Starting salaries for juniors: based on current value or future potential?

Question

I started as a Junior Software Engineer a year ago with limited experience, though I've improved since then. I'm curious about how employers determine starting salaries for inexperienced hires:

• do they set salaries based on the employee's current skills and experience at the time of hiring?
• or is the starting salary meant to reflect the employee's expected proficiency after a training period, meaning it's higher than their current value?

I'm asking because I could use the answer in negotiating a raise.

I also imagine that different employers may have different approaches? What is your experience?

Answer 1

Salaries are not based on "skills" but on "value to the company" and "supply and demand". There is a lot more to bringing value than just "skills", a lot of this is about cultural match, understanding how the company works, effective communication, etc. Skills are just a means to and end.

Starting salaries are indeed a mix of "initial value" and "expected value". That's a good thing, since the value that a fresher brings to the party often very low in the first few month but they still get paid. Some people get the hang of it quickly and some take a long time to ramp up.

If things go reasonably well, than a good point to determine the raise based on actual performance data is about one year into the job. Your best approach here is to focus on deliverables and carefully track what projects you have completed, at what quality level, and what the impact of these projects were. Take this list to your performance review.

Answer 2

Starting salaries are set based on what companies have to pay in order to hire the people they want. Exactly how they determine what to offer each candidate depends on the company; they may have a standard rate they are currently paying for anybody in that initial position, or they may adjust it based on how much they want this individual.

These days, companies do not assume the employee is going to be with them for any significant percentage of a career, so unless this is an exceptional candidate their future value probably doesn't figure in that strongly.

Remember that value after training requires the cost of training, which has to be figured into the cost of bringing the new employee on board. And that an employee started at a higher rate may find that raises come more slowly to compensate for that.

So, no, I don't think there is any principle here that you can use to argue for a raise at your current job. The best you can do is look at reports of typical/average starting salaries across the industry, without trying to guess what is driving those numbers, adjust based on relative cost of living, and try to guess what you might be worth on the market.

Or start interviewing and see how much you are offered. But see many past answers about the inadvisability of trying to use an offer to persuade your current employer to adjust your salary; they may take it as a sign that you are likely to leave soon whether they give you a raise or not.

Answer 3

The answers Hilmar and keshlam provided are quite good. (They don't need me to point that out.)

What is worth adding is from an employer's perspective dealing with Junior Devs. At a large company with only annual reviews to get raises or reclassify, job hopping is just about the quickest way to get more recognition and money. IMHO this is a waste of talent on their part and feeds the concept that devs must job hop.

Smaller companies with flexibility, keeping managers / mentors updated with meaningful progress is very helpful. If the managers are capable, hopefully they reward the dev with incremental raises.

The quandry that many companies fail at is "You have to retain them to train them". The idea of training someone and they leave versus not training them and they still.

The best possible outcome is get the company to provide trainng, increase pay, and not be afraid that you are going to job hop away.

In other words asking for career growth at your current company and getting it.