In my previous post I described how to make an additional $10,000 in 2017. For freelancers, the combination of “charge more” and “work more” is pretty easy. For employees and contractors, however, it might be a bit trickier since most people have a hard time asking for money – or at least asking for it in the right way.
So how about getting a raise without asking for one?
This was one of my favorite (and, regretfully, most secret) techniques from my days as an employee and contractor.
Instead of asking, “May I have more money, please?” or (even more cringeworthy) stating “I think I’m worth x”, the correct question is “What do I need to do to be worth x?”.
There are several important aspects of that question. The first is that it comes ahead of the increase. You’re asking your manager to help you align with the organization in such a way that you’ll be worth x. This should be a manager’s dream – you’re making it easy to manage you, and in a proactive way.
Next, notice that x can be whatever you like. I once got a 50% raise with this technique and my manager was happy to give it to me. Don’t get me wrong, it wasn’t a handout – I had to develop solutions to a couple of very difficult problems to be worth it, but that’s where the beauty lies. By posing the question this way, and up front, you quickly enter a space of discovering and defining value that’s starts with mutual agreement and completely bypasses the need to negotiate.
Another important aspect to this question is that you may get the response, “We’ll never be able to pay you that”. The manager I had at my very first salaried job had to deliver that message. To her credit, she delivered it proactively (I was WAY too immature to ask for a raise well – she simply got in front of the issue before it ever came up) by telling me, “This organization will never need all that you can do. Get as good as you can before you leave, because we’ll never be able to pay you what you’re worth simply because we can’t consume what you do.” That response, while somewhat disappointing, is incredibly valuable information. An appropriate reply (and FAR more appropriate than my reply) is “Then what is the maximum I can be worth here and how do I get there?” It’s also a sign that it’s probably time to start looking elsewhere.
Lastly, there’s an even better technique than what I’ve described. It’s actually more of a super-charged version, which is why I presented the other one first. That technique is to bring suggestions for value along with your ask. That’s what I did for the 50% pop mentioned before. I took the “what can I do to be worth x” and turned it into “would it be worth x if I solve y and z?” You see, at that point you’re doing part of your manager’s job for them and that’s incredibly valuable.
The final point I’d like to make is that you have to deliver. It’s not enough to ask where the value is, you are committing to deliver on it. Don’t go asking how to get to x and then reply with, “Yeah, I don’t want to do that”. Only ask if you’re looking to grow and looking to stretch yourself.
So, look around and identify some of the opportunities which almost certainly surround you. Talk to your manager in your 1-on-1 to set a goal. Make a plan, check in during your 1-on-1s and quarterly reviews – the next thing you know you’ll be making what you want.
No 1-on-1s or quarterly review? Oy, well we’ll discuss managing your manager next time.
As you look to 2017, you can pretty easily add $10,000 to your income. Here’s the math:
$10,000 = $5/hr more than your current hourly rate. (divide your salary by 2,000 for a quick hourly rate)
If you’re making $20 – $25 per hour, then you need between 400 and 500 extra hours next year. This is 8 to 10 extra hours per week. An extra hour per day, plus 3 – 5 hours on Saturday morning will do it. Not only that, but the extra time you put in should move you up to a mid-level freelancer.
If you’re making $30 – $50 per hour, then you need between 200 and 350 extra hours next year. This is 4 to 7 extra hours per week. An extra hour per day Monday -Thursday and a few hours on Saturday will do it.
If you’re making $50 – $100 per hour, then you need between 100 and 170 extra hours next year. This is 2 to 4 extra hours per week.
If you’re making more than $100 per hour, chances are that you’ve built a system of work where adding more time isn’t going to move your income needle enough to offset the loss of free time and big thoughts.
The lesson here is twofold: first, the extra money is easily within grasp if you spread out the effort through the whole year. Secondly, working on your value (aka your rate) will give you more leverage than simply throwing additional hours into work. If you’re early in your career then put in the time, collect the extra money, invest in yourself, and learn as much as you can. By accelerating your experience with the extra time, you’ll hit mid and senior levels earlier and find compounded returns later in your career.
2011 was a big year for me and since it represented a lot of what it means to be a Big Swinging anything I felt a post was in order. To be clear, “big” doesn’t always mean “good”. 2011 was rough. The startup that I had been working on for months vaporized in a matter of days. I had the worst job of my development career. I had clients who didn’t pay for months. At the other end of the spectrum, I got to work a lot with one of the most talented developers I know. I got coached by the most successful person I know. Finally, I ended the year with an ideal client portfolio which should set up 2012 to be even bigger, and definitely better, than 2011. Here are some things that I learned.
Give As Much As You Can, Then Stop
The year started with me wrapping up a contract that I had been on for more than a year and jumping back into the startup world. I had been working on the startup during off-hours for a couple of months and had picked up some great new skills (MongoDB, IronPython, ASP.NET MVC 3, etc.) I had negotiated my ideal combination of great salary and good equity stake and was ready to work on the company full-time. I had no problem working for free for several months and paying some travel expenses because I really wanted to make the deal happen. Then, it all unravelled in the course of a few days. The partner on the business side decided that the salary I was asking was too high. This was months after I thought we had agreed and after this partner had told our only investor that he wasn’t needed. In the past, I probably would have compromised to make it work since I had already invested a bunch of time and effort, but I’ve matured since then. The combination of recognizing sunk costs and having an unwavering requirement that I trust my partners led me to withdraw. It was hard (and somewhat scary) to abandon the path that I had committed myself to for many months, but I had given all that I was willing to and once I was asked for more it was time for me to stop. Since I had set a “if I don’t have signed paperwork by this date then I’m out” deadline, it was clear that it was time for me to leave even though it wasn’t easy. Know what you’re willing to give, but be honest enough about it that if you’re asked for more then you stop.
It’s Hypocritical To Not Get An Outside Perspective
After leaving the startup path, I needed to figure out what was next. Quickly. The nervousness of not having work lined up really drove me. Crazy. The problem with being both driven and crazy at the same time is that you thrash. You end up expending incredible amounts of effort for near-zero progress . . . or worse. I was fortunate in that one of my business partners is an incredible coach and he made it clear that we needed to talk. I don’t remember anything we discussed during the hour except him saying, “With options comes power.” My problem was less about not knowing what to do and more about *needing* to do something. I took his overall advice of “get a few clients who will pay so you’re not dependent on any of them” and started working on my client portfolio. After I got things back on track I realized how hypocritical it was for me to not seek an outside perspective from the beginning: That’s a big part of what I sell!
Find Enough Clients Who Can Pay
For the rest of my career, I am likely to have at least 2 clients. An ideal number for now is 3 or 4, but it takes at least 2 in order to have options, and therefore power. One of my clients is a startup and startups sometimes run out of money. There’s a big difference between a client who is unwilling to pay and a client who is unable to pay. If they’re unwilling to pay, the relationship has probably been destroyed and things quickly turn into strictly business decisions. If a client is unable to pay, however, things are a little different. It is in the nature of startups to reach beyond their grasp and sometimes they fall. I happen to really like this particular client so I checked in with them once a month, but never in a mean or threatening manner. Because I had other clients who *could* (and did) pay, I had the option of waiting. It took a good 3 or 4 months, but they raised another round of funding, sent me a check, and we’re back to working together. If I had been demanding or unpleasant during their inability to pay, we probably wouldn’t be working together now AND it wouldn’t have changed the fact that they couldn’t pay. If you have enough clients who can pay, you have the option of working with some who may not . . . and they’re often the most enjoyable.
The Happiest People I Know Are Where They Put Themselves
I read a lot of blogs and talk to a lot of people about their work and their lives. One thing that really crystallized this year is that people who are in a place intentionally are much happier than those who have “ended up” someplace. And it’s not just the rich ones who started something that became big, it’s also the folks who decided what they wanted to do with their lives and set themselves up around that. This is sort of an extension or evolution of, “Do what you love and the money will follow” because I think that that phrase needs a bit of updating. I’ve seen plenty of people who love technology or software development, but are f’ing miserable because they’re in a situation not entirely of their choosing. Chances are you know someone like this. He liked computers and software and learned to code. He found a job somewhere because he needed a job and things were somewhere between fine and great in the beginning. Over time, he got worn down by the company environment until he ended up with a position he would have never consciously chosen. But he’s stuck. He’s afraid to go somewhere else and now he’s just kind of “ended up” doing what he’s doing. Contrast that with someone who has created her own position to do work she enjoys, even if it doesn’t pay a lot (as long as it’s “enough”). She’s invested in making things work. She’s set up her work to integrate with her life. And she has options. If things don’t work the way she thought, she can always redesign and renegotiate the position. She’s there by choice and since she chooses to do what’s she’s doing she’s better at it and happier overall. When I find myself in a job because I need it, it’s not very long until it starts to wear on me. When I’m working on a project that I helped create, however, I’m committed to it and energized by it. I’m not suggesting that choosing your work is the answer to all your problems or the one true path to happiness, but I have observed (and lived) that people who consciously choose their work are happier than those who don’t.
There are almost no advantages to being the son of a world renowned economist. One thing that keeps it from being a total wash, however, is that I got introduced to the concept of optionality at an early age. I honestly don’t remember when I became aware of it, although I can remember thinking the term “synthetic puts” sounded cool when I was 12 or so. Even though I didn’t understand the underlying math until much later, I grew up with at least a subconscious realization that the ability to choose was worth something.
In my early 20s, I started trading stock options online.
I was horrible at it.
I was buying options, which meant I was paying someone for the ability to make a choice.
I was in my early 20s, which meant that I made really bad choices.
So there I was, paying someone to let me make bad choices. I stopped in my mid 20s after I grew tired of losing money. The concept of optionality stuck with me, however, and I’ve incorporated it into my approach to both software and clients.
On the software side, this often means decoupling. I don’t favor decoupling because it’s cool, I favor it because I’m wrong a lot and want to be able to fix my mistakes as quickly and easily as possible. Decoupling gives you options because it reduces the impact of changes, meaning that you can make more changes. Particularly in business software (and espectially in large enterprise systems), you can bet that change is coming. Requirements change. Systems that need to be integrated change. Business processes change. If your system can keep up with this change, it's a lot more valuable than one that can't.
On the client side, I sell a wide array of options and clients like it even if they don’t realize that that's what it is. Instead of saying, “Here’s the deal: You pay me X and I’ll deliver Y” I almost always offer choices. The actual choices aren't important here, the important thing is that no matter what they choose the work they need will get done. Sometimes that means paying for my own hardware, software, hosting, etc. Other times it means travelling to be on-site with them or their clients. The point is, that by offering them the option(s) to do things their way, I get to charge a premium over someone who simply sells billable hours sitting in front of a screen.
If you can provide optionality that's valuable, you can sell it and collect the premium.
As a bookend to the previous mention of options trading, I returned to it recently for a bit (now in my mid-to-late 30s) and did pretty well. The difference? Instead of buying options, I sold them through credit spreads since I now realize that my value is in providing optionality rather than using it.