I’ve written a bit in the past on how important negotiation is at work. It’s necessary to be armed with information during the job application process, but the work doesn’t stop there. Yes, it’s good to think about long-term career goals, and yes, it’s also important to network and make connections, but don’t let your salary fall behind market rates. The earlier you are in your career, the larger of an effect incremental salary increases will have on your lifetime earnings.
In general, you are almost always going to be paid less than your market value. Most companies cannot match salary growth at the rate that the market demands and pays for experienced hires. For small differences, I really wouldn’t sweat it. There are many factors, like insurance coverage, a short commute, commissions, enjoyable work, and skill development that can’t be easily valued within a job’s base pay. However, when you find yourself in a situation where you are severely or grossly underpaid for your work, it’s time for a correction.
The more information you have on hand, the better
Not every title demands the same skill range. There are companies who “burn and churn” straight-out-of-college analysts, and other firms that have career analysts that make six-figures. Same title, totally different meaning, totally different pay.
If you find out that a person within your company is getting paid significantly more for the same level of work, that’s a different matter. Companies are in the business of making money. Just as it is with pursuing financial independence, there are two methods of success: reduce your expenses, or increase your income. Companies can increase revenue, or they can cut costs. Your salary is a cost to your employer. If they can get similar quality labor for cheaper, there’s no reason for them not to do it.
For that reason, it’s a not a bad idea to be upfront with coworkers about salary. There are exceptions. Obviously, it’s not good to disclose a salary to a subordinate. In very small companies, discussing pay is also probably more trouble than it’s worth. However, if your company is big enough and has a fleshed out hierarchy, you’re missing out by not having a buddy to discuss payroll with.
Document your work as proof of value
A company is not a person. If you are being fairly unpaid, you have to prove it. Complaining to a manager won’t make a lick of difference if you can’t prove your value to the company. The negotiation process cannot be an emotional one.
Ever done a yearly review before? Give yourself one. Write down all the big projects and assignments you’ve tackled over the past year, and jot down a few notes for each. Include examples of above-and-beyond behavior that are easily recalled by others. Get into the habit of giving yourself credit. When the time comes, this is what will tip the scales in your favor.
Interview for other jobs and have offers in hand
When it comes down to it, a salary negotiation cannot truly be successful unless you’re willing to walk away from your current job. I’m not talking about a 2-5% increase here; I’m talking about a significant pay increase. I successfully negotiated a 20% increase in salary this year (no promotion) by having a job offer in hand. Without it, my increase would have ‘only’ been 12%. Had I not taken some of the above steps and had higher-ups vouching for me, I would’ve received less than 10%.
As a rule, I talk to every recruiter that reaches out to me, even if I’m not actively looking. First of all, it’s good to keep basic interview skills sharp. Second, it helps to gauge what the current demand is for a person of your skills. Third, you can test the waters. What does that mean? Say you’re making $60K now. A recruiter calls and asks you what salary range you’re looking for in your next role. Say $80K. That might be too high for the recruiter, so you tell the next one $75K. Over time, you’ll get a sense of what someone is willing to pay for you. The results will be more surprising than you think.
Know your market worth
I’m a huge fan of Glassdoor’s Know Your Worth tool. It’s a completely free tool you can access as long as you have an account (which you should get if you don’t have one already). Three quick steps give you access to a trove of information.
Step 1: Input your current role, firm, location, and years of experience. This gives Glassdoor a starting point.
Step 2: Add in your current salary. This allows Glassdoor to run the calculations comparing your current pay to your market rate.
Step 3: Add in your educational background. Higher education is correlated with higher pay, and that is a factor that is taken into account. In some fields, education makes a big difference; in others, it’s barely a blip. I also really like the demo piece. It’s completely optional, but as a female, I’d love to see if Glassdoor can see any larger trends in pay differences in gender, with a much larger sample size than studies have used in the past.
Result: A great dashboard.
The thing is, this dashboard isn’t even the best part. I find that I most often research salary data when I’m looking for new jobs. Within the dashboard, when you scroll to the bottom of the page, you’ll see the Salary Explorer. This is my favorite piece of the Know Your Worth tool.
While Glassdoor lets you look up salary by individual company, this lets you look at an average salary for a job title, based on the industry, years of experience, and company size. When there isn’t specific salary information available, this is a great tool to know what to expect from a potential job offer or benchmark against what you should be getting paid when a few things are tweaked. Glassdoor has totally changed the way I look at the interview process, and how I think about my salary.
Talk to people, do a little research, and take some phone calls. Negotiating a salary with your employer is a serious thing. When you’re going through this process, you may realize that there are more opportunities for you if you leave for another job. On occasion, your existing company will make it worth your while to stay. Either way, you’re better off for it.