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Saturday, June 21, 2008

unfair raise practices?

A reader writes:

I changed jobs 2 years ago. When I made the switch, it was an increase in responsibilities (middle management), but my salary did not increase. The reputation and stability of the company and the new job was very interesting to me. Last year (year 1), I received an above average raise - raises are dependent upon performance. This year, although my performance was solid, I received a below average raise. The rationale I got was that my salary is much higher than my peers and I effectively have less responsibility.

I have never heard of such a practice, so I was wondering (1) if this makes any sense and if other companies have this practice and (2) what I should do about it?

I wrote back to this writer and asked if anything had been said about performance issues or ways that they'd like her to improve/evolve. She replied, "Yes -- but nothing out of the ordinary -- just some things to work on. I had high praises for my strengths. She said that my performance was 'solid' and that based on it I would have gotten the average raise if my salary weren't so high."

Okay. So do other companies have this practice? Yes. But that doesn't mean it's a fair one or that it's not negotiable.

Salaries for similar positions vary within a company for all sorts of reasons -- one person negotiated better than another when hired, one person was hired at a time when the market was flooded and thus salaries were lower, another person was hired when the market was tight and thus salaries were higher, and so forth. The reality is that each employee negotiated the terms of their offer individually and there will be variations. The company may want to later go back and even out the differences, but by doing so, they are effectively undoing the offer you negotiated for yourself.

I do see their side of it; their thinking isn't insane or anything, but it's based on what's best for them, and you need to advocate for what's best for you.

So here's what I would do in your shoes. I'd go to your boss and say: "I understand what you're saying, but I accepted the job at a particular salary point, with the understanding that future raises would be based off of that salary, reflecting my performance. By now adjusting my salary based not on performance but instead based on the salaries you've negotiated with others,we're effectively undoing the original offer that brought me here. I'd like my raise to be based on my performance."

The subtext of this, of course, is: "I wouldn't have accepted the offer otherwise and if you change it on me now, I may decide to leave." You're not saying that explicitly, because you don't want to make threats (nor do you want to be bound to a course of action) -- but you don't need to say it explicitly, because your manager will worry about it anyway.

Now, this may work and it may not. No matter how right your argument, companies can and do turn down raise requests all the time. But it's worth a shot -- and of course, if they don't budge, you always have the option of looking around at other jobs if you decide to. (On the other hand, there are factors to consider beyond money, like how much you like your job.) Good luck, and please let us know how it turns out.


Anonymous said...

AaM gave good advice.

Compensation negotiation never ends. You have to be proactive every time. It is good to remember that the company doesn't care about you (no matter what the CEO, HR dept, etc says otherwise). You were hired to do something for them which enables the company to make more money than you cost. If you choose to go, don't burn any bridges in the process.

Anonymous said...

You might also want to ask if your company has a policy on the amount of the raise based on your compa-ratio or your position in the pay range. That is a very common compensation practice to have a raise amount based on performance that can be increased or decreased depending on where your salary falls in the pay range.