Being Reactive with Compensation Requests and Concerns

Problem

"I had a person on my team who had arrived a year ago. She started as an intern and spent six months with us doing a very good job. We decided to offer her a nearly full-time position but with quite a low salary. The reason being that she was still studying and still had a class project to complete, thereby, allowing her to only work four days a week with us at the company as an engineer and giving her one day a week to work on her project. However, several weeks after our agreement she came to me and asked me for a full-time job, five days a week, but with a market average salary that she thought she deserved. I was surprised at her request, especially given the short amount of time that had passed since our last agreement, and told her I would have to think about it. She really brought a lot of value to the team and it was nice having her around, but still, we had agreed on something just a month and a half prior. It didn't feel right to me. She came back to me a couple more times asking what I had thought, looking for an answer. I didn't have one. Later she met with me again and said she had found another job with a very good salary and that she would be leaving the company the following week. I had to decide whether to let her go or come up with a new offer."

Actions taken

"When she initially asked me for the full-time job I told her that I would have to discuss it with my partners. This took a little bit of time. We were in the process of closing the budget, dealing with accounts, and having all the common discussions with investors. When she approached me again, I told her that we were still in the process of defining the budget and that I could not make a decision without that finalized budget. It wasn't until she informed me that she would be leaving that I went straight to my partners and discussed with them the young, smart, and talented engineer that we could potentially be losing. We came back with an offer which was way below the market and 8k below her other offer. I did not consider the effect of this low proposal because I was in the mindset that I just needed to propose an offer to her immediately. She found our offer insulting and so at the end of the day we proposed something close to what the other company had offered her. She had built a strong relationship with the team and took pride in the company, so she said yes."

Lessons learned

"I think that if we had taken the initiative right away, when she first told us that she wanted to go full-time, the negotiation would have been completely different. We had been thinking too much about the budget, about the company, about what we wanted to do next and about all these big issues that needed to be taken care of. Instead, we should have been more reactive to her request and proposed something straight away. I learned that if someone is of value and is doing good work then you should listen, try and take care of them, and be quick in your response, not only when it pertains to salary but also other conditions as well. I also believe we didn't think of the repercussions of delaying our response. I think if we were more reactive this team member would have appreciated what we offered her and would have been thankful for us to propose something quickly and that showed her importance to the team. As an alternative, I think our delayed offer that we gave is something that she is taking for granted because she had been offered better elsewhere, even though our final offer was really good. In the end, I think that it ended up costing us more than what we would have paid if we would had been more reactive."