My previous post on salary history generated several comments, two of which are below (both by anonymous posters, by the way).
What planet do you live on?? In a perfect world, people’s salaries increase with responsibility. In the REAL world, however, people’s salaries can stay the same or increase only slightly because a company’s revenues are down the overall budget is tight. Salary history is an inaccurate way to assess the job applicant, because it may reflects corporate situations that the applicant had absolutely no control over.
I’d love to see research that connects salary to anything meaningful. It seems to be a poor element to base anything on, despite how convenient it might be to the process.
To address the planet I live on, it’s called earth and despite what happens when Ms. Frizzle and the gang go into outer space, it really is the only inhabitable planet in our solar system.
Glad we’ve cleared that little bit of information up. Now, let’s talk about salary. Our second anonymous friend wanted to see salary connected to anything meaningful. I am now going to do that (albeit without putting on a lab coat to be more scientific).
Everyone listen up: Your salary/benefits package is how much your company values you.
That’s it. That is what your salary reflects. If they value you more, they’ll pay you more. If they value you less, they’ll pay you less.
Now, please note that I did not say, “your salary is how much your boss values you.” Your boss and your company may have very different value systems. Ultimately, your company wins. Now, granted that value also includes your benefits, such as health insurance, vacation, flex time, etc. But, for the sake of simplicity, we’ll use the term salary to encompass all that good stuff.
McDonalds values their CEO more than they value their burger flippers. How do I know this? Their salaries differ by a little bit. As they should. Just about anyone is capable of making hamburgers, but very few people are capable of running a company. If a company loses a good CEO they are in big trouble, as they are hard to replace. But they expect turnover amongst restaurant cooks to be high.
If a company’s revenues are down the pool of money for increases will go down as well. Then it becomes even more apparent who is valued and who is not. Trust me when I say there is always SOMETHING available for the super-valued employee. (Extra vacation, flexible schedule, telecommuting–something if financial conditions don’t allow for more hard cash.)
Now, sometimes (and I bet our first anonymous poster would argue that the word should be frequently, but I don’t think so) the value the company places on you is dead wrong. Slackers get big raises and someone who is actually bringing in money to the company gets nothing but a pat on the back.
This, I think, is a problem HR should help solve. Having strong performance rating criteria (Like the SMART method discussed below) helps to get what should be valued actually valued.
So, if you came to me and said, “I didn’t get an increase for 3 years because the company was having a down turn,” I would ask these follow up questions:
1. Why did you stay with a company that was doing so poorly you didn’t even get raises?
2. What did your company do to show that it valued you?
3. How did you attempt to turn the company around? How successful were you?
Good answers? The company gave me additional stock. With the stock being so low, there was nowhere to go but up. I believed that the company would eventually pull itself out of the slump and my stock would be of great value.
Bad answers? Ummm, I don’t know, I thought it would get better.
Now, if you truly believe you are underpaid, ask your boss to re-evaluate your position. You need to point out why the company should value you more than they do.
Now, the world is not fair. Some things are even wrong. Everyone argues that teachers should make more money than movie stars, but the reality is? As long as there are people willing to take the teaching jobs at the salaries being offered that is precisely what they are worth. (Ironically, the unions keep schools from being able to place appropriate values on teachers. Therefore, those that could do better elsewhere leave, and those who couldn’t, stay. It’s a perverse system that encourages bad performance.)
So, if you didn’t get a raise? It means that the company you work for values something else more than they value you. It may be shareholders. It may be paying the electric bill. It may be your co-worker.
Be someone who brings values and (in a relatively free market economy) your value will be worth dollars. If not at your current company, leave. Hit the job market. You’ll find out pretty quickly what you are worth.