The other option the employer left out was some of the low- or non-cost benefits that could have been thrown in…a better office, extra pto, etc.

Bob’s response misses the point and makes a profound ethical error. If the VP says that the company will only pay the market salary to an outsider rather than their own employee whose ability and loyalty they already know.
The company is saying to the outsider “the laborer is worth his hire” but is denying that hire to their own employee.

To say “As things stand, we can’t do better”, is an outright lie and will be spotted as such by the employeee who will think if not reply, “Not true, you’ve already told me that if you’d gone outside you would have paid more. And while its nice to be in a position with a new compensation range and a higher ceiling, receiving, for the same level of performance a higher raise than you’d receive in your current position, the brutal fact remains that the outsider, because he or she would have started at a higher salary would receive higher raises for arguably the same performance level.

Any company caught paying below market better start paying market or it will face an exodus of its best people and demoralization of the rest.

I sure wish ethics was as simple a subject as people say it is. To me, this is a profoundly gray situation. Consider:

The company appears to be trying to preserve every job it can. It didn’t, after all, hire from the outside at the higher rate. Instead it promoted from inside, saving money in the process. That doesn’t strike me as unethical.

Mr. Cunningham advises the employee to try to get the maximum right now, which most likely would mean another employee would get less, nothing at all, a cut, or laid off.

Ethical? Only by a very strange view of the discipline.

“As things stand we can’t do better” is only a lie if the company would cheerfully spend more to hire from the outside. It hasn’t done that yet, so its only lapse of ethics depends on an assumption regarding its behavior in the road not taken.

Accusing a company of an ethical lapse because of what it didn’t do but might have done is, I’d say, a peculiar way to evaluate such things.

“‘As things stand we can’t do better’ is only a lie if the company would cheerfully spend more to hire from the outside. It hasn’t done that yet, so its only lapse of ethics depends on an assumption regarding its behavior in the road not taken.”

That’s an interesting bit of sophistry Bob – from a business perspective, why would the company go through the costly hiring process and pay more money when they have a perfectly qualified candidate already who they believe will take less? That they would ‘cheerfully spend more’ is not at issue, the question is *would* they pay for a more expensive candidate if the current one did not accept the offer, cheerfully or grudgingly. If they would, their statement is both unethical and probably foolish from a business perspective.

I agree your initial response was more tactful than the original, but it amounts to asking the candidate to accept less now for some promise of future benefit – and not even benefit equivalent to what the total market value for that period would be, as Tim points out above. If I were confident in my value, I might ask for something in writing with guarantees of specific ranges and time periods if the manager gave me that line. But that same confidence would force me to look around to see if a better opportunity to realize that value exists.

The company is taking a business risk with your approach – if the market really is paying that amount, they are essentially betting on other factors to keep the in-house candidate from leaving. If the in-house candidate leaves, they will not only have to pay the market rate for the replacement, there is time lost in the hiring process, time lost for the new candidate to get acclimated, and the real risk that the new candidate is less effective than the original, or just doesn’t work out altogether.

Perhaps they would have made a calculated risk based on what they know of the candidate, perhaps not. Perhaps they really don’t think the candidate is as valuable as someone off the street, and are hoping to recoup extra training costs with the money they’d save by an outside job search. Perhaps they’ve done the ROI and found the return insufficient at this time to justify the additional expense of a higher salary in return for the work that role would provide. But any of those responses is more honest than what you said initially.

For what it’s worth, I think your intentions are good Bob, to try to find a mid-point that both the candidate and employer could agree on. I even agree it could have been ethical, if it was true that the manager believed the company wouldn’t pay for a more expensive person internal or external. But forgive me for being a bit skeptical, given the other likely possibilities. And whether ethical or not, it still seems like a pretty short-sighted and potentially costly position to take.

So with that, let me offer up the candidate’s appropriate response to yours:
“I see your point of view, but I believe I can show you how my efforts now will provide you with the return you need much faster than hiring an equivalent candidate off the street. If I can show you how that additional speed to market would more than pay for the difference in my salary, as well as greatly lower the overall risk of return, would you agree it would be worth the additional cost?”

A manager worth *their* salary will jump on that opportunity. Or maybe a savvy manager would even take the initiative and ask the candidate to justify their amount before they try to close the door on the discussion.

Nick, Your book is on it’s way to my home. Love your reasoning and concepts. I want to help people find career paths that will best suit their situation, goals and needs. You are so right to promote the idea of “what can the company do for me.” , especially with experienced, qualified people. Too many companies out there today only see what is in it for the company without regard for the lives and families of its employees. My goal is to help people avoid that type of employer by getting answers to these real life situations before they take on a new position. And to help with questions to ask the manager in a way that will not blow the interview and still weed out the companies that just “chew up & spit out” so to say, their employees. Thank you, you are helping untold millions take their stand to make changes to better their lives.

@Scott: Two excellent points in your post.

First, the cost of hiring must include the cost of leaving a position empty or filled by a newbie who requires a learning curve. Assuming the internal and external candidates are equal (for sake of discussion), the economics are pretty clear. A smart internal candidate will use that logic. Which brings us to…

Second, your “How to Say It” is perfect and bears repeating: “I see your point of view, but I believe I can show you how my efforts now will provide you with the return you need much faster than hiring an equivalent candidate off the street. If I can show you how that additional speed to market would more than pay for the difference in my salary, as well as greatly lower the overall risk of return, would you agree it would be worth the additional cost?”

I tell this to job hunters all the time. Don’t ask for more money unless you are prepared to show how you will produce more money. Pay for yourself. Nice going.