Image for post
Image for post

50. The Brad Pitt model for negotiating wages

I hire people from time to time. I’ve begun giving them four numbers that they need to tell me. I don’t ask for their Nazi number. ;-)

The numbers are pretty simple, but make the whole employer/employee dance a lot nicer and more nuanced.

So I’ve written it down, and since I’ve recently learned to do things using canva.com’s Infographic template, I’ve done that here as well!

It’s in PDF here.

But how does this benefit the employee at all? Won’t an employer always go for the lowest salary? Not in my experience. Here are some thoughts on why this approach benefits both employer and employee.

There’s something rotten in the state of hiring

I think the default hiring model is broken. It puts all the economic risk on the employer, but it’s also pretty standard that the Day 1 wage is more or less the same as the Day 200 wage.

In reality, that’s just silly. Even a person with all the necessary skills (and the personality to match company culture and the people there) will be a liability to begin with.

Everyone needs to get pointed out where the toilets are, how the friday cake works and that you have to avoid Anna from Accounting, who will sap your soul by her mere presence.

Settling in and learning what’s what takes time. And since the employer is expected to pay the same on Day 1 as on Day 200, that means you don’t hire people unless you’re VERY sure of them.

If the risk was shared, it would be very different. Someone who says “I’ll work for a very low wage until I’ve proven that I’m worth it” has a much better chance of getting hired.

Why do you think we hire friends and people we’ve done volunteer work with? Because we’ve already gone past that first test phase on some level.

It’s a matter of risk capital not being present. Right now, my company can afford to throw 1.000€ at a weird idea and see if it works. Not too often, but we can do it. It wasn’t too long ago that we couldn’t afford to risk even a thousand euro on something with a low guarantee of success.

Hiring someone you haven’t worked with before is exactly that.

It’s taking a risk

And it’s not about the overall money. It’s about the risk money.

An example with some numbers

If we want to hire someone who wants somewhere around 3.000€ pr month, it means that right now we have to pay that person 36.000€ for the first year of work. And after that you (maybe) negotiate a raise.

Now, the first couple of months are the risky ones. Here, you find out if people fit in, pull their weight, function as needed, etc. Let’s just say it takes three months to properly evaluate someone.

These three months cost 9.000€. Then there’s the remaining nine months, which cost 27.000€.

This means that before we hire someone, we have to be able to risk 9.000€. That’s a LOT of money in a small company.

If the person said “I understand your situation. I’ll work for 500€/month for three months, and then for 4.000€ pr month after that.”, I’d be much more willing to take the risk and hire the person.

EVEN though it’s more money in total (37.5k vs 36k). As an employer, I have no interest in giving people a low salary. I have an interest in not giving them a bigger salary than they “bring in” (whether directly or indirectly).

I’d love to have people working for us, who make 10.000€/month! Because then they’d be bringing in even more than that, in some fashion.

There’s a “But”, though

Now this isn’t true in all industries. The closer you get to unskilled labour, the more marxist it becomes. The “easier” the task is, the more people can work from Day One, and the less the risk is from hiring them. But even then, they take up space and resources.

As a good friend of mine says “The problem with interns is that they breathe the air”. I wouldn’t put it that way exactly, but the illusion that interns are a golden resource to be exploited is just plain wrong, unless you have a lot of tasks that involve unskilled labour and you don’t care too much about employee morale.

All of this also works whenever we try to sell something to someone. If they ask “What does it cost?”, the simple solution is to give them a number, and if they can’t match that number, then walk away.

It’s just not how it works, in my experience. People have budgets. They take risks. They have shifting realities as well. And if they know you and trust you, they’ll fight for your money as well.

One reason I don’t mind doing unpaid speaking gigs is that I know that they sometimes lead to paid speaking gigs from the same people!

Win/win instead of win/lose

Telling someone “It should cost xx, but I understand that you only have yy to risk, so let’s do it for yy now and xx later” is a good way of acknowleding their reality.

We understand this mechanism when it comes to a lot of other things. “Try the first month for free” is not a radical idea. Except when hiring people, it seems, and to me that’s just silly.

This got a bit long and complicated, but in essence it is simple. If you want someone to give you money, the more you can remove their risk at doing so, the higher the chances are of them doing so.

Granted, if you only “sell” something once to each “customer”, it’s pretty stupid to give it away for free.

But if you sell to the same person many times (as it could be argued that you do when you’re employed), using the old drug style “The first hit is for free” will get you a lot more job offers. Because then you’re assuming some of the risk as well.

Case in point. We’re looking for a graphic designer in Rollespilsakademiet for a part time job. Someone who says “I’ll work for free for a month as a test period.” has a pretty good chance of getting a shot at the position.

The fact that every time we take in someone new it spends our time and energy as well. And having to work with a new graphic designer every month would be horrible. Even if we didn’t have to pay them!

And does this hold true for actual reality? Well, both our Danish division (Rollespilsakademiet) and our international one (Dziobak Larp Studios) consists almost entirely of people we have worked with in volunteer projects first. The only exception is Mark, our money guy, and he was an intern with us as part of his education. ;-)

If you like my writing, and want to throw money at me to write more, you can do exactly that, using Patreon.

https://www.patreon.com/user?u=3351676

Written by

Director, The College of Extraordinary Experiences & Coach at McKinsey

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store