Money could not buy you friends, but you got a better class of enemy–Spike Mulligan (1918-2002), Comic
How much you’re going to make is one of the first things that crosses your mind when a job is presented to you. It is perhaps because we measure our worth by how we are compensated. It’s a visible manifestation of our worth, status, and importance. It is no wonder that everyone is after getting a bigger paycheck. Although jokes abound in the matters of one’s pay (“why is this called your take-home pay? It is because you are embarrassed to take it anywhere else!”), everyone is deadly serious about how little money they make. This is perhaps because most money matters are relative.
The purpose of this article is to provide some guidelines so that you can explore if your compensation is equitable. The following guidelines provide some criteria for evaluating your own salary and compensation.
- A given compensation at any level is a reflection of the basic economic rule of demand and supply. This means that for you to command a salary that is on the high end, you must demonstrate that you are a rarity. This must happen from the very beginning of your positioning and by how you approach a potential employer. Making an end-run on your compensation does not usually work well.
- The best time to peg your salary is when an offer is presented to you. If you accept that with some eagerness the employer is going to assume that they are offering you the top dollar for what they are getting. Once again, your bargaining power depends on how you have positioned from the get-go and how you have differentiated yourself from the pool of candidate competing with you. During your transition it helps to position yourself for multiple offers, even though some offers may be from less desirable employers (the one you’re negotiating with does not have to know that).
- Upon being offered a job, a good way to assess how you are being measured is to ask for the salary range for the position that you are getting. If you are on the low end of the range then, clearly, you are being viewed as a beginner in that role. You must argue that your value represents a salary that is to the right of the mid-point of the range and convince the employer to consider that as a commensurate compensation. Always let the employer come up with a number rather than you. Doing this allows you to negotiate.
- Evaluate compensation for comparable positions through available databases as those provided online by salary.com. Make regional corrections to the data and come up with some guidelines for where you belong. Often employers make their decisions based on your immediate past job and sometimes that can throttle your efforts to negotiate your salary upwards. In such cases, focus your negotiations based on the value you bring to the new job and not based on your past salary. In most cases this works well if handled with confidence and logic. Having some options also helps (see #2).
- If you are unable to get the compensation that you seek, but otherwise like every thing else about the job, ask yourself if this job can be a resume builder. If it is, then you can certainly increase your market value as you get traction in your new job. Additionally, upon on-boarding it is a good idea to have an initial discussion with your hiring manager about the compensation that you had hoped for and what is actually your starting salary. Asking them to monitor your performance and then making an ad-hoc adjustment based on what they see can be a good way to create an opportunity for mid-course correction in our salary. This generally works well. You must do this at the start of your job. Remember, in business you get what you negotiate and not what you deserve.
- If you are already employed at a place and wonder if you are underpaid, a good way to check is to look at the periodic increases you have received. If you have not kept up with the typical inflation in your region then you have a reason to wonder. Annual average increases of 3-5 percent are typical. The rate of inflation has been about that. If one has stayed at a company for many years then it is possible that your wages are lagging the market norms. For any particular year, though, your increase may depend on your relative performance and not on the rate of inflation.
- If you have evidence that you are indeed being paid below those around you who are doing comparable jobs, you must first assess why that is. Visit your annual reviews of the past few years and see if there are opportunities for you to improve in certain areas. If you have failed to show progress despite your manager’s specific suggestions, then you must remedy this by sitting down with your manager and working a plan that allows you to overcome that barrier.
- If you believe that you are underpaid despite your value contribution (not your efforts) then you have a reason to take positive action. It is easy to equate salary to the effort you put in. This is misguided. The compensation you receive must be a measure of the value you deliver, regardless of how hard you work doing it. Also, your salary is not a reflection of your needs. Your needs are driven by your obligations and that is irrelevant in this discussion.
- If you are not being paid commensurately and equitably it is best to convey that to your manager based on facts. It is best not to bring up someone else’s salary as a matter of comparison. Even if you happen to know someone’s salary you must not bring that during your discussion. In most companies you are to know only your salary, so stay focused on what you make and want to make. Remember that salary data in a given job category (“salary curves”) represent equitable salaries in a given market.
- In this meeting with your manager you must present objective facts about your performance, contributions, and your market value. In this context it helps to have other benchmarks such as another job offer or market data that shows how a certain level of experience translates into salary data (there is a big range in such data, so be careful in making an argument merely based on this data). In such discussions it is difficult to translate the range into a number that you deserve. This is why having another job offer can be a big advantage.
- If you are not able to convince your manage about getting a bigger salary, make a plan with them to deliver specific outcomes and tie those outcomes to an adjustment that you agree to beforehand. Do not make an end run when you happen to deliver something, more as an exception or through fortuitous circumstances. Often, a consideration can be one time bonus in such cases.
- The best way to protect your prospects for a fair salary is to be aware of your value contributions and your comparative market value. If you are truly valuable but are unable to exploit that value at your current employer and if all the strategies suggested above fail to give you what is fair and equitable, you must look at other opportunities. Always keep your resume current and start shopping around.