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I just received an offer letter from a tech company and I am a curious if it is normal practice to state this in the offer letter: "Your salary will be reviewed on a regular cycle as dictated by company policy"?

Is this normal? To me it sounds a little shady, but I might just be thinking too much which is why I'd like to hear from others who've seen/received offer letters before from tech companies.

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    What's shady about performance/salary reviews? How else are you going to get raises? – JasonTrue Jun 22 '12 at 1:11
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    Have you asked them what it means? This is just legalese for "they can change the cycle duration anytime they please" because it isn't specified, you are being paranoid. If you don't trust them, don't work for them, it isn't healthy to start a relationship with someone you don't trust. – user718 Jun 22 '12 at 4:07
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    @Jarrod I think you're jumping to conclusions. That being said, most companies can't be trusted. :) – Nicole Jun 22 '12 at 7:04
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    If they dislike you enough to lower your salary, they're probably going to fire you rather than actually lower it. Withholding raises/bonuses and some chiding make much more sense than lowering salary. – Rarity Jun 22 '12 at 13:54
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    @Jarrod While I'm just having a bit of fun, in the end it's business and the documents are almost always entirely in the company's favor, to the extent of the law (for example where some states don't allow non-competes, etc.). – Nicole Jun 23 '12 at 19:39
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It's normal. It usually means you will be eligible for raise in 6 months or 12 months or whatever their cycle is. They usually tell you what the period is and not saying "timeline dictated by policy" though. The idea of putting in the letter is that even if the salary is lower than you want, you know there is potential for it to go up.

Don't worry about your salary being "reviewed down." That almost never happens. Companies get rid of underperforming people. They don't demote them often.

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  • I just find it a bit strange that they don't mention the interval, which to me means they could easily demote/cut salary after the first day on the job. Not saying they would, but based off that wording, it does give them the option to do it. – paul smith Jun 22 '12 at 2:16
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    If they do this on the first day, aren't they making the review cycle one day long? That sounds tedious for whoever has to do the daily review. I am sure they will be much more pragmatic than you are suggesting. – James McLeod Jun 22 '12 at 2:51
  • Usually that cycle coincides with reviews (annually/bi-annually). – Steven Evers Jun 22 '12 at 12:48
  • They don't mention the interval because you can then hold them to it. Companies want to have a standard policy that governs how often this happens, not to have it written slightly differently for every employee. The cycle can and probably will change - it's something HR managers love to mess around with, changing between all-at-once, on-your-anniversary, in-your-anniversary-quarter, etc. – Ross Patterson Jun 26 '12 at 22:25
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It is likely that the form letter is there to tell you there is a policy.

Some do the review on your anniversary date. Others do then all at once. If they do the reviews all at once, they will exempt from reviews new employees who have been there less than 6 months.

This is generally covered in the first days of work when you look over the employee handbook.

The policy will also discuss the procedures to be followed during the review including goal setting and bonus pools.

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  • mhoran is correct. Really the glass is at least half full. The fact that they promise to have regular reviews is a good thing. That's when you'll get your raises. – Jim In Texas Jun 22 '12 at 4:27
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An offer letter is not a contract, but may attempt to clarify certain mutual expectations that you should be aware of. I can't remember the specifics of all of my offer letters, but I do recall similar language to what you describe.

I've worked for a large software company that changed their review process from semi-annual to annual about five years after I joined. In the original semi-annual plan, a raise and bonus were roughly equally likely for either review, and both reviews had numerical scores. Later, they switched to an annual plan where the mid-year review usually had no meaningful score and a mid-year raise or promotion became a somewhat unusual scenario, but the potential bonus and raise impact of the annual review doubled. Bothering with the specifics of that plan was already more detail than was worth putting in the offer letter since companies change the specifics of their policies frequently. The important thing was that there was a scheduled review process at all.

I have worked for some companies that had no such regular process, and you were highly unlikely to get a raise unless you were also promoted, or if you basically had a competing job offer in your hand and you were so critical to the company that your manager felt compelled to make a counter-offer.

I've really only seen companies reduce salaries under extreme circumstances, and then, only when their employees were relatively unlikely to find better employment options elsewhere. Reducing pay was commonly practiced by the Carnegie steelworks especially when people were paid using piecework style compensation, but it's highly unusual in companies that have employees with plenty of other options. I observed Microsoft cutting agency temporary and vendor pay once, during a particularly nasty economic downturn (somewhere in late 2008 or early 2009), but I'm fairly sure the effort reduced the number of people willing to ever consider contracting for Microsoft ever again, so I doubt many companies would be willing to try that very often.

I also worked for a different company during that same time period whose client exercised a clause in the contract that required a reduction in the cost of the contract, which led to an ultimatum to accept a pay cut or leave; the company lost several people immediately and only retained the rest because a month later most of the people who accepted that short term pay cut received full time offers from a joint venture that had been in the works during contract renegotiations. This was only possible due to the rather poor economy and the slightly limited options available to rapidly change employers; any other time and they might have lost 50% of their workforce within 3 weeks. But attrition would have net them the same result when the goal of reducing cost was more important than team capacity.

It's worth pointing out that an offer letter is not the final word from an employer before you start. If you have questions about company policy, ask the recruiter or the person who sent you the offer letter. If you want to know what their actual routines are, it's usually ok to politely inquire about such details once you have an offer in your hand.

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    I have to vote this up for the simple fact you told him to ask the company any questions he might have. – Donald Jun 25 '12 at 15:24
  • I should add that my attorney said an offer letter becomes a contract when you start work, for what it is worth. Of course, if you're in an at-will state, that may mean little. – JasonTrue Nov 16 '12 at 1:25
  • Even with an "at-will" state you are offered some protections, in that the offer letter can be retracted, but not modified ( i.e. you are paid with cookies because they believe you to be Santa instead of money after you accept ) without your consent. – Donald Nov 16 '12 at 4:51
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If you work in a region with "at-will" employment, as I do, then your arrangement for working with a company is always voluntary on both sides. You shouldn't look at this offer letter as if it were the set-in-stone rules that your position at the company will abide by. There is company policy and culture to consider. It's likely that you fit that culture, or you wouldn't have been offered a job.

I wouldn't worry too much about a pay cut on day #2. After all, if a company wants to hire you, why would they want to immediately make you unhappy?

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There is almost no chance that any tech company that is going to hire you is going to just drop your salary suddenly.

They are hiring you because they want you to work there. If they didn't think you were worth the money, they wouldn't be paying you it. Given how tight the job market is for talented workers, most companies are doing whatever they can to keep top talent. I know, I run a website that does tech hiring and can tell you most companies are desperate for good talent.

Further, when you understand how most corporations of any size work you will understand that there is almost no incentive for them to drop your salary. Salaries are a budgeted item. If a salary isn't spent it is usually "lost" to the department that hired you. That department has no reason to not pay you that salary because it doesn't come back to them even if they were to decrease your salary.

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