Tuesday, July 10, 2007

Opening Offers, Counteroffers, and a Tip for the Newbies

At my cc, some terms simply don't get used. Some are the predictable grad school-ish buzzwords: “counterhegemonic,” say, or “problematic (used as a noun).” But others are more pedestrian: “surplus,” “abundance,” “counteroffer,” “merit raise.”

We don't do counteroffers or merit raises. Salaries rise for the just and the unjust alike.

In some ways, it's a great system. I don't have the agonizing decisions about whom to alienate, and we're spared all manner of really dreary conversations. Raises are negotiated at union contract time, and that's that. From the union's perspective, it's good for solidarity, and it ensures that a pinhead manager can do only so much damage. (More cynically, it also protects the employees who carry the least weight.) From the college's perspective, it makes budgeting relatively straightforward, and it allows us to redirect energy from invidious distinctions – however merited – to efforts to improve the college as a whole.

But there's a nasty little catch.

If a new hire doesn't play relative hardball at the moment of first hire, that's it. Once you're tracked, you're tracked. If your starting salary is, say, 3k lower than it could have been, that difference will never – never – be made up as long as you're here. If anything, it will slowly compound. If you do a just-good-enough-not-to-get-fired job, you'll get your contractual raise; if you routinely walk on water, same raise.

I've seen other systems, and there's something to be said for them. Some do a pure merit system, wherein everything is up for grabs at any moment. I'll admit even I find that a little scary, since a single bonehead chair or dean could screw up a department for years in one fell swoop. Some divide the salaries into a “cost of living” increment that everybody gets, and a “merit” increment on top of that to be distributed by performance. That strikes me as much more reasonable, since nobody gets left completely in the cold, but there's still an incentive not to retire on the job. Some do across-the-board raises, but have a separate pool of money for counteroffers.

Counteroffers are offers you make to incumbent employees not to leave when someone else is trying to hire them. The market logic of them is clear, even if the morality (rewarding disloyalty) is a bit off. The idea is that somebody's market price can only be assessed by actual offers – once an actual offer has been made, you can either counteroffer or say goodbye. Those who aren't good enough (or aggressive enough, or disloyal enough) to solicit outside offers don't need extra enticements to stay.

I've read that once somebody accepts a counteroffer and stays, the median length of subsequent stay is 18 months. That makes sense to me intuitively. Generally, you don't look if you're satisfied; looking is a sign that something is wrong. Unless money is the only issue, which is seldom the case, then after the glow of the raise wears off, you're still dissatisfied. Honestly, one of my prouder moments as a manager occurred at Proprietary U, where I had a wonderful professor – and a friend – who was desperately unhappy there. He complained repeatedly about how unfairly he was treated, about how the institution was beneath his Ivy League Ph.D., and so on. I made him an offer: if he put a sock in it for a while and stayed on his good behavior, I'd give him every glowing reference he wanted. In return for not being a pain in my neck, I'd help him escape. He accepted, I held up my end of the deal, and he was gone for greener pastures within the year. I got a good, low-maintenance year out of him, and he got a job he actually wanted. It was better for everybody, even though part of me was sad to see him go.

I'd rather go with an internal merit system than a counteroffer system, given the choice. Better to reward loyalty and institutional service than really aggressive job-searching.

But I'd almost rather have either than a pure same-raises-for-all system. Given the dramatic mismatch between our starting salaries and the cost of housing in the area, I don't have any tools at my disposal with which I can say to a prospective hire, “yes, the opening salary is low, but we'll bring you up in a few years.” The salary will go up in modest increments and no more.

I can imagine an obvious retort -- “so raise the opening offers, dummy!” -- but neither the budget nor the union would allow it. To the union, 'salary compression' is unfair to incumbent employees, who are, after all, the union's constituency. And the degree to which we'd have to increase our opening offers to come within range of local house prices is simply prohibitive, even if we were to tough it out with the union.

It's frustrating. To my mind, hiring well is one of the best things we can do to position the college for the long term. But it's hard to hire well when the best you can offer is not just low, but fated to remain low for the foreseeable future. We can't go back and “correct” lowball hires, and we can't raise the floor now to go over the heads of the lower-paid incumbents. We can't even hold out the hope that outstanding performance will be recognized financially. We can highlight the various other benefits of the job, which are real and desirable, but which don't pay the rent or the mortgage.

My tip for the newbies: if the college doesn't do merit raises, go for broke on the opening offer. If you don't, you'll never stop paying for it.