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I am employed by a consulting firm that contracts me out to a company I work at daily. I am a full employee, benefits, 401(k), the works. The contract allows me to be hired directly by the daily employer without penalty after 6 months, and my daily employer is very keen to hire me on and stop paying a middle man.

This situation is new to me because I have never negotiated compensation where:

  • I am already 6 months into the 'spin up' period of the job.
  • My employer already knows my abilities and working style, and seems happy with me.
  • There is no mystery accepting an offer. I know exactly what the job involves- great coworkers, interesting work, poor work life balance, poor opportunities for upward mobility or skill development.
  • I know my employer is extremely short staffed, and desperate to keep what few employees they still have in this position.
  • I am currently paid hourly, which is great because 48+ working hours per week are the norm. If hired, I would become salary (exempt).
  • I would like to stay, but I am willing to walk away if an agreement can not be reached.

Considering how much I work, I would be asking for at least +20% to go to salary instead of hourly. Informal conversations have implied that a salary match (so a substantial pay cut) is all my manager is expecting to offer. Other perks (better work life balance, cross training opportunities) are not realistically going to be granted.

I am not asking for normal expectations for contract vs. full time employment compensation or how much to ask for or when to broach the subject. I am asking for techniques to appropriately negotiate a salary at the end of a contract to hire period, similar to this question but with understanding of the unique negotiating positions created by a contractor being hired on full time.

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    If the client company is paying you via a normal contracting agency they may have no idea what you are actually being paid - rather they know how much they pay the company for your services. Do you know how much the client is actually paying for you? Chances are it's much higher than your hourly rate, and the client may be happy to give you more than a 20% premium over your current rate. – Egg Jul 19 '17 at 0:57
  • @JoeStrazzere that's interesting, I've had the opposite experience. When I was a contractor, I had no idea how much was being paid for me in total, and in my current position when I am given resume packages from contracting agencies to look over (second-hand as I'm not a hiring manager), they state a high rate that I've always assumed was what we'd pay the agency per hour rather than what the contractor would make per hour. – Egg Jul 19 '17 at 1:36
  • My experience in contracting was always identical to Egg's; don't ask, don't tell. Even if I asked. Maybe it was the market etiquette at the time? – Nolo Problemo Jul 19 '17 at 21:48
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I am asking for techniques to appropriately negotiate a salary at the end of a contract to hire period, similar to this question but with understanding of the unique negotiating positions created by a contractor being hired on full time.

You write that you are prepared to walk away from this job. If so, just tell your manager what you want for a salary and proceed accordingly. Nothing unique here.

Find a time to talk with your boss.

Say something like: "Look, boss. I like it here and I think you like me. You know the kind of worker I am and I'd like to stick around. I need a salary of $X, I believe I am worth it, and I think you'll agree." Embellish as appropriate with your accomplishments over the past 6 months, the value you bring to the company, the fact that you are already fully trained, etc.

Again, they know you and you know them. It's different, but nothing unique.

Your boss will either conclude you are worth what you are asking, or not. He may come back with a counter-offer. Be prepared with how you will choose to respond in any case.

You might be best served by firing up the job search anyway.

poor work life balance, poor opportunities for upward mobility or skill development.

Are you sure this is a job you want? Your bothering to write this makes me wonder why. Don't bring those points up during your negotiation - they won't help.

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Its been my experience that these situations never end well. Your employer is looking to pay less for you, and probably have you work more. You, on the other hand, do not want to take a pay cut.

I think you are shooting too low with the 20%. I would ask for 30-40% more plus a sign on bonus. In a sense you want them to say no. Your default is: "I am very happy with my current work situation". Your employer wants to change it, but you can resist that change.

When they make an offer, be thankful, but say something like "how can I do that? You are asking me to take a significant pay cut. I'd rather keep the situation we have."

If you have time, you may want to read the book Never Give in By Half it is a great negotiation book.

  • Less for them doesn't necessarily mean less for you. If, for example, you get paid $20 an hour (and 50% overtime on 8 hours a week), then a salary of $55,000 is a net increase for you (not a big increase, but non-zero). On the employer's side of this equation, lets say that they pay $30 an hour for you regardless of if its over time or not (they might even be paying more than this). This means that they're paying the temp agency $74880 a year! Look at the cost savings of hiring a salaried employee for a mere $55,000! – Draco18s Nov 11 '18 at 22:32

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