Why I Negotiated For A Pay Cut

Pay CutWhat do you do?

“I’m the Vice President for two financial companies.”

Do you like it?

“Yeah, it’s…”

Both answers are lies to a degree. I am not my job and given the opportunity I would be doing something else. Yet we say these things to make small talk function. In order to generally feel good about nodding along with acquaintances while the other person shrugs and speaks.

My name is Eli and it is true that I have held the title of “Vice President.” Yet that certainly is not what I do or who I am. So much so, as you might have guessed by the article’s title, that I recently negotiated for a pay cut.

Considering today’s uncertain economic times, why would anyone do such a thing? Well that’s a good question and I’m glad you asked. If you’d be kind enough to stick around I’ll field an answer.

First my negotiation; with the exception of my employer not actually being named “employer” here is the actual verbiage of my pay cut proposal:

“[Employer]

As you know, I’m coming upon one year of employment at your firm – during which time you have been both reasonable and fair. Usually this is about the point where an astute employee would figure to negotiate for a pay raise. They would emphasize their skills and how they’ve progressed, the value they add and goals achieved, along with the justified compensation range of their peers – the whole lot. While I certainly believe all those things apply to me and more, I’d like to take a slightly different approach. Here’s my proposal:

76% of my current salary in exchange for all Mondays and Fridays off, commencing presently

Vacation days remain the same

Now I should underscore that this request comes from neither discontent nor recklessness. Rather, life is finite and I simply want to try my hand at a variety of endeavors. One undertaking will be to begin a blog, but most of my future happenings are not yet known.

I believe this arrangement will allow for solid productivity while simultaneously offering a lower fixed cost outflow for you and your business. More specifically, there is considerable research that suggests output does not diminish commensurately with attendance. On the business front, a lower salary would enable even greater budgetary flexibility for your firm.

I appreciate your consideration and look forward to your response.

Thank you,”

Now I’m not necessarily a Robert Frost devotee, but I was hopeful that this pay cut proposal would make all the difference (negotiating for a pay cut is the path less traveled by and it’s made all the difference and all that jazz).

So did I loathe my job and simply felt compelled to reduce my time there? Not really. It wasn’t about hating my job. Incidentally – depending on how you feel about free golf and unlimited ham samples – it’s been the best occupation of the 10 or so income producing opportunities I’ve had. Plus the prospects were solid: above average salary, vacation, bonus, a subject matter I enjoyed, benefits, the works.

Yet nobody reads about the guy who spends 40 years in an office and retires comfortably. Or even the over achiever that “just” works 20 years for that matter. (Where’s the circus training and base jumping?) Sure it’s the “safe” route, but it might be the larger sacrifice. If the work doesn’t drive you, then the apparent “security” turns into handcuffs. What you’re ensuring is not only a future but more aptly you’re securing yourself away from adventure, unknown, opportunity, passion and freedom.

Admittedly it’s not for everyone, but it’d be a shame if you “died with your music still in you;” with a song still to be sung – and all because your office chair had a cushy back.

It’s not as if I wanted to sleep until noon 4 days a week or eat cereal in my PJ’s while watching the Price is Right. (Ok, so the second one could happen on occasion) The real reason is that I want to take advantage of the most important resource I have – time. Which, incidentally, gives me the opportunity to contribute to this website and write to you lovely folks.

Now a common argument that I expect to hear is that I’m “leaving money on the table.” That – especially at such a young age – I’m foolishly tossing aside the immense compounding runway (time to invest) that sits before me. Yet that’s always true.

Throughout your life you’re always “leaving money on the table.” If you didn’t see a coupon in your local newspaper. If you buy the brand name instead of the generic. If you choose to eat at Chipotle over Taco Bell. (Or for that matter if you choose Taco Bell over making plain white rice at home.) In each instance you’re “leaving money on the table.” You’re making a conscience decision to trade more money than is necessary for something that goes beyond your bare requirements.

In reality you’re just trading one thing for another; an additional piece of cotton (money) for something you want. When I choose to buy Chipotle (CMG) over Taco Bell (YUM) I’m simply trading a few extra dollars for what I perceive to be a better meal. Sure, I could go with Taco Bell, have a meal and save a buck or two. For that matter I could always cook at home. Yet I’m willing to make that trade – dollars for delicious – a day or two per week and frequently twice on Sundays. Similarly, the same holds true with trading more time for a pay cut – it’s simply a recharacterization of wants.

Whether today, next decade or in 35 years, once you stop (or slow down) employment you are always “leaving money on the table.” The point isn’t to work until your fatality; seeing how much cash your urn would fit. Rather the point is to achieve enough – both in a financial and personal sense. The end game isn’t the largest number you can think of, it’s the freedom to do what you please.

Further, I would contend that the usefulness of money decreases as you obtain more of it. In fact, depending upon your situation, more money could actually be a hindrance if you exchange it for too much time or use it to buy too many trinkets to keep track of.

For me, the decision to propose a pay cut in exchange for more discretionary time all came down to this single Benjamin Franklin quote: “some people die at 25 and aren’t buried until 75.” I wasn’t ready to settle before trying my hand at a variety of endeavors.

So what was my employer’s response?

They said “no.”

They said I was too valuable and they weren’t looking for me to work less or get paid less. Indeed, they indicated that eventually they would like to pay me more and had no interest in discovering my capabilities as a well-rested, multi-faceted citizen.

So what did I do? I thought about the bigger risk and responded. Then I considered the possibility that my reading audience would enjoy a good cliff hanger and said: “stay tuned for my next post to find out my decision.”

18 thoughts on “Why I Negotiated For A Pay Cut

  • July 28, 2014 at 2:51 pm
    Permalink

    Eli,

    Good stuff. I couldn’t agree more. Life is full of trade-offs, but none of which are more commonly misunderstood or just generally accepted as money for time. And it’s rather unfortunate. People truly don’t understand how valuable or finite time is until it’s almost gone.

    Perspective is difficult to achieve and maintain at a young age. Maybe we’re old souls. I don’t know. But I do know that life is way too short and valuable to be spent toiling away in an office when life is meant to be lived.

    I know I’m 1,000% happier now writing for a living and making 50% less than before. I get to see my family more, spend time with my little baby niece, inspire others, research businesses on my schedule, and generally do what I want. I actually just got back from a jog because the weather was nice and cool and…well…I felt like it.

    Get busy living, or get busy dying.

    Looking forward to part two, though I already know the conclusion. :)

    Best wishes!

    Reply
    • July 29, 2014 at 6:16 pm
      Permalink

      Thanks for your comment and kind words, Jason. I definitely agree. Prices are quoted in the same nominal dollars terms, but rarely do they “cost” each person the same amount. We often trade our most precious resource – time – without considering the effort or benefits associated with it.

      Without giving too much away, I think your transition to writing is a great one and truly believe that it will lead to a better path.

      Thanks for stopping by and I hope to see you commenting regularly. :)

      Reply
  • Pingback: If I Can't Figure It Out In A Decade... | The Currency Of Time

  • August 5, 2014 at 11:43 am
    Permalink

    I have to tell you, life is way to freaking short. I’ve had a number of jobs over the years and for the longest time, I allowed myself to be defined by my job. I worked for Coca-Cola and there were times when it was the best job in the world. We had a great salary, great perks, a new company vehicle every two years, company trip incentives, stock options, etc. etc. If you cut me, I bled Coca-Cola.

    But, I was a real s**t as a human being. My personal life was a disaster. I was a first class schmuck. Then a company downsizing came and they decided that they really didn’t need me anymore. Hey, what about all the moves I made for the company? What about all the awards? What about all the turn-arounds that I engineered? What about all the sacrifices I made for the company?

    They really didn’t give a crap. To them, I was just a replaceable asset that had, in someone’s mind, become a liability. To old. To connected. To independent.

    I sent out a ton of resumes to bottlers and couldn’t seem to get a nibble. My wife suggested that perhaps God wanted me someplace other than soft drinks. I told her that I new more people at Coke than God did. The only offer I got was from a guy at church who sold cars. So in desperation I took the job. First month, I sold more cars than anyone at the shop and had no clue as to what the hell I was doing. The owner, Joe Bullard, was probably the best human being I’ve ever met in my life. He valued people, family, God.

    What I learned is that it doesn’t matter what you do for a living. What matters is why you do it. We all live and we all die. What you do in between those two events is what makes your live one “worth living.” It’s how you relate to others. What kind of a husband and father you are. How you reach out to lend a helping hand to others who are less fortunate.

    It also is about living dreams. Jumping out of a perfectly good airplane with a parachute. Fishing for Tarpon on the Tampa Bay flats. Coaching young men who are playing football and teaching them life lessons about “team.” Putting together a bucket list and crossing things off as you do them. Sharing that with someone you love more than yourself. Laughing at disaster and crying with success.

    Follow your dreams. Don’t allow someone else’s dreams to replace yours. As Tom Cruise said in a movie, “Sometimes you have to say, “What the f**k?”

    Dave

    Reply
    • August 5, 2014 at 12:17 pm
      Permalink

      Dave, thanks for stopping by!

      Your story is a great one. I really like that middle of quote: “What I learned is that it doesn’t matter what you do for a living. What matters is why you do it.”

      Incidentally, I have an article idea that precisely relates to your “jumping out of a perfectly good airplane” analogy. Sometimes the plane doesn’t take you to where you want to go I guess.

      I believe the Tom Cruise movie is “Risky Business” and a line that followed was: “wtf gives you freedom, freedom brings opportunity, opportunity makes your future.” (Although I haven’t seen the movie :))

      I appreciate your comment and hope to see you around my new website!

      Eli

      Reply
  • August 6, 2014 at 12:27 am
    Permalink

    I couldn’t agree with you more. As a professional actor, I have spent a lifetime sacrificing financial security in order to do a job that I love more than anything. I wouldn’t change it at all. Looking forward to part 2.

    Reply
  • August 14, 2014 at 1:44 am
    Permalink

    The old phrase, “time is money,” seems to resonate with this article. It’s very true that most people do not realize the true value of time and simply trade it for dollars. Actually, they trade time and heartache and lot of other “crap” for money. While money can afford you a nice lifestyle it cannot afford more time, no matter how much of it you have. If we all valued time a little more than money we’d all be much happier content people. Thanks for sharing this perspective.

    Reply
    • August 14, 2014 at 8:19 am
      Permalink

      Hi, DivHut thanks for stopping by! You got it. Actually so much so that the phrase “time is money” is included on my Start Here page.

      I think purchasing decisions would be a lot different if we paid in time rather than dollars. It’s easy to cast aside a piece of paper or electronic figure, but lost time is something often regretted. Thanks for sharing your comment.

      Reply
  • Pingback: How To Figure Out When You Can Quit

  • August 21, 2014 at 10:59 pm
    Permalink

    Hi Eli

    I must say I disagree with the statement that you were actually asking for a pay-cut.
    In absolute terms maybe, however you were still asking to be paid more for your time that you were spending at the business in question.

    Work 60% of the time for 76% of the money, so an effective 16% pay rise, if i was your employer I would be turning that down as well. If we accept that time is money, the employer would now be paying much more for time than they were previously.

    Reply
    • August 21, 2014 at 11:43 pm
      Permalink

      Hi James, thanks for your comment. However, there are at least four mitigating factors related to your sentiment.

      First, the proposal was just a starting point – a number with which to begin the dialogue. Having fully expected intermediate common ground it would have been imprudent on my part to propose both an absolute and hourly cut. For instance, if I had opened with 60%, perhaps a counter might have been 50%. From there it would have been pretty difficult to get back to 60%. With negotiation it’s rarely the case you can begin where you want to end.

      The second point relates to the timing of the situation. Coming upon an anniversary, it wouldn’t have been out of line to seek a pay raise. As mentioned, the proposal was not firm stance; rather it was merely a place to begin the conversation. Had it ended at say 63% that wouldn’t have been unreasonable.

      The third factor relates to my added knowledge and leads into the final consideration. It might be true that it could have been an hourly raise. Yet, in view of experience gained, this does factor in productivity. As an employee gains experience, but gets paid the same, the employer is gaining additional output per measure while the employee has no such equal gain. That is, employers consistency gain as employees develop yet employees’ compensation is only irregularly adjusted.

      Finally, it should be underscored that while I was asking for less money, I wasn’t necessarily asking for less work. I proposed being there for 3 days a week, but fully expected to provide solid output. Previously I had come in before what was required and often left late as well – I would have done what it took to accomplish the needed goals. Specifically, instead of 60% time it very well could have been 76% or 80% time (for that matter 100%). More pertinently, as stated in the proposal, output does not decline commensurately with attendance. That is, my employer could have “had their cake and eaten it too.” They could have had similar output with a lower cash outflow, not to mention a better rested and presumably more rounded employee.

      Reply
  • December 1, 2014 at 1:45 pm
    Permalink

    Eli a cliffhanger, genius ok OK you have a strong writing style the cliffhanger made me laugh.

    I also appreciate your rebuttal to James . you can’t start negotiations at your goal. You have to leave room for the give and take. Though I thought the same sneaky way to get a raise hahah . well off to check out the conclusion. I guess I have to work on my story line right now I’m the slightly less common road but not a full out adventure.

    Reply
    • December 2, 2014 at 10:38 am
      Permalink

      Thanks roamer, I truly appreciate it. I wholeheartedly agree. Negotiation implies give and take: starting too low is unquestionably a larger error than starting too high. I hope the conclusion doesn’t disappoint. All the best.

      Reply
  • Pingback: Liebster Award - The Currency Of Time

  • March 30, 2015 at 1:51 pm
    Permalink

    I need to go find what your decision was. I plan to do something very similar in 2016, asking for every Friday off. And then the year after that I am going to ask to be able to work remotely for 3 months out of the year in addition to every Friday off.

    In 2018 I want to be completely location independent.

    I don’t know what I will do if they say no. But I am going to make it very hard for them to say no.

    Cheers!

    Reply
    • March 30, 2015 at 5:22 pm
      Permalink

      Hey Gen Y, luckily the decision is now only a click away :) Incidentally, I had a similar ideology when I was negotiating as you presently do, but it didn’t happen quite as I expected. My only advice is to be ready for a variety of outcomes. Additionally, there are a lot of great resources out there working towards your goal. The book “The 4-Hour Workweek” comes to mind. I hope reach your goal. Cheers!

      Reply
  • Pingback: April 2015 - Content Curation - Gen Y Finance Guy

Leave a Reply

Your email address will not be published. Required fields are marked *