Stop Being Cheap: Why Saving Money On Salary is Costing You Big Time

Here is a true story and a cautionary tale about an attempt to save some money on a salary.

Jane received a promotion at work. When she received the paperwork from HR, they detailed a salary that included a 10 percent raise.

She was thrilled and happily began her new position.

A few weeks later, the HR manager called her in. “Jane,” she said, “There’s been a mistake. Your increase was supposed to be a five percent increase, not a 10 percent one. We’re changing your salary effective today.”

Jane was shocked. The new job had a lot more responsibility than the old one. She’d made plans for the extra money.

She was doing a good job with the new responsibilities and getting up to speed faster than people would expect.

She made these arguments to the HR manager to no avail. It had been a clerical error, and there was no way she could honor the original paperwork.

Jane went to her boss. Her boss hadn’t seen the paperwork and wasn’t aware of the original 10 percent offer.

To keep reading, click here: Stop Being Cheap: Why Saving Money On Salary is Costing You Big Time

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12 thoughts on “Stop Being Cheap: Why Saving Money On Salary is Costing You Big Time

  1. Yeah been down this route before. It is also worth noting that despite most companies in the US prohibiting employees from discussing their pay it almost always seems to get out. So even if Jane had continued at the 5% rate she would have probably found out if it was under market rate.

    1. It’s illegal for a company to prohibit employees from discussing their pay with each other.

      1. In theory it is illegal. In practice most employers can get away with it to the point the belief that employers CAN forbid you from discussing pay is pervasive. Litigation can be expensive, takes longer than a couple of mortgage payments, and will probably give you a reputation as problem child in your industry.

        1. Exactly. Our managers brought us in to a closed door meeting, told us that our paid holidays were being reduced to 6, and promptly told us if we discussed this on social media, our IT staff would “track us down” and we’d be fired. If we discussed our compensation rates with any employee in another office location of the company, including how much vacation/holiday/PTO we received, we would be fired. They flat out said it was prohibited.

          Whether they are aware of the NLRB regs or not, that’s what we have to deal with. And as you said, litigation can be expensive, nothing is in writing, and faced with job loss, I suspect none of my coworkers would ever step up to corroborate the statements.

          1. It’s so easy to claim you fired someone for a different reason and so hard to prove you were fired for discussing salary. Of course everyone obeys these illegal directives.

  2. I wish I could send this to every company, everywhere. Human resources are called resources for a reason. They have a value and, unlike other resources, have free will.

    1. While working for seven multi-national companies I observed that HR staffers clenched the pursestrings tighter than even the financial controllers. The typical response from HR staffers for requests for promotions, out-of-cycle pay adjustments, and other monetary rewards was a very firm, “No!” I one time asked the HR director for the division, over 1500 employees, what options I had for retaining my key employees. He replied that traditionally how I did that was up to me. I asked for guidance and he basically refused to provide it. In my mind I was leaping across the table in the restaurant to put him out of my misery.

  3. Good for Jane! Too many organizations are just that short-sighted.

    I’d be willing to bet that if Jane weren’t an employee; and, instead, were a client the company would have just eaten the “mistake.” Their thinking would be “well, we don’t want to lose this client.”

  4. At the large non-profit for which I work, people (particularly in IT) leave and then get recruited back. Valuable employees leave because you can’t get a decent increase once you are in the organization. If you are hired in at the bottom of the pay range because of your skill level at the time, all of the cost of living raises in the world won’t ever get you to the midpoint once your skills warrant that because the midpoint rises as well.
    I’m interviewing in our IT department and, should I get offered the position, will ask to earn close to the midpoint in order to avoid games like that instead of following the standard formula.

    1. At most big companies you have to leave and come back in a few years to get the salary you should be getting. They think they’re saving money but they’re not.

  5. I think this relates to managers being rewarded for the wrong things. In this case a raise is money they “didn’t have to spend”. Managers are graded on dollars and are rewarded for not spending money they “don’t have to”. All the expense in ot and recruitment you outlined is money they “had to” spend. As such that expenditure is [in this distorted business model that’s all too common] is the former employee’s fault and not the manager or hr’s fault.

    1. Or a manager can give a decent raise to one person but then has nothing left for the others. Keep one, lose five. Does that help?

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