Help a Reader: Asking for a Raise

Here's a recent question a reader left on my post titled More Thoughts on Asking for a Raise:

I have a somewhat unique situation and I'm not quite sure how to handle it so advice would be appreciated.

I've been working at a company 6 months (graduated 7 months ago with a master's and bachelor's in engineering). When I received the initial offer from the company, I did a poor job of negotiating. The offer was above the competing offer I had and was in an area with lower cost of living and convenient to where my wife worked. I didn't want to lie about the other offer so I tried to play them off the other company without claiming my other offer was higher. I was in a weak negotiating position and of course they held firm and I accepted their initial offer. I know now I should have counter-offered without mentioning the competition and that way I wouldn't have lied or been in the weak position. My mistake and I don't have any issue with the way the company handled this.

After accepting the offer, I received another offer that was more than 10% higher than what I am making now. Since I had already accepted the existing offer, I did not feel it would be ethical to renegotiate. I also found out that another engineer with virtually identical experience hired on at the same time at about 10% more than what I make. Within two weeks of starting my job, I was receiving phone calls from other companies in my industry. During this time, I've also found out that other companies in the area pay 10-20% more for similar engineering jobs to what I am doing now.

I've been lauded quite a few times by management for my work ethic and the quality of work I produce relative to my peers. I now know pretty accurately what my market value is and feel like I've been at least an above average employee, if not a great one. What I'm not sure about is how to handle this disparity. I haven't quite finished my entry-level training here (although I'm on track to finish it months ahead of previous new hires) so it'd be hard for me to justify a promotion right now. As best I can figure, I'll be due for a promotion sometime this summer. I don't want to look for work elsewhere or use that point as a negotiating tactic, partly because I haven't been here long and I don't want a reputation for job-hopping. With all of that background, here are my questions:

1. Should I wait for my promotion to bring this up? Based on other information I have, the raise that comes with a promotion would still probably leave me paid below the market rate. Given that they'll probably tell me what my raise is at the time they announce my promotion, do I tell them the raise isn't large enough?
2. Should I bring this up now? I realize having been on the job only a few months, many managers would consider it premature to ask for a raise.
3. We also have a yearly cost-of-living raise. Would it be appropriate to address this then?

Other thoughts?

I suggest he waits until he completes his training. Once that's done, he can bring up the issue of pay. He should do it in terms of 1) what the market is paying for similar jobs and 2) his above average/great performance. As long as it's done in a professional way, he shouldn't have any problem with offending anyone at the company.

If he does, this, there are a few reactions the company can have, including:

1. Sure, we'll raise you up to the market value pay of the job you're doing.
2. We can raise you up a bit, but not that high (not as high as what he's shown to be market value.)
3. Sorry, pay raises are given once a year and according to procedures.

If he gets answer #1, then there's no problem. With answer #2 or #3, he needs to decide whether it's worth it to stay with this company or move on to another one. That's a question I can't answer for him. (Note here -- he should seriously consider both the cost of living and his wife's work issues when looking at options. These aren't trivial issues.)

One final thing -- this is an entry level position (I'm assuming based on the time he's been working), so it's likely there are a gazillion other people who could fill this role. If this is correct, he needs to be very careful about threatening (or even implying a threat) to his current company as they may simply tell him to pack his bags and replace him with any number of other suitable candidates.

That's my two cents. What would you suggest for him?

Comments

[fathersez]

I think you have given great advice.

He has made some errors in his first negotiation, and these are the consequences of those errors. Nothing monumental.

It would be better to complete his training or even if need be, wait until the 1st salary review discussions before making his next move.

In the meantime, he can work on further enhancing his reputation as a great employee.

[Mixer]

He never mentions whether he likes working for the company or whether there are other benefits aside from salary (could have a very nice health plan, 401k matching, vision/dental, etc). If this is "just a job", then I'd agree with FMF. If this is a "career", then wait until your yearly review and ask then. Get some time under your belt and continue to work hard and show committment to the company; good employees are hard to find (versus qualified employees) and your employer should recognize your value and be willing to listen.

[Eric]

I agree, waiting until the first review is your best bet. If they don't want to bring your pay up to market value, throw out some resumes. If you get an offer, use it as leverage to get the raise you want. If not, leave. Remember, this is business so nothing personal. The key is to not do this often, only when necessary.

[Kyle]

I agree he should wait until his review to bring up the issue of pay, but I wouldn't be shy about bringing up the fact that I was being paid below-market rates. Be sure to have concrete data in hand. If he really does have several other offers at 10-20% more, I would threaten to leave and then follow through if I didn't get a reasonable raise. That's basically what I did when I accepted my current job. My old employer offered to match my new offer, but I ultimately decided to take the new job anyway because it was more interesting work.

[Bill]

The solution is straightforward.

(1) When you finish the training ask for a raise to the market level you deem appropriate. Accept the yes or no answer from your current employer.

(2) If you believe your talents are worth more elsewhere, then stop talking about what you have found out and start interviewing. The job market is a fluid place and folks often "fudge" about what they are really making. See if you can qualify for a position with an offer letter that verifies what you think the market will bear. Do this confidentiality.

(3) Only consider making a move if a new offer increases your salary 15% to 20% over your current compensation. This is the necessary compensation spread required for taking the considerable risk on a new employer environment.

(4) Add the other factors (personal, family, etc.) to your deliberations and decide what you are going to do.

(5) Make sure you perform. None of the adages about job-hopping, etc., apply to performers. Read a bit about the good and bad of counter-offers from current employers. You will want to be prepared if they make one should you announce your intention to leave.

(6) Remember the situation is fluid. If you decide to stay, keep track of the market and start the process over in six months to a year if you still feel undervalued.

Use this approach and you will have "real" data eliminating all of the "possibilities" and "as best I cans" in your request. You will also avoid constantly talking about the adequacy of your pay with your current employer. You are not likely to be considered for promotions and additional training if they have a constant concern you may leave the firm over inadequate compensation. Your major risk is if your current employer finds out you are looking. Once again, read a bit about how to handle this situation and avoiding detection such as posting a resume on a job board. There is plenty of literature on how to maintain confidentiality with the network you choose to work through.

[Joe Cool]

I have a similar delimma:

Started in a training program at a Company. All my peers either have an MBA or interned at the Company previosuly. I am the only one with an undergrad degree and no internship at this exact Company. I found out, (sort of accidentally) that the MBA's make about 38% more than me, and the people who interned here (undergrads) make about 13% more than me. We all peform exactly the same work, and are all on the same career path.

My question is this: at my yearly review, how do I increase my pay relative to my peers, if we all get the same % raise, then the gap just continues to widen. My boss has told me in all my meetings with him that I am performing very well, and that most of the trainees in my program do not usually do so well. But, he also does not know that I am aware of what my peers make, and I don't feel like I can use the numbers in my argument (he would be furiuos if he knew I found out what they make).....how do I go about getting my salary more aligned with my peers (obviously not fully catching up with the MBA's, but getting closer to the other undergrads)?

[Uri]

Moving to another company will be a disservice to yourself. You need to stay a few years to gain from the job. Leaving after a year will likely burn the bridge with the company as they will have invested in you but you will have provided little in return. I suggest that you plan on staying at least 2 years but preferably 3.

One other thing to note is that market pay is always moving. Jobs are always going and you will never find the maximum pay. Stress is also lower the less you are paid and you are less likely to get bad reviews, which will help you at future jobs. Some employees get locked to a company because their pay is so high that they can't find anyone else to pay them that much.

[Rick]

I don't have a lot of experience with negotiations, I was never very good at it, plus I work in a unionized environment now for the past 8 years so raises are planned, everyone gets them, and they're not based on performance.

Having said that, and having 3 other jobs in two different careers, I would say definitely wait until after the training period, and if there is a yearly review that would be the time to discuss market value. After the first year if you continue to be above average, then I would mention that as leverage for a better pay rate.

[Bill]

If you work for a large company, it's likely that your raise and/or bonus are set before your annual review meeting with your supervisor. It may be silly to do it that way, but in my experience, that's how it goes. Therefore, you should schedule time to discuss this with your boss just before the annual review period or the completion of your training program. Most large companies will also tell you what they consider to be the "market value" for your position. If nothing else, check the job postings for similar positions within your company and make note of the listed salary ranges.

Don't bring up any other job offers unless you have them in writing and are ready to accept them that day. Don't talk about what others in the company are paid either. Do give your boss a concrete list of reasons why you deserve the compensation boost. You're finishing your training program early. That's good. Give examples of your quality work, and if you have documentation of the praise you've received (certificates, emails, whatever), have them available for reference during the discussion.

If you present a well reasoned argument and get lousy results, then you can think about looking for a new job. However, unless you're in a desperate financial situation and really need the extra cash, I'd still recommend toughing it out until you hit the two year mark.

Also remember that it's not all about money. When switching jobs last spring (seven years after graduating), I turned down an offer making almost 20% more, instead choosing a position that paid almost exactly the same as my old one. The new job is union represented, so there wasn't much to negotiate. Why did I take less money? I liked the location. I liked the work environment. I've been here 10 months now. Stress levels are low, and my boss seemed quite pleased with me during my mid-year review today. I should get a nice raise this fall, and I'm on track for a promotion in another year or three. Life is good.

[Bill]

To clarify a point in my first paragraph above, I'm not suggesting that you call up HR and ask what they think your market value is. But the information is usually accessible to employees in one form or another. Unless you're in a small company that has not yet succumbed to the will of the HR overlords. If that's the case, then your boss might actually have some discretion in determining what you should be paid.

[indio]

Recently I spoke with an HR recruiter for a global financial services, that told me they were finding it increasingly difficult to attract young talent. They were paying well, but it was perceived that there weren't enough "perks" to go with the job. As part of their recently revised retention strategy, they were making changes to keep people on board by letting them choose their own PC, etc. I think it makes perfect sense if you are talented, smart and bring a lot to the table to renegotiate with the new info you have available. It's cheaper to retain employees, than it is for HR to recruit and then train new employees. I would show them the other offer to let them know they are not competitive on salary and that you know it. Tell them you like working there and like the people and can they match it. Don't make threats, just tell them what you know and leave the ball in their court to see how they respond. If they say no, then you decide if it's worth it to stay or make the leap. Keep in mind that your base salary now is going to play a role in any future job when they ask what you were making at previous job.

[Ryan S.]

Nothing unethical about leaving one job for another that pays more. Believe me, the company will dump you a lot faster than you will dump them. The reason there is no company loyalty anymore from employees is because the company itself is not longer loyal to the employees.

[Laura]

I had exactly the same situation (even the same degrees) and I didn't negotiate a higher offer when I started like I should have, the reason being it was higher than all competing offers and I had no negotiating power. But when it came time for my yearly raise, it was much higher than I expected. A good manager who values your work should know what you're worth and pay you that. And don't think that being behind now means you will be one pay raise behind for your whole career. You will catch up in just a couple years. You accepted the job so it must pay pretty well, so I say stay there for at least 2 years (to avoid job-hopping and to get a feel for the industry). Then if you want to move, you will be better prepared.