Talent Development Centre

Discussing Your Rate with Colleagues is Rarely Ever a Good Idea

Cameron McCallum By Cameron McCallum,
Regional Vice President at Eagle

Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one. –Benjamin Franklin

I can’t count the number of times throughout my career that I have been approached by a contractor asking for an immediate increase to their hourly rate mid-contract. And when asked what has changed, the reason was not that the role had morphed into a more senior position with added responsibilities. Instead, it turned out that the contractor had discussed rates with a colleague and found out that there was discrepancy in rates and they were not earning as much as the individual sitting next to them on the project. While it is tempting to be a party to these conversations, in fact they can have serious negative consequences. Ask yourself the following questions next time you run into this scenario:

  1. Do you really have the complete story? There are so many variables that determine a contract rate and there is no way that you will likely ever have the complete story. Contract rates are based on project budgets and there can be ranges between rates for the same position. A hire early on in the process might have had access to a bigger pot but if you are hired last, there may have been less money left. Perhaps the person you are comparing yourself to had a history with the client and they were willing to pay more to get them. I’ve also seen a client hire a number of “senior” resources at a higher rate and then determine that they need to add someone but change the category to “intermediate” with lower rates. And are you completely certain that your colleague is telling you the truth. Some people feel very uncomfortable having this conversation and they may feel inclined to embellish the truth. The point is, we often end up making assumptions without having the full story.
  2. Didn’t you sign a contract? A contract is a contract and when you sign a legal document agreeing to the terms and conditions that exist within that contract, the expectation is that you will. Make sure you do the heavy lifting up front. Just as any business owner/operator should do, ask questions so that you understand completely and have considered everything about the role you are potentially signing up for, not just the qualifications needed, the end client or the duration and rate. You are running a business and ultimately are responsible for the decisions you make to accept or decline an opportunity. Can you imagine the contractor who has agreed to renovate your kitchen coming to you in the middle of the renovation demanding more money because they’ve heard that a fellow contractor got more money for doing a kitchen down the block. They wouldn’t and for good reason!
  3. Are you thinking long term? Trying to renegotiate your contract in the middle demonstrates short term thinking and rarely turns out positive. You risk destroying relationships and burning bridges, something I have witnessed countless times. Instead, before you act on your assumptions, go back to the reasons you accepted the contract in the first place — the technology, the location, the duration, whatever it was that made it attractive. Think about the valuable relationships you’ve forged with your Recruiter, the client and your colleagues on the project. Then think about what delivering a successful outcome will mean when you are pursuing your next project. The more you build your reputation as a professional and the more you are associated with positive project outcomes, the easier it is to negotiate higher rates for future contracts.

I believe that if you want to make more money, the trick is to be patient, think like an entrepreneur, be professional and good things will happen. So next time, instead of getting caught up in the moment and feeling like someone has taken advantage of you, don’t lose track of the end goal.

4 thoughts on “Discussing Your Rate with Colleagues is Rarely Ever a Good Idea

  1. Hi Cameron
    Your post has some interesting points but you miss lots-I have been in the business many years.

    Eagles business is making money on the spread between what you receive from a client and the end contractor.

    Very rarely do you ever tell the contractor what your margins are – and if a contractor asks the rep – what it is, eagle is very uncomfortable saying somehow this is secret.

    Also if want to shop around on contracting companies to see what one has the lowest margin, nobody is willing to do that.. generally when talking to one of your reps or any of the other companies they want you to sign an exclusive agreement so the end resource can’t shop around.

    Everyone has to make money no denying that but more transparency would be helpful for everyone…

    Sean

    1. Thanks Sean,

      I agree that it can sometimes feel like you don’t have all the details when evaluating an opportunity with a Recruiter. I would suggest that the margin (or spread as you call it) shouldn’t be the main criteria by which you measure the quality of the opportunity. In my experience, when a contractor tries to negotiate between mulitple agencies to get the “best” deal, the difference between the offers usually comes down to a dollar or two. And while that negotiation is happening, the Recruiter is continuing the search to find other equally or better-qualified candidates and you risk not having your qualifications forwarded to the client. More important to you as a contractor should be the relationship you have with the Recruiter and agency you decide to work with. Do they take time to understand your skillset? Do they present you with quality opportunities that properly match your skillset and meet your criteria for duration, location and rate? Do they know and understand the client’s needs and requirements and do they provide you with a level of service that ensures you are well represented during your contract?

  2. I agree with Sean. The title of the post should have been ” Discussing Your Rate with Colleagues is Rarely Ever a Good Idea FOR US”. You need to keep contractors and clients in the dark about margins because they are often unreasonable and have no basis in reality except to maximize profits and bonuses. Meanwhile clients are paying more than they should for resources that are getting paid less than they should. Every situation is different and the margin should reflect that, but there should be greater transparency. I, for one, insist on it.

    1. Hi Dan,

      Thank you for your comment.

      I agree with you, every situation is different. While margin might play a role in rate discrepancies between you and the colleague sitting next to you, there are often other factors at play. As I mention in the first point of the article, there are many variables that determine the contract rate.

      The real key is to ensure that your are adept at contract negotiations and you are happy with your rate so that you are not changing the rate mid-contract. For more information see https://jobs.eagleonline.com/5-rate-negotiation-mistakes-independent-contractors-sometimes-make/

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