Monday, February 17, 2014

Anchoring My Expectations

Anchoring My Expectations
Anchoring?
Our time in Hawaii had to come to an end sometime, so yesterday we stepped onto a 767 and woke up back in Arizona. We snorkeled in a sea of fish, hiked on lava rock paths, saw waterfalls and petroglyphs and even an active volcano, and we ate way, way too much. I won't go into all the nitty gritty details of our trip, but if you find yourself hungry in Kona, I highly recommend visiting Broke Da Mouth Grindz (try the Garlic Furikake Chicken...just $9 and enough to feed two people) and Da Poke Shack (and try anything, because all the raw fish is delicious).

Now that I'm back, the next big thing coming down the road is my annual review. This will be my first performance review with my new employer, and I'm not entirely sure what to expect. Normally I would let my mind run wild, day-dreaming of raises and fancy promotions. But after hearing about a friend's recent experience, I am taking a different tactic and throwing an anchor on my expectations. Let me explain:

My good friend just recently started his working career after leaving grad school. And by all accounts, he did a great job for his employer during his first year. He built a new database for the team, engineered significant cost savings, and even took on some managerial duties by overseeing a remote team. During his annual review they negotiated some different compensations, and his leader put out two possible scenarios: one involved a 22% raise, and another involved a re-class and a 32% raise. These were huge jumps in salary but they seemed possible, and justified since they would bring him into line with similar employees' salaries at the organization. Nothing was set in stone, of course, but she would put in those recommendation with human resources. 

And then the waiting game began. One month passed, then two, without many updates. Every once in a while he'd hear back that H.R. was still working on it. Finally, after three months, he got word that he'd only be receiving a ten percent raise due to budget constraints. Not that anyone should be too disappointed with a double digit increase in salary, but it was a bitter pill to swallow. He wasn't happy with the result.

I'm no psychologist. But my guess is that his disappointment stemmed from the fact that leadership had anchored his expectations. When we first hear a price or a number, that figure has a well-documented impact on future decisions and impressions (e.g. - how we value an object, or will negotiate a price), even if the original "anchor" has no relevance whatsoever. Jason Hull writes about the effects of anchoring seen in a behavioral economics experiment, in which the act of simply writing down the last two numbers of students' social security numbers resulted in different estimations on the price of a bottle of wine. Students whose social security numbers ended with higher numbers thought the bottle was worth more than students with lower ending social security numbers. And this impact was achieved simply by writing down random two digit numbers. (What is interesting is that that same anchoring effect was seen in a subsequent bottle of wine: those same students also overvalued a second, different bottle. The lesson: anchoring has a persistent effect.)

Because my friend had been told a specific dollar range for his raise, it set his expectations for his compensation to be somewhere in that range or, at worst, at least close to it. But the anchor didn't necessarily have anything to do with the actual raise, if any, he would receive. After all, budget constraints might be non-negotiable, regardless of how well one performs. What if his leader had recommended that same salary range to human resources, but had instead told him that only a 3% raise was likely? How would he feel about that same 10% raise then? Or what if no anchor had been presented: how would he react to a ten percent raise had his boss simply not suggested that any specific figure was possible?

Trying to pull a lesson out of this, I am going to throw an anchor on my own compensation expectations. As most employees probably do, I've been thinking about the possibility of greater compensation for months. Might I finally crack a six figure salary? Might I get a bonus large enough to cover our yearly expenses? My mind was wild with the possibilities. But now that I've completed my self-assessment at work and I can no longer influence the results, I am telling myself that I'm likely to receive no raise, and only a 1% bonus. Every time I think of my upcoming review, I tell myself those are the likely figures: 1% for a bonus, and no raise. That I pulled these numbers out of thin air, and they are artificially low, does not matter. Even when subjects are explicitly told that at anchor is irrelevant, it still has an impact. So even while I know anchoring is a logical fallacy, it's likely that my expectations will be significantly affected by just those numbers of one and zero. I've even written them down on the chalkboard in my office.

So next week when my boss sits down with me, if I get a bonus above 1% or any raise whatsoever, it'll seem great. I think with the low anchor, I'm giving myself a year of satisfaction with my new compensation, whatever that ends up being. And isn't that the end goal: feeling like you are well paid, and being satisfied with that amount?

That said, I'm certainly hurting myself from a negotiation standpoint. If I want to counter my boss' offer and negotiate a bigger raise or bonus, research indicates that I should do the exact opposite: set higher expectations, get better results.

But what do you think of the approach? Ought I try to trick myself with the anchor, or set high expectations and, as I've been trained to do, negotiate for a better outcome?


*Photo is from fiRax at Flickr Creative Commons.

66 comments:

  1. Welcome back!

    It's a tough balancing act but if you know you are getting paid fairly relative to peers and your industry, then the anchoring trick is a good one to use in this case I agree. What you don't want to do is continually set your expectations so low that you never end up negotiating, and could also be opening yourself up to getting taken advantage by an unscrupulous boss. (I'm not saying your boss is like that, but there are plenty out there who will get away with paying people as low a wage as possible, even if they know they deserve more).

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    1. I hear what you're saying, FIREstarter. There's a risk with such anchoring that it works, and then my expectations for future salary increases are dampened. And I negotiate for a living, so there's always a part of me that wants to push for more.

      Still, as with most negotiations, your better results are balanced by less satisfaction with those results. It's really rare for either party in a negotiation to feel totally satisfied, even though the negotiation itself yielded increased results.

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    2. I agree with theFIREstarter. My boss always negotiated for the lowest possible salary for our staff. Since I was over HR, I had to be a party to this ridiculous method for compensation. It didn't matter if the employee was far better than everyone else, everyone was paid based on the minimum possible to keep them around.

      During a particular year of turnover in our marketing/development department, we had offered salaries with a $30K range to equally qualified candidates, simply based on what they were paid at their last job.

      So...it's important to keep your ears out and do market research to understand what's fair compensation, but happiness and fulfillment are more important than cash, so as long as you believe you are in that range, your anchoring method demonstrates your priorities and will support a long-term, positive relationship with your employer. Good luck! I'll be rooting for a double digit raise!

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    3. Yea as you may have guessed I have a feeling this kind of happened to me over the first 5-6 years of my employment. Although I can't be too sure because I never did the research like you say, this is definitely key! I got a 20% raise last year which was great, but I think it was really just to bring me in line and I was getting totally mugged off beforehand... still can't complain eh :)

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  2. When I got promoted since I was on the higher end of the scale i was hoping for 5 to 7% instead it was closer to 12. That made the long hours bearable as opposed to 3 or 5% if it fell short I would be very disappointed because of the increase in work

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    1. 12% is awesome. That's great that you had a higher expectation that was exceeded: it's the best of both worlds.

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  3. Providing the anchor is much better than having the boss say "Yes, you are due a raise, let's sit and discuss it" then never discussing it, and subsequently cutting your pay due to tight budgets. Even though I'm a co-founder of the company, I don't have final say on the pay decisions (they are handed down to me), and so it would have been much easier to my psyche to hear "I'm not sure we can do a raise this year because of X". The way it went down was a major bummer that I'm still trying to come to terms with.

    That action alone is making me consider whether I should stay at the company I helped start, or look for something else (or start something else).

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    1. That's a really unique situation, Liam. I hadn't realized that, even at the top, policy and budget constraints still limit what can be done.

      I'm sorry to hear about how that pay situation went down with you. Please come back and let us know what you decide.

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  4. So glad to hear that you had a fun time with the Mrs. in Hawaii!! I absolutely loved poke when I was there and would even eat it for a (late) breakfast... you made me crave it just by reading it! As for anchoring expectations, is it too misleading if you 'anchor' at 1% but then "secretly hope" for a higher figure? That way, if you reach above then you don't set yourself up for disappointment, but if it's lower than your 'secret hope' then it sets you up for negotiations? I usually do that with race times (like I'm sure I'll accomplish it in x hours but hope for y hours), and there's always this secret/underlying 'push' to go for the y hours goal.

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    1. Yay! Another poke lover. I miss it already. I don't know if we can find that in AZ.

      I hadn't thought about trying for both methods. That may be a compromise to consider. To be honest, I'm wondering how completely the anchoring is working, as I still sometimes find myself daydreaming about some huge raise...

      Good analogy with race times. Back in track, I would do the same thing. I'd play down publicly what I'd time out at, but then on my hand I'd have my stretch goal written on my palm.

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  5. Glad you two had a great trip - sounds like you pigged out! :) That's what happens on vacations.

    I know this feeling all too well. I have been told my job with the university (the one on the hook) has a salary of X, roughly 70% more than what I currently make - but that assumed more experience than I have, and it's all weighted against one another. So even though I was originally happy with the idea of a 20% raise when I switch to the university, I am now questioning whether it will be more like 40% (meet in the middle). I am going to try to keep my expectations on the low side, and be happily surprised because honestly, I'm doing a lot better than most people I know one year out of their grad degree.

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    1. Isn't it a double edged sword to know what your colleagues make, Alicia? I secretly want to know, even though I know there's a good chance it will only bring me dissatisfaction.

      And I think it's always healthy to compare ourselves to people outside our organization (or town, or country) to get another type of anchor/comparison. Perspective can get a little narrow in the corporate world.

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  6. Sounds like the trip to Hawaii was fun! Honestly, I usually try and keep my expectations low in most areas of my life. It sounds pessimistic, but I like to be realistic.

    At my last job, I didn't even receive a review when I was there for a year. It was really disappointing, as I had worked my butt off in my new position and there was no acknowledgement other than an email from my bosses congratulating me. Even my uncle was commenting today about how raises are difficult to come by. All too often, HR is quite the barrier. I've never been with a big enough company to have a dedicated HR department, but it really does stink when your boss would like to give you an amazing raise and it doesn't come through. In any case, I hope things go well!

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    1. My wife is the exact same way, EM: she is always planning on the worst case scenario, and then is pleasantly surprised. It works for her. But anchoring in this way is new to me...I usually do the opposite.

      I'm sorry to hear about your experience at your last job. But at least you found a new opportunity. I'm pulling for big raises for you guys, too!

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  7. DB40,

    Glad you guys had a great time in Hawaii. Never been, but I truly hope to one day. It's on the bucket list!

    I try not to anchor myself to numbers at work or in the stock market (cheaper stocks don't always equate to a good value), although I suppose I'm guilty of it just like everyone else. I suppose I'm just a happy-go-lucky guy. I'm pretty happy with more money anytime it comes my way. A rate greater than inflation is ultimately what I'm hoping for, as it increases my purchasing power. Again, this goes for salary or income from investments.

    Although, my income has been trending the opposite way as I took a pay cut recently. I suppose in this way I'm anchored to what I made last year and now earning less this year (which is a certainty) is kind of pissing me off. :)

    Anyway, I hope you get what you're due. If you work hard and you provide value for the company you should get the going rate. And I hope that rate ensures you plenty more moolah! :)

    Best wishes.

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    1. I hear what you're saying with the prior year's salary as an anchor. That's the other edge of this sword. It's hard to trick yourself into any other reference point, since you know you were making more in the prior year.

      Great point about anchoring with stock prices. That's the example I read about in my research: investors who see a price drop from 80 to 40, thinking the stock is undervalued. It may be, it may not.

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  8. Welcome back! Glad you had an amazing time in Hawaii... I miss it so much, and it's only been a month! Can't wait to go back, and I definitely want to visit the Big Island next time around.

    In regards to pay raise expectations, I used to care a lot more... These days, I'm so focused on building up the passive income that I really don't expect much, or anything... So, I go in with low expectations, knowing that a slight, or even significant bump really doesn't impact my overall strategy too much. In a way, I like that feeling since I feel the longer I work, the less reliant I am on my earned income...

    Best of luck and I hope you get everything you deserve!

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    1. I'm so envious of your point of view, since your focus is on passive income rather than earned income. We are nowhere near that yet, though as you know we're trying to pick up as much as we can from you and other real estate investors.

      And yeah: we miss Hawaii, too! Maybe we can buy a rental property there, if only to write off the trips as a visit to our property. :)

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  9. Welcome back! I am glad to hear that your time in Hawaii was great and you ate a lot of delicious food (basically, that's what you have to do when you're on vacation!)

    Regarding your question, I would personally go for anchoring the expectations. It's impossible, I guess, not to dream about greater things, but usually our dreams go a bit over the real possibilities... and really there would be no need for disappointments as in the case of your friend.

    Actually, I guess that the best way to approach this would be to wait and see. Assess the situation when it happens and decide how to use your negotiation skills right there, when it happens. Good luck and I hope this goes as good as it go!

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    1. Thanks, C! I definitely ate too much and I'm a little worried that I've gained back the weight I lost last month! I'll have to wait until the 28th to find out. Time to go running!

      I am going to try to commit to the anchor this time, but can see the merit of just waiting and seeing, with no expectations. The rub might be actually clearing my mind of those pesky desires though...hard to create a blank slate.

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  10. Glad you had a good time in Hawaii - and what a nice time of the year to go!

    Just out of curiosity, is the negotiation with HR a standard thing? That seems a little crazy that your review and raise might take 3 months or more to become finalized and at such a different value than what got talked about. We've worked in big companies and small companies and have never heard of anything like that.

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    1. Hi, Mrs. Pop! It was my friend who had that situation with HR, but I agree that it seemed a little out of the norm for it to take so long. And the variance between what was proposed and what was delivered was certainly a letdown.

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    2. Hey there, Mrs. Pop. This is the anonymous friend. I work for a state university, and HR has to get involved in everything - despite the fact my salary comes entirely from grant funds, and not the university. HR was also more involved than normal because people aren't allowed raises over 10% without review from the dean and provost. So, when the initial figure was brought up, the balked. My boss pressed the issue. So, they talked with their people, and their peoples people, and came back with three options. Once an option was chosen, there was more talking. By the time HR finally okayed an option, we still had to talk with our budget people again, and three months had passed. The budget had changed completely, and my boss got cold feet I guess when she realized that encumbering a 22% raise for me over the life of the grant left extremely little wiggle room for much else. So, she put in for 10%, and that was that. I couldn't argue. She said that as we got more and more grants, and my salary could be spread out over them, we could revisit the issue. It sucked. I was (and still am a little) bitter. At the end of the day, I'd rather have taken 10% almost four months ago now, than this. It was extremely difficult to anchor expectations, because I had been given an expectation of at least 20%. In comparison, 10% was a blow. I know better now, I guess. Thanks for taking an interest.

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    3. Thanks, buddy. I should have probably included more of the details, as that is a better narrative.

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    4. Nah. You got the gist of it. That's a lot of detail to include!

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  11. I tend to set low expectations so that I can be pleasantly surprised when things go my way. I think that's a great strategy! That way, you won't be disappointed.

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    1. Totally agree, Holly. It fits our risk-averse personalities. :)

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  12. I think anchoring your expectations is a good idea if you can do it. If it was me though, I'd still be hoping secretly for a better raise so I'd probably be disappointed even if the raise came in at the lower end of the scale as expected! It's much worse though when people expect a high raise and plan on how they are going to spend it, only to find out it's much lower than they originally thought! Good luck, I hope the review goes really well! :)

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    1. I agree, Hayley. I think our expectations end up causing a lot of heartache sometimes. Thanks for the well wishes!

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  13. I totally understand why you would anchor lower. I do the same thing, but it does hurt you when it comes to negotiation. I have noticed my boss anchors lower and says we should all be grateful for the money we receive even if it's low. He mentions how he didn't have bonuses for a couple of years due to the recession. Of course, he forget to mention some years were extremely good to him! So he anchors lower so he sets our expectations low. And offers low raises and bonuses.

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    1. I think we might be in a unique boat, SFL, as we're both Procurement professionals. We're expected to negotiate, as that's part of what we do for a living. I wonder if that low anchoring technique your boss uses is a litmus test.

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  14. It's so easy to day dream and let your mind drift away into impossibilities. I would say though that if you're worth a 5% raise then you should show that you're worth the 5%. The trick is, if you don't get what you think you ought to communicate to them on how to get to that number. People are often underpaid because they have allowed companies to do so. If you show your worth and they're a good company to work for then I think you'll get the raise you deserve

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    1. I hear you, Michael. That is typically how I'll approach a year end review: in my self assessment I definitely try to illustrate my value to the company. Though I've never had the guts in the assessment itself to write down the number I expect with a raise. :)

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  15. Sounds like an awesome trip and I can't wait to make it out to Hawaii with my wife!

    That seems like a very long time for the HR review to come back. Although if it's fairly standard for the company then I guess it's just par for the course. I'm sure management doesn't have to wait that long for the final verdict on theirs though. Another thing that ran through my mind is I wonder if her boss knows how HR works and usually cuts the increase down so they were playing the game of anchoring an increase w/ HR so HR's actual increase, even after being cut, was still a reasonable level. That still doesn't justify telling someone a 20-30% raise and then getting only 10%, because anchoring is a strong psychological game our mind likes to play.

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    1. Right: that initial figure is such a jump that I think his boss should have verified it could be attained before ever speaking of it. But it at least provides a really interesting case study in how the initial offer really has a huge impact on what is eventually delivered.

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  16. Did you have Loco Moco in Hawaii...I have a craving for it. I've been dealing with some anchoring issues. I lost out on a house (co-op) because in my opinion the seller priced the home fairly yet I may have expected more of a concession because I see other places selling for 5% or more off the asking price. But should the listing price matter that much...it should be the fair market value. And I'm not sure if my new issue is anchoring...but all prospective places are compared to the one we lost out on. (both appearance and price wise). As for salary...working in government makes everything pretty clear cut. The raise is more or less based on a table negotiated by the union.

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    1. I had a Spam Moco and it was all I thought it could be. Delicious stuff. I think I may try to make my own here.

      I know what you mean about the housing prices and anchoring: it's a real thing. Jason Hull has a great article on the subject:

      http://www.hullfinancialplanning.com/how-does-realtor-com-anchor-you-to-high-prices/

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  17. I do the same thing. I have low expectations, usually, and my company doesn't give very high raises in general so I think it's the best approach. Unfortunately my bonus is pegged to our company's performance which I have little impact over in my position. I'm a pessimist, though, so that might be the driving force for my low expectations haha.

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    1. My wife is a pessimist (or, from her perspective, a realist) and naturally has the same approach. This low anchor represents a change in my approach, as I generally hope for the best (and sometimes get disappointed).

      I think our bonuses will generally be the same way: tied to the company's performance, and then divided amongst the team's members according to performance.

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  18. Holy Moly! I have to say that having never worked for a big corporation, this whole idea is just sort of mind-boggling. In non-profit-music-school-land I was generally in the position of having to fit my own salary into my departmental budget, which totally diminished any expectations for large raises! More money for me personally generally meant less money to spend elsewhere in my budget, which generally meant more work for me personally! So it was always a balancing act and I generally felt like I'd rather make less and work a sane amount rather than having to constantly work extra to make up the difference.

    That being said, I am a big fan of low expectations in general. This is an endless source of frustration for CatMan because he tends to see it as me being overly pessimistic. Don't EVEN get me started on what this means during football season! He says I'm a total downer to watch the games with because I always just figure that the we're probably gonna lose. But I don't think I'm really a glass half empty sort of a person - I would just prefer to be pleasantly surprised instead of having my hopes dashed.

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    1. My wife's the same way, EcoCatLady.

      I was recently talking to my friend who works at a non-profit, as she's about to negotiate her salary for the first time when she comes on as a full employee. She feels the same way: that every dollar paid to her is a dollar that can't go to the organization. And in some ways, that's right. But that's a fixed pie mentality. What if good employees could grow the pie?

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    2. Ha! Well in my situation it was anything but a "fixed pie" since our organization got very little in the way of public funding and donations, and none of what we did get went to my department. I basically had to fund the school through tuition income as well as make a hefty contribution to funding the rest of the organization (the concert part) which couldn't support itself...

      Geez! Even all these years later it still pisses me off - I always felt that the concerts could have been a huge profit center rather than a financial drag on the organization. Maybe they are now, I haven't been involved over there in nearly a decade. Anyhow, so I guess it would have been more accurate to say that every dollar that went to me was another dollar that I had to bring in the door!

      I have to say that life got soooo much easier when I quit my job and went into business for myself, when I actually got to keep all the money that my efforts produced instead of having to support some other department's exuberant spending habits!

      I'm totally floored that I can still get worked up over that all these many years later! Let it go.... let it go....

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  19. Love Hawaii! I plan to be there within the next 3 years more permanently.

    I always had a 'heart to heart" every two years with my employer to make sure they pay me as close to market as possible. As a revenue generator, I know my number. Do you know your market number?

    I try to anchor as high as possible -10% to give wiggle room so that I'm not holding my employer hostage.

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    1. Hi, Sam! I talked to Charles from Getting a Rich Life in Hawaii and he mentioned you guys had met. I'll touch base with you the next time I'm in the Bay Area or, if some time passes, when you're back in Hawaii. :)

      I do know the range for my position and I'm at the higher end of that range currently. I also am the highest compensated team member, despite being the newest. So I'm not entirely sure I'll be able to use the market to justify a higher range now, but maybe in a year. Great tip on having a heart to heart every so often.

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  20. Excellent post. It's true, as I had the same experience recently, and I'm aware of the result that anchoring expectations can have. But, I do agree that people should set high anchors. They're like goals, and I'm a big advocate of that whole "shoot for the stars" kind of mindset.

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    1. I'm an advocate of the same in negotiations, Ryan. At this point, I'm on the fence as to whether to treat this first annual review as another negotiation or not.

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  21. I guess it depends on the situation. If you're already completely happy with your current salary and an increase wouldn't really increase that happiness, then there's no need to stress it at all.

    But if a raise could allow you to do more things you enjoy, then my honest opinion is that this is a self-defeating strategy. To me, a better approach would be to put the work in to specifically outline for your boss all the things you've done that show you deserve the raise you actually want and negotiate from there. Yes, you might end up with something lower than what you truly want, but is that really worse than just settling for whatever comes your way? Again, it depends on whether the extra money would actually make a difference in your life, but if it would then I don't see why you'd willingly give it up.

    Though I do agree that simply dreaming about what you might get without putting the work in to make it happen is the worst of both worlds. High expectations combined with a low probability of them coming true is a definite recipe for disappointment.

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    1. Great counterpoint, Matt. I'm a bit undecided whether I should treat this conversation as a negotiation. It's my first year with the company, and I negotiated my initial salary for over a month, eventually getting my target salary. Within that context, I'm not entirely sure I want to push them 12 months after that, but it'll depend on what they offer.

      Plus, I think there's a relationship between my expectations the end result, but not only from an "improving the result" perspective. My friend would have felt better about the 10% raise, maybe even been ecstatic over it, had he thought only 5% was likely.

      Is it better to get 11% and be pissed about it, or to get 10% and be satisfied for 12 months?

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  22. Hey, DBF - thanks for the shout out.

    Ramit Sethi has an excellent video on how to approach raise negotiations: http://www.iwillteachyoutoberich.com/the-briefcase-technique/

    I'm not sure that the analogy to your friend is appropriate in your review situation. He was told he'd get a high raise and then didn't get it. That's different than setting a goal of what you want your raise to be. Anchoring in negotiations occurs when the first number is mentioned. You can have different mental numbers: stretch goal, goal, walkaway number. The walkaway number is your actual mental anchor - it's the number where you are satisfied to continue your employment with your employer. You could simplify the mental juggling and get rid of the stretch goal and just have two numbers.

    When I ran a company, we wanted to keep our good employees happy. It was a balancing act; we didn't want to pay more than needed to keep our employees happy, but we also didn't want to pay too little and have them looking for other jobs on the side. While we realized that there is always going to be natural turnover (we couldn't compete when Google came calling, and were secretly happy when Google poached someone), we didn't want to create a situation where anything beyond a stellar offer would tempt our good employees.

    Therefore, if you're a good employee, it's not an adversarial situation. Your boss wants you around because you make life for your boss easier. You do good work --> your boss looks good --> good things happen to your boss --> good things happen to you (ideally). Your boss doesn't want to overpay, or may be constrained from overpaying by budget, the work equivalent of a sports salary cap, but your boss also wants to make sure you're appropriately motivated to keep doing good work.

    Keep in mind alternatives to pay raises. If you can't get an X% raise, but only a Y% raise, could you get more vacation or telework or more company cafeteria benefits? Part of the goal of negotiations is finding things which are easy for the other side to give away that are more meaningful to you.

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    1. I liked that video, as well as a related one on negotiating salary. Ramit always has good stuff: that guy is a rockstar.

      I hear what you're saying about differences between the situations. I'm on the fence about how to proceed. I feel, and this is going to sound weird, like we make "enough" money. We're saving a really good percentage, I like the job...my main goals now might be more esoteric. Like, I want to feel good about my salary. I can achieve that by constantly getting raises and bonuses that exceed my anchor/walkaway point, or I can change my perspective and try to trick my mind. Being risk averse, there's a part of me leaning towards the latter.

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  23. Great question! I was "promised" a certain dollar amount as a bonus for referring a huge job to my producer. I'm waiting to see what number actually shows up in my mail, and I have a feeling I'm going to be disappointed and having an angry phone call. I would say for me, I always tend to have lower expectations as a freelancer because anything better is just a bonus. But I have to be VERY careful with spending so I almost expect the worst and hope (and really try) for the best. That doesn't mean me being complacent and just seeing what happens. I work hard to try to make a certain amount, but sometimes I just can't. In your situation, it might be different because you are salary.

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    1. I'm hoping that everything is as you had discussed with your producer, Tonya. I can imagine that income is harder to 'count on' as a freelancer, but on the upside I bet you have more intrinsic motivation to keep expenses under control, as you noted.

      I can see the allure of having a regular, salaried position and a freelance gig on the side. You get the best of both.

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  24. Lower expectations mean you'll never be disappointed. That's why I was surprisingly pleased by the new Robocop movie :)

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    1. Ha! I haven't seen that yet, but maybe I'll clear my mind and take the wife out for a matinee.

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  25. I try not to set lower or higher expectation but rather what I think is right and fair. That way if I get low balled, I'm more likely to make my case to why I should get more rather than accept it. And if I get more, well then that's awesome!

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    1. Cool strategy, Stefanie. I like your balanced approach: you're protected from either scenario.

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  26. Love this, DB40, and think it's a super smart approach. I "over-anchored" regarding our tax refund this year and had to work quickly to change my attitude. Funny, though, how the same win can appear as a huge victory or a colossal disappointment, based on how we've anchored our expectations, isn't it?

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    1. Yes, you're absolutely right, Laurie. I was planning on owing on my taxes this year and, lo an behold, we got a refund. It was only $650 for federal, but since I was planning on owing, it seemed like a big windfall.

      Expectations are powerful. I'm not sure what the best way to employ them is, but I know I'm happy when I'm pleasantly surprised.

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  27. I've been in the position before where I wasn't getting a fair shake and I was "well anchored" enough to challenge their assertions and fight for what I thought I deserved.

    It won't always work, but most employers will at least admire your passion.

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    1. That's a good argument for the opposite tactic, Jefferson. With higher expectations, you're more likely to fight for what you think you deserve.

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  28. I use inflation as my anchor. As a person's pay gets higher and higher, raises come more in-line with just matching inflation, and that's fine by me. When I started out, I got two double-digit raises in the first year. I then got very respectable raises for the next ten years. I now typically get 3+% raises each year, which still make me very happy.

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    1. That's a healthy perspective, Bryce. I'm still relatively early in a typical working career, at 33. As I move up the pay scale, it's reasonable that the increases can't possibly keep up as they've been, unless some serious promotions happen. After we start bumping up against the top of the pay grade, just beating inflation might start to look pretty good.

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  29. I am in dire need of some poke!
    As for expectation, I personally like keeping mine low. That way, if/when it gets surpassed, it's a pleasant thing!

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    1. Hooray for another poke lover! I ended up doing the same thing, Lisa, with good results.

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  30. I have read so much about pricing anchoring since I'm a real estate investor. It's amazing how much it can affect how much people will ultimately pay for a property. When it comes to your own internal expectations it can be a blessing or a curse. Do you have any idea what the standard raises are like where you work? One job I had right out of college had 3% raises into the budget... guess what? Everyone got a 3% raise. Surprise surprise.

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    1. I had a general idea of the benchmark this year -- it looks like a 2% raise was the standard, with no bonus. Not a good year. :(

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