Author Topic: What is a reasonable entry-level 401k match?  (Read 20135 times)

zurich78

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Re: What is a reasonable entry-level 401k match?
« Reply #50 on: March 07, 2015, 04:29:06 PM »
I don't think your post replies to the point I was making. I obviously agree that your salary history is irrelevant to what you are worth in some abstract sense. However, the question of whether you should disclose that information is a very different question, and it is that question I have been addressing in my posts.

If you believe that disclosing your salary history is shrewd negotiation strategy, that is fine. I have no vested interest in dissuading you of that notion. In fact, if anything, it helps me for you to be getting less money than you otherwise could, because it means higher profits for the corporations employing you, and to the extent I am a part-owner of those corporations, I am earning more money as well.

Successful negotiators do not get what they ask for very often. If you are getting what you ask for, you are probably not asking for enough.

Let me ask you this though: Do you think disclosing your salary history can help you, or do you merely think it's neutral? If you merely think it's neutral, why take an unnecessary risk by using that strategy? If you actually think it helps you, I'd be interested to know your explanation of how it does so.

I never said it was shrewd negotiating strategy.  And when I said I had disclosed them in the past, it was because I was required to do so as part of my online application submission.

I wouldn't volunteer that information at all because it is irrelevant.  As irrelevant as the class I dropped in college.  But if asked, I'd have no problem revealing my salary history (or the class I dropped).  It will have no bearing on what it would cost a company to retain me.

If I was selling a car for FMv of say $10K, and a buyer found out I got it for $100 from my uncle, does that mean I should sell it to him for $2K?  That information has no bearing what I want to get in return for the car.

Now let me ask you.  If you had an opening for a minimum wage position and a candidate you liked disclosed that he/she was currently making $60K, how much would you pay him/her?  Minimum wage right?

I get what you're saying.  It's no coincedence that many of the offers where I disclosed salary started just a bit higher than my recent pay.  But i'm saying it didn't matter.  The end point was always the same and that's what really matters.
« Last Edit: March 07, 2015, 04:49:35 PM by zurich78 »

a1smith

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Re: What is a reasonable entry-level 401k match?
« Reply #51 on: March 07, 2015, 04:55:08 PM »
A comment for your next job application - the best time to have negotiated the salary was on the phone when HR and your prospective manager called you.  They were probably typing up the offer letter at that time and called you to find out if $55K was going to work.  You mentioned it was a generous offer so they mailed you the offer for you to sign.

netskyblue

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Re: What is a reasonable entry-level 401k match?
« Reply #52 on: March 07, 2015, 05:13:46 PM »
It may happen that a prospective employer is considering you and another person for the position to be filled.   They like both of you equally well.  You disclose that you made $63,500 at your last/current job.  The other person tells them that they made $47,900 at their last job. 

If the employer thinks EITHER of you can do the job equally well, and they liked both of you, it's in their best interest to offer the other person $53,000.  THAT'S why they want your numbers.

Or maybe they haven't even gotten to the point of interviewing you.  They first interview the guy who made $47,900 and liked him, so why even bother going through the time of interviewing someone who's likely to cost them more money?

a1smith

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Re: What is a reasonable entry-level 401k match?
« Reply #53 on: March 07, 2015, 05:46:09 PM »
At work we are required by HR to interview at least three candidates for any position that is available.  So, there is always at least two other people vying for the position.

zurich78

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Re: What is a reasonable entry-level 401k match?
« Reply #54 on: March 07, 2015, 05:56:09 PM »
It may happen that a prospective employer is considering you and another person for the position to be filled.   They like both of you equally well.  You disclose that you made $63,500 at your last/current job.  The other person tells them that they made $47,900 at their last job. 

If the employer thinks EITHER of you can do the job equally well, and they liked both of you, it's in their best interest to offer the other person $53,000.  THAT'S why they want your numbers.

Or maybe they haven't even gotten to the point of interviewing you.  They first interview the guy who made $47,900 and liked him, so why even bother going through the time of interviewing someone who's likely to cost them more money?

I don't think that's why.  Plus, the hiring manager is the one who makes the decision so he will want to present an offer to the best candidate.  HR just sets the limit on how much he/she is allowed to retain a candidate for.

Frankly, I think it's a myth that companies want to lowball people.  I've worked for some of the biggest brands in the world, and they have all want to pay the least amount of money that keeps turnover low, not the least amount of money they can get away with.

a1smith

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Re: What is a reasonable entry-level 401k match?
« Reply #55 on: March 07, 2015, 06:21:06 PM »
Frankly, I think it's a myth that companies want to lowball people.  I've worked for some of the biggest brands in the world, and they have all want to pay the least amount of money that keeps turnover low, not the least amount of money they can get away with.

I agree. Any company that lowballs learns quickly that the new employee figures it out eventually and moves on.  This increases their hiring costs, disrupts projects, etc.  Overall, it's a money loser for the company.  Where I work, they benchmark about a dozen other companies to make sure they are paying market rates (not too little, and not too much either).

ender

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Re: What is a reasonable entry-level 401k match?
« Reply #56 on: March 07, 2015, 07:20:49 PM »
Frankly, I think it's a myth that companies want to lowball people.  I've worked for some of the biggest brands in the world, and they have all want to pay the least amount of money that keeps turnover low, not the least amount of money they can get away with.

I agree. Any company that lowballs learns quickly that the new employee figures it out eventually and moves on.  This increases their hiring costs, disrupts projects, etc.  Overall, it's a money loser for the company.  Where I work, they benchmark about a dozen other companies to make sure they are paying market rates (not too little, and not too much either).

This is exactly what I would consider lowballing.

"What's the absolute lowest amount of money we can pay to prevent people from leaving us?"


Hey It's Me

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Re: What is a reasonable entry-level 401k match?
« Reply #57 on: March 07, 2015, 08:36:41 PM »
You can't negotiate a 401(k) match - that's beyond the scope of power that any one HR manager has, and is standardized across the firm. (In other words, deviations from the plan must occur as amendments to the entire plan, and for everyone enrolled.)

My firm provides a 25% match of all of my contributions, (so effectively a $4,500 employer match when I max this year). Because I have a pretty low base salary, this represents roughly a 10% match, subject to a 4-year vesting period.

NathanDrake

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Re: What is a reasonable entry-level 401k match?
« Reply #58 on: March 07, 2015, 09:53:50 PM »
It's just the psychology of it. If somebody tells you they currently earn $100,000 per year, as an employer you will be much less likely to consider paying them $1,000,000 per year, because the $100,000 figure has implanted itself into your mind as a rough ballpark of what they are worth. If the candidate insists on $1,000,000, you're more likely to just walk away rather than consider offering it.

Now, in the context of lower paying jobs, there is typically a budgeted range for the position and no matter how expertly you negotiate, you can only get something within that range, so you might not be that prejudiced by the past salary disclosure. However, in the context of higher paying jobs, the budget is basically unlimited so disclosing prejudicial information can make it harder to get what you want.

Another way of looking at this is that disclosing your salary history quantifies your leverage. If your tell the prospective employer, "I won't accept unless you offer $1,000,000", they are simply not going to believe you if you are currently paid only $100,000. But if they believe you are currently being paid $900,000, they will think you have more leverage and might take you more at face value.

How are you negotiating that high of raises for each job switch? This doesn't seem realistic...100% raise from starting salary is what a fully experienced person at my company could expect to make after many years.

Perhaps you can do this if your starting salary is low, but eventually you'll plateau unless you own your own business and have the ability to grow it.

a1smith

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Re: What is a reasonable entry-level 401k match?
« Reply #59 on: March 07, 2015, 10:10:44 PM »
Frankly, I think it's a myth that companies want to lowball people.  I've worked for some of the biggest brands in the world, and they have all want to pay the least amount of money that keeps turnover low, not the least amount of money they can get away with.

I agree. Any company that lowballs learns quickly that the new employee figures it out eventually and moves on.  This increases their hiring costs, disrupts projects, etc.  Overall, it's a money loser for the company.  Where I work, they benchmark about a dozen other companies to make sure they are paying market rates (not too little, and not too much either).

This is exactly what I would consider lowballing.

"What's the absolute lowest amount of money we can pay to prevent people from leaving us?"

I think maybe it is just a matter of semantics.  The market rates I mentioned are efficient labor market rates.  The prevailing market rate will settle at the fair value.  I don't know if I would define it as you have.  I am happy with my pay and benefits; I think I am being fairly compensated.

With the huge number of salary surveys that you can find online now it isn't really possible for companies to lowball employees; at least employees who are staying on top of their market value.

NathanDrake

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Re: What is a reasonable entry-level 401k match?
« Reply #60 on: March 07, 2015, 10:20:18 PM »
I never said that the most highly compensated people are only paid 100% of starting salary positions. Only that for any given position, there are certain salary bands that are developed by HR. These bands can be quite large, but they don't span anywhere near 100% of a given starting salary. For those in typical careers, such as a nurse, accountant, doctor, engineer, lawyer, etc. The odds of just switching jobs for 100% raises seems completely unrealistic. Those salary bands stagger with each level, and generally are maybe 10-20% higher from the previous promotion/position level.



I'm a red panda

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Re: What is a reasonable entry-level 401k match?
« Reply #61 on: March 09, 2015, 09:51:25 AM »
A very smart co-worker of mine once asked me "if you find someone worthy of hiring and you really want to work with that person, why wouldn't you make the very best offer that you can?" 

I've interviewed at two companies that I later found out paid their recruiters bonuses based on how LOW they could get qualified candidates to accept salaries.  (i.e., the bonus was only paid out after the new hire completed their 6 month probation period.)

I'm glad I didn't take jobs at these companies, as I think this is a horrible way to treat your employees.
« Last Edit: March 09, 2015, 09:53:47 AM by iowajes »

nobody123

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Re: What is a reasonable entry-level 401k match?
« Reply #62 on: March 09, 2015, 10:30:53 AM »
I've interviewed at two companies that I later found out paid their recruiters bonuses based on how LOW they could get qualified candidates to accept salaries.  (i.e., the bonus was only paid out after the new hire completed their 6 month probation period.)

I'm glad I didn't take jobs at these companies, as I think this is a horrible way to treat your employees.

Why wouldn't that be so?  Assuming a candidate is qualified and deemed to be a good fit, why wouldn't you try to minimize their salary?  I would be much more worried working for a company that is throwing around money, threatening profitability.

I think in general, most companies assume they are going to have to pay market rate for a new hire.  Frankly, I would be concerned as to why a qualified candidate would accept anything less.

RexualChocolate

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Re: What is a reasonable entry-level 401k match?
« Reply #63 on: March 09, 2015, 10:53:48 AM »
For "front office" jobs (anything client facing or product producing) you obviously want the best people. Minimizing expenses not always the motive.

For "cost center" or "back office" jobs (HR like in the example, audit) there is a much higher incentive to minimize expenses.

Obviously plenty of exceptions, this is just the general rule. For jobs you need a warm body in, you want to pay the least possible that won't get you sued. For ones that are producing revenue, you want to maximize the reward even if it means the expenses go up.

Agreed that giving the future employer your previous numbers only helps them, but are you going to pass up an opportunity due to it? It irritates me as well, but its becoming common practice.


cranilation

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Re: What is a reasonable entry-level 401k match?
« Reply #64 on: March 09, 2015, 11:53:03 AM »
A comment for your next job application - the best time to have negotiated the salary was on the phone when HR and your prospective manager called you.  They were probably typing up the offer letter at that time and called you to find out if $55K was going to work.  You mentioned it was a generous offer so they mailed you the offer for you to sign.

I very much hope that that is not the case.  During the call, they said that everything was open for negotiation and that I should talk to my spouse about it and think it over.  So, fingers crossed.

MrMoogle

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Re: What is a reasonable entry-level 401k match?
« Reply #65 on: March 09, 2015, 03:45:47 PM »
A comment for your next job application - the best time to have negotiated the salary was on the phone when HR and your prospective manager called you.  They were probably typing up the offer letter at that time and called you to find out if $55K was going to work.  You mentioned it was a generous offer so they mailed you the offer for you to sign.

I very much hope that that is not the case.  During the call, they said that everything was open for negotiation and that I should talk to my spouse about it and think it over.  So, fingers crossed.

Yes that's a good time to start negotiating, but $55k isn't your whole compensation.  You need all the details that come with the offer letter to valuate the offer.  You need to look at the whole package before determining whether 55k is acceptable or not.

cranilation

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Re: What is a reasonable entry-level 401k match?
« Reply #66 on: March 10, 2015, 06:42:49 AM »
well, it worked!  Thanks again everyone!  Job starts in a few weeks... and then you all get to field all sorts of questions like "what about 401(j)?" etc :p

ioseftavi

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Re: What is a reasonable entry-level 401k match?
« Reply #67 on: March 10, 2015, 07:01:12 AM »
well, it worked!  Thanks again everyone!  Job starts in a few weeks... and then you all get to field all sorts of questions like "what about 401(j)?" etc :p

HINT THIS IS WHERE YOU TELL US WHAT FIGURE YOU SETTLED ON AND HOW IT WENT.  By "it worked" I assume you got the job, but what figure - did they go for 60k plus the 1k signing bonus?

MrMoogle

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Re: What is a reasonable entry-level 401k match?
« Reply #68 on: March 10, 2015, 01:28:16 PM »
Congrats!!!

cranilation

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Re: What is a reasonable entry-level 401k match?
« Reply #69 on: March 10, 2015, 04:17:33 PM »
haha ioseftavi, yes i got 60k.  the 1k bonus is to be determined - they said "the relocation expense should cover that" but I'm not going to push it for just 1k.  Next job, though, I'll do things right, from the start.

ioseftavi

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Re: What is a reasonable entry-level 401k match?
« Reply #70 on: March 10, 2015, 09:10:15 PM »
haha ioseftavi, yes i got 60k.  the 1k bonus is to be determined - they said "the relocation expense should cover that" but I'm not going to push it for just 1k.  Next job, though, I'll do things right, from the start.

Congratulations dude!  Well done on revamping your offer, and good on you for getting the extra $5k!  Now go and kick some ass!

MooseOutFront

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Re: What is a reasonable entry-level 401k match?
« Reply #71 on: March 11, 2015, 07:12:32 AM »
Great job here cran!  You were about to send an epic email to HR.  Haha it would have been remembered for sure.

I admire your ability to learn on the fly and implement some good advice immediately to your benefit.

ShoulderThingThatGoesUp

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Re: What is a reasonable entry-level 401k match?
« Reply #72 on: March 11, 2015, 07:13:43 AM »
Congratulations!