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I have a very solid experience in Software Development and Project Management, and I just learned that the company I work for has posted a new position that requires half the experience and a lesser set of skills than I have. This new position pays the same salary as my current salary, while at the same time they declined to pay this same salary to me when I was joining the company.

How should I counter this?

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Apply for the job! –  Telastyn Jun 7 '12 at 1:18
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This is how these situations often turn out: psychologytoday.com/blog/passive-aggressive-diaries/200910/… –  jfrankcarr Jun 7 '12 at 3:44
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"...I know there are many projects in the pipeline where my involvement is crucial for the projects to be successful..." apparently your management doesn't share your opinion on how crucial you are, and they are probably correct, everyone is replaceable in the end. –  Jarrod Roberson Jun 7 '12 at 6:20
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@JarrodRoberson, that may not necessarily be the case, often orgs just fail at paying people what they're actually worth. It might be a good time of the OP to ask for a raise. –  Angelo Jun 7 '12 at 9:16
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Ali, it would be helpful to know how long you have been at the company? For instance, if you were just hired a year ago and the salary is dramatically different, that's one thing, but if you've been with the company a few years, then that's a different situation (with perhaps different tactics). –  jcmeloni Jun 7 '12 at 10:39

5 Answers 5

First and most important, get over the idea that salary is going to be fair. New people often make more than existing employees because they have to offer that level to get new employees because that is what the market is now charging. Once you are an employee, they know they have you and don't have the need to offer more because you were already willing to work for less.

Yes this is short-sighted and it results in lots of the best employees moving on. But as long as MBAs think that anyone not a senior manager is an interchangeable part, this will continue to happen. They aren't worried that you will leave because chances are that you won't and if you do and they have to pay the new person more than you were getting, well that is the same as giving you a pay raise (only there might be several months when they get work out of you while you are looking where they don't have to pay that, so it is cheaper in their minds to get a new employee if they are going to have to eventually pay that rate anyway).

So do the math, you get hired in 2007 for 60K (amount chosen totally at random and does not reflect what I make or what I think you make) and get a 3% raise each year for the next five. So now you get around 69K. In the meantime, it's gotten harder to fill postions and new employees won't accept new jobs unless they get substantial payraises. So if you were looking for a new job, you might want 75-80K. So will the people who are replacing you if you leave. So to fill a new postion they have to offer say 78K which is way more than you make and the person isn't as experienced as you are and certainly doesn't have your intimate knowledge of the current software. But managers at the hiring level don't see that as a value-added when they are concerned with salaries, they only see that you were making 69K and it is outrageous to give you a 12% raise when other employees have been getting 3% raises. What if everyone else found out and asked too? That would blow their budget out of the water. So while I can afford to give a higher number to the two new employees, I don't have the money to give that to the 20 current employees.

Now a few people have really good negotiating skills and can get pay raises and intial salaries higher than the company average. But in the long run, the initial salary you start at will dictate how much you make for as long as you are at that company (and often longer, making 69K, you might be happy to get 75K at the next job but someone who started out better than you who already makes 75K is going to want 82K even if he has the same skill set you have).

One reason why many companies will fire you if they find out you let out how much you make is because HR (who can see all the salaries) knows that they are paying unfairly. If you knew the current salaries, you might find out that the very top people you have make less than the worst performers (becausue their best skill is negotiation not programming). Women in virtually all career fields make less than men, people of color make less than Caucasians, people on work visas from other countries make less than the normal market salary as well. Put this is your brain and engrave it there in capital letters - SALARY IS NEVER FAIR.

So what do you to to make sure you get the best you can get:

First learn to negotiate. The best negotiators will walk away from a deal they think is less than what they want. If you want a salary increase and they don't give you one, are you willing to leave? If the manager knows you won't leave (and they can can make a good guess most of time if you are serious), there won't even be a negotiation. Practice negotiation skills before you ask for a salary increase (one failed increase negotiation will drastically reduce your chances of a successful one later at the same company so get prepared).

Next, moving to another job in another company is probably the best, least complicated way to get a good pay raise. (just don't move too frequently or it will become harder to find new positions after about the first 3-4 stays of a year or less)

If you want to stay where you are, you generally need a promotion or change to your job title to get a substantial raise. Added responsibilities are the key to higher salary or at least the perception of added responsibilites as shown by a new job title. Remember they are getting you for 69K now, why would they want to offer you more unless there is something in it for them (and retention of a valuable employee isn't enough most of the time). So figure out what you are doing that goes beyond your current job description and negotiate a new position. Sometimes it might be as simple as a move to a job with the label senior on it (sr. developer for instance has a higher pay band in HR than developer, completely new positons often haven't had the pay band set yet and thus have more wiggle room to have a higher salary)

Remember the lower you are on the management totem pole, the more easily replaceable you are viewed as being even if that is patently untrue. So get a higher position if you want more negotiating power.

Technical people like to believe that outstanding job performance will get the large pay raises and that they shouldn't even have to ask for them. But really many outstanding performers make substantially less than many simply acceptable ones. So don't count on outstanding performance alone to get you more money.

And remember a request for more salary because someone else is making more or new hires are making more or because you need the money is doomed to fail. So is a casual mention that you'd like a pay raise (that is not a negotiation to your boss, that is whining). To get more money in your current job, you have to show that your performance is worth it to the company, that you are someone key that they don't want to lose (really hard to prove, so don't depend on this one) and that you will take on additional responsibilities (or have taken them on and want to be rewarded for it) and that any pay raise will be offset by the additional money you bring in (one reason why sales people find it easier to get payraises, plus they know how to negotiate).

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+1, That comprehensively sums up the reality of these situations. –  Angelo Jun 7 '12 at 19:26
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Great answer HLGEM, but have you considered adding a summary at the top for the tl;dr impaired? –  Mark Booth Jun 8 '12 at 11:34
    
I had a friend that was getting small increases every year. Eventually there was such a brain drain at the company they increased is salary by like 10% in a single step. Granted new hires were not being paid more, it was a similar problem, they just should not hold onto the talent because of being under valued. –  Ramhound Jun 8 '12 at 15:09
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In essence your answer leads to the conclusion - recompense in all 'human' activities is simply based on human dynamics (or politics) and it's about how you interact with others in the organisation and not on some easily defined technical metric. Want something? You have to deal with a person/persons and work with their desires and needs. I love the quote 'Get over that salaries are fair'. Very good answer. –  Preet Sangha Nov 3 '12 at 0:00
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Harsh, but unfortunately true. –  Burhan Ali Nov 28 '12 at 9:21

Ask for a salary increase. Prepare the reasons why you feel the increase is justified. Focus on your skills, your role, and the market value of those skills. Maybe they'll throw you a bone and give you less than you asked, but any increase is better than none.

Some people like debating and wrestling over money. There's no need to be shy.

If that doesn't work, then see if other companies are willing to pay you more. The best way to find your true market value is to see what other companies offer you.

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I was talking to a colleague about this recently, and we came to the observation that our industry is odd in that promotions and raises are much more often more easily acquired by just switching companies. You'd think that wouldn't be case. –  SnOrfus Jun 7 '12 at 2:46
    
Focusing your skills, role, and value should be relevant to what the company does and should demonstrate how and why you deserve that salary increase from them. If you make it about them and not about yourself, they should respond better to that and be more inclined to meet your offer. –  Matt Chan Jun 7 '12 at 11:43

My current employer is in this situation. Folks hired get hired at the market rate, but since 3% raises don't keep up with the rise in market rates, new hires end up making more than experienced employees. The only solution for folks wanting more significant raises is to actually quit and go work somewhere else - then come back. I quit to work elsewhere and about 18 months later they needed me back, so I'm back here at about 20% higher than I was making before leaving (everyone gets 3% annual raises and even folks who are about to be fired get 2% - it is a privately held company).

Negotiation is a very important skill in IT, and one that seems to be undervalued by technical workers. I think it will be the most valuable skill you can learn this year. And the most important part of negotiation is the ability to just walk away. You need to know what your "best alternative to a negotiated agreement" actually is (the term was coined in the book Getting To Yes, and a review is here), and negotiate from that point. The point behind understanding your BATNA is that you will know what you will have/get if negotiations fall through, and that you won't accept a deal that is worse than BATNA without knowing it.

Many companies like to write policies that say discussing salary/wage/benefits to be a fireable offense. The purpose of this is to strike fear into their workers and to practice the doctrine of "divide and conquer." The National Labor Relations Board has repeatedly held that discussing salaries, wages and benefits to be an "organizing activity" covered by section 7 of the NLRA and that company policies forbidding such discussions are banned because they violate section 8 of the NLRA (one example upholding this view is Handicabs, Inc. v. NLRB, 95 F.3d 68). If you aren't going into a negotiation knowing what others are currently making for the same job, then you are going to be coming from a much weaker position than you should be coming from.

You need to be able and willing to leave. You mention working in project management. If you don't currently have a PMP certification, I recommend getting that credential and use that in your negotiations. If you don't get the raise you are looking for, the PMP will show other employers that you are a PM and are serious about being a PM. This should get you more money than you are making now.

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Ask for an increase but base it on the current market and what other organizations are paying and what your experience is and most of all what you are contributing

I'd simply avoid talking about the position you've seen posted. It will just tend to lead to a lot of unproductive and/or awkward conversations about that position, about your pay, that positions pay, your starting pay, etc, etc. Basically a morass of questions and subject matters that you'd really be better off avoiding. in favor of the above approach.

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First, you need to acknowledge that you created the problem you now have... you agreed to this salary when you accepted the job offer.

Sour grapes, jealously, or greed are all real feelings and in some cases you may genuinely be underpaid. However, unless you can demonstrate that median market wages for your position have increased significantly since you accepted their offer, this is an uphill fight for the reason outlined above.

Most of the time you have to be ready to walk if you want more. If the company likes you enough, they might make an offer to you on the way out the door. However, proactively threatening to leave unless you are paid more is a recipe for making yourself unwelcome. You cannot demand they pay you more when you previously agreed to the terms you have.

Sometimes you can ask nicely and they will make it right. In my experience proactive wage adjustments prior to resigning are unusual... unless the wage imbalance is so absurd they know they're at risk of loosing you (and that also assumes they don't want you to leave ;-).

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