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We want to make an offer to candidate, say John. And we know John's expected salary, say 50k. We can offer John what he wants.

However, our company's year-to-year salary increase is very low compared to the rest (say 2% vs industry 5%).

As we make this offer, should we increase his starting wage beyond what he has asked (say 5% over 50k)consider we won't be able to give competitive salary increase annually?

  • Is there anything that prevents you from just 'giving' John a raise later on? Say, one year from now, the industry average has shifted 5% and John's compensation is lower than average. Do your employees only ever have their salaries raised as part of this annual increase? Is it not performance based / value based or anything like that? – schizoid04 Jun 18 '17 at 20:16
  • I ask because regardless of what you start this employee at, the concept that his salary will not keep up with the market average will lose you that employee within just a couple of years. What you start him at, he'll think is what he's "worth" now. Seeing that number marginally change over the years will take a toll. – schizoid04 Jun 18 '17 at 20:18
  • salary can only adjusted by annual review or title change or below market expectation – GeekInPink Jun 19 '17 at 18:23
  • Well, then if the market is rising by 5% each year, and your organization is only automatically giving 2% increases, would you not be able to give him the difference as his salary would then be 'below market expectation' ? It seems like a strange rule to have – schizoid04 Jun 19 '17 at 18:46
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As we make this offer, should we increase his starting wage beyond what he has asked (say 5% over 50k)consider we won't be able to give competitive salary increase annually?

No. While I understand what you are trying to do, it simply won't work.

Once you give a new employee a salary, that will become the anchor for that employee's expectations. If their annual increase is 2% and everyone else in the industry is 5%, they will feel cheated anyway. They won't remember that you attempted to give them a higher base a year ago.

I have no idea why your company would consider it okay to give 5% more than market rate initially, but to consistently give smaller raises than the industry. That makes no sense to me, and virtually ensures that you will lose people.

If it were me, I'd work on getting the annual increase policy changed to more closely align with the market and competitors' practices.

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  • AFAIK this is one of those toxic situations where you get as a company if you are taken over by Finance people, which is pretty much every second corp there is. I never understood this either - our company is very austere with regards to pay increases, thus we lose good, experienced people. But the cost is not only the price of hiring through agency (typically 25 % of yearly salary) but also the fact that often we have to hire significantly above the leaver's salary, which again causes ill blood as unexperienced new starter gets higher salary than everyone who is years in the team... – Eleshar Jun 18 '17 at 20:52
  • The same thing was the case with that company we merged with recently, or the one we acquired some time ago, or the one my boss came from, or the one some of my coworkers left to. All of them big companies, big on austerity with salaries and all of them having insane recruitment bills and grievances from old salaries seeing all these "overpaid" new starters. – Eleshar Jun 18 '17 at 20:55
  • @Joe, we are working on policy change proposal but it will take a very long time to get things in place – GeekInPink Jun 19 '17 at 18:25
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Speaking as a candidate and not an employer, I have always been told that you get your money coming into the job and not on the job. I would be honest with him about how the salary increases work, so John is prepared. Also, what is the going rate? Is John under or over that market value? If he is under, then I would definitely raise him up to the 5% to keep him happy - monetary-wise. If he is over, maybe 2 or 3% above his expected salary.

Is there something your company offers that might negate the extra money? Healthcare coverage for family, more time off? Something else you have to offer? You don't want to have to look for someone else in a year or two, if John can move on to a higher paying position.

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    John's expected salary is inline with his experience and adequate for market value. Good point about the benefit package, we do have more time off compare to other places – GeekInPink Jun 16 '17 at 20:45
  • Depending on John's age, more time off might make a difference. I'd also consider being open about the situation. He might want to work for you, especially if you can bring up the benefits that you have other places do not. Otherwise, you might hire him to lose him. – DataGirl Jun 19 '17 at 19:00

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