your employer is going to want something more from you.
Seems unfair? Think about your employer, not yourself.
2) Sell Yourself
It is painful to see how so many employees expect their employer to notice how good they are. They demonstrate this in their body language and in their resumes.
I = Nothing Special (but I’m secretly hoping you’ll see through this and recognise my hidden qualities). Wake up. It’s not going to happen.
To sell yourself requires self esteem, i.e. believing you’re worth something.
What are you worth? Why? What makes you special?
Some people may say they are special, but can’t explain why. They can’t give you examples. It’s all airy-fairy.
Selling yourself is about QUANTITY + QUALITY. It’s about how much and how well.
For example, in a resume, don’t say that you’ve worked in your industry for ’10 years’. Who cares?! For all your potential employer knows, you might have been useless at your job for 10 years. You have to talk about quality, too.
For those of you that appreciate grammar, think adjectives + adverbs, not just verbs and nouns.
‘Surpassed sales targets throughout 5-year employment’
Ideally, think numbers.
‘Surpassed sales targets by up to 20% throughout 5-year employment’
3) Invest in yourself
Education is a great way to boost your perceived value. Work on a masters degree and/or attend specialised training courses. If you want your employer to pay for this education/training, don’t get greedy; don’t expect a salary increase AND free education.
If your employer pays for your education, allow time for you to prove that the investment was a worthwhile one. This is your responsibility, of course. You’ll also be proving that you’re not just getting a free education and running off to another company.
If you pay for your own education, you can use this to show your dedication to improving yourself and your value to your company. Nevertheless, YOU have to dot the T’s and cross the I’s. Show how this education/training will add value to you and the company. And, ideally, prove it.
However much it pains some people to hear this, investing in yourself also means spending money to look, dress and act the part. If you want to be treated as a quality employee, look like one, dress like one, and act like one.
4) Give your employer justification to pay you more
Returning to point 2 about investors, your employer has a job to maximise profits. If an employer is to pay you more money, you need to show how that investment will lead to the company making more money.
Ensure that you do points 1 to 3 above. In addition, try to be someone that everyone likes from the lowest to the highest rungs of the company. Being a talented A-hole will only get you so far before someone becomes determined enough to get rid of you.
Embarrassing your employer with a viral email probably won’t have the desired result.
5) Change Job
Or at least have a back-up job in case you fail.
Ultimately, it is very common for employers to label you as being a certain level of employee. If you enter in a junior role, getting into a senior position will always be very challenging, because… well… you’re the office junior. This label will always have an influence over your pay, too, especially if you work for a private company with hidden salary information.
If your employer won’t recognise you for anything higher than the role and pay you started with a long time ago, then you can very easily free yourself from such labels and limitations by changing to another company. With a fresh and professional resume designed for the higher position you want, your future employer will accept you for who you are (or who you want to be) and you can anticipate a salary increase more inline with what you deserve. Don’t lie, though.
Knowing that you have an alternative job means you have nothing to lose. This will give your self esteem a boost, and make your arguments about what you’re worth more credibility. Don’t threaten your employer with quitting, though. Whatever happens, you want to leave your job on the best possible terms that you can.
You can read more about the Wells Fargo email incident at the BBC: http://www.bbc.com/news/blogs-trending-29620944