The system does take advantage of nice people that are bad negotiators.
I guess don't hate the player hate the game as it is all game theory in the end and the complainers or negotiators will always tip in their favor. You can be a team player and get your worth but you have to speak up and be aware.
I think it is better to be fair at salaries even though you could pay the great developer you have lower than the good one that knows the market and is a negotiator. If you don't and they find out they are gone as happened in this instance. Open salaries might even be a good idea with bonuses for performance.
We are all* bad at bad at negotiating when we desperately need a job, this is one of the biggest reasons I suggest people look for a different job while they're still employed, if they have that luxery.
Job hunting while you don't need to helps you overlook those places where you know you might not be a good fit for whatever reason, and interviewing when you don't need to helps you build your negotiating skills.
I got my current job while happily employed at my last one, the only reason I applied was quite literally for the interviewing experience. But I liked what I saw, they agreed to a salary that I decided ahead of time was the bar that had to be met to be seriously considered as a potential new job, so I said yes and so did they.
2 years later, I'm loving my job, my team, and my management team. Job hunt while you don't need to.
How do I know I'm making market rate? I check glass for periodically and share salary info with colleagues who reciprocate.
* we aren't all bad at negotiating but enough of us are that I think its a safe generalization here.
That happened to me today. They asked me my rate. I said $X. They said they could offer $X-20%. I declined the interview. (I was getting bad vibes for other reasons, so I don't feel bad.)
If I was unemployed, I might have considered $X-20%. Since I have a job, there's no reason to accept a job for a lower salary than I'm getting now, especially when the interviewer is being a jerk. (If it seemed like an awesome opportunity, I'd consider equal or slightly less. This was not one of those, it was a contracting company looking for a warm body RIGHT NOW to fill a client need.)
One other lesson I've learned that's surprising: You would think that in a job where you're underpaid, you'll be appreciated, and in job where you're paid well, you'll be abused more. My experience has been the opposite. In the jobs where I was paid well, it was a more pleasant experience than in the jobs where I was underpaid. In business, money equals respect, so if you're underpaid, that means they don't respect you.
This is known as the Best Alternative to a Negotiated Agreement, or BATNA, and it's a pretty helpful concept: the better your next best option is, the better position you will be in to negotiate.
> ... it is all game theory in the end and the complainers or negotiators will always tip in their favor.
But what is "in their favor"?
Hypothetically, I'm new to a field, interviewing with a company in another city. If I'm completely honest with them, then I might say, "You can make me a lousy offer if you want; I'd probably accept it. I don't know the job market, and I don't know your city. But soon, I will. And when I do, unless you offer me enough now to encourage me to stay, I'll be gone. And all your effort in finding me and interviewing me and moving me there and training me and bringing me up to speed on your business will be wasted. So why not just make me a decent offer now?"
Of course, no one ever says that.
But, viewed through that lens, I think it's clear that many businesses are awfully poor players of "the game", as well.
Many people stay even after they realize they're underpaid, simply out of inertia. Companies knows this, and by getting you to accept a low-ball offer, they're just taking a calculated risk, and reaping the benefits in the interim, if not the long run.
The trouble with an issue like this is that it is difficult to disentangle a calculated risk of the kind you are talking about from mere short-sighted thinking. People proceeding from the two different viewpoints could end up acting identically.
And then there is the fact that the company is often not really the one making the salary decisions. Rather, someone has had hiring authority delegated to them. And this person's motivations in making an offer might not aligned with the long-term best interests of the company.
I've heard several hiring managers say "recruiting is very expensive in both money and attention; while we don't want to significantly overpay you, we also don't want to underpay you and then have to go through the whole process again in six months when you discover your market value."
nope, "don't hate the player, hate the game" is a massive cop-out, and excuses people who perpetrate broken systems because they benefit from them. there is no abstract "the game" written into the fundamental nature of human psychology; there is only the collective behaviour of all the players, some of whom end up influencing the game more than others.
> massive cop-out, and excuses people who perpetrate broken systems because they benefit from them
> there is only the collective behaviour of all the players, some of whom end up influencing the game more than others
You drew the wrong conclusion from your own example. The sum of all of the players actions is the game, and it delivers results similar to the Nash Equilibrium. Everyone works in their own best interest and the system is actually not "broken". This is the system working. If you would work for half what another employer might pay you, fine. Obviously, I weight the benefits of saving money on your salary, with the negative (and likely outcome) that when you find out, you may leave taking talent away. Some employers pay well to prevent this (google, yahoo, amazon come to mind), and thus their talent is largely safe from financial poaching.
This is how the system works, and how the world works. It isn't equitable and it isn't a fairytale. However, it is true.
> Everyone works in their own best interest and the system is actually not "broken".
You assume that all actors are rational. It ignores things like office politics, people building fiefdoms, people holding grudges, the idea that you aren't a "team player" if you're asking for more money, the idea that one should be "loyal" to the company (but that the company can be "cold and calculating" when it comes to you), gender/racial/whatever discrimination, etc...
People often do not work in their own best interest. Or maybe they work in their best short-term interest while ignore their medium- and/or long-term interests.
The player's action is not separate from the game. The game is what the various players do.
Hate the player. The player is someone you can hate and blame and point fingers to and make an example of so that other players refrain from unwanted behavior.
Yes, many of us have been fortunate in that we've actually had managers or clients encourage us to raise our rates to what they knew were market standard. Unfortunately, not everyone experiences those lucky moments.
I am currently reading through Thomas Schellings The Strategy of Conflict, which is brilliant, but even the first chapter is enough to outplay the normal plays that you will encounter (e.g buying a car, demanding a certain wage etc). It is a surprisingly easy read for an old book.
I own a small but quite successful software business and struggle with how much to pay people. Our developers are all quite happy with their jobs and (as far as I know) compensation. Several of them have spontaneously told me it's the best job they've ever had. When hiring, I will ask if there's a level of compensation they have in mind, but I don't press if they don't want to state a number. However, any who have stated a number tend to quote ranges which I find quite reasonable. (In the 60k range for intermediate to senior people.) We're not in an expensive area, and those ranges line up with average to above average from what I can tell on Payscale and such.
So, I end up paying people around, or even slightly over, the top of the range they quote. It's certainly within our means, and being well paid should allow them to focus on the work and not worry too much about compensation. (From my own past experience, normally if you say you're looking for $X to $Y, the employer hears $X.)
So far, so good. I certainly wouldn't want to pay less. However, our profits are still very healthy. In other words, I effectively still make considerably more than my developers. Of course, I would expect to make more given the time I've put in and the risk I've taken. It's just a job to them. And they're happy with what they're making, and it IS market level. But... I still feel awkward about how much the company is making compared to their salaries. I wonder how they would feel if they knew the exact numbers. (Although I imagine they could estimate it fairly closely if they wanted to.) I wonder if I'm being greedy watching my savings rapidly grow while my employees make good but not fantastic money. But at the same time, I have trouble with the idea of voluntarily paying everyone considerably more than they a) are happy with and b) asked for, given that I know the rates we're paying are already competitive and we have no trouble hiring.
Why not have the employees participate in a profit sharing program? On a quarterly or annual basis, any profits over a minimum level get split so a percentage gets put into a pool and distributed to employees as a bonus. This distribution could be based on salary or just an even split.
The advantage here is that employees are 1) rewarded for the work they do, and 2) shows that the company understands the value that they bring, 3) the employees become invested in the success of the business because they benefit directly from it (as opposed to a flat "10% bonus based on salary").
As an employee myself, it's hard to look at companies that make massive profits but don't reward those responsible for helping make that happen (the labor force). One could argue "anyone could do that job", or "if it wasn't him it would be someone else", but that doesn't matter. Just because you CAN take all the profits for yourself doesn't mean that you should.
From an economic perspective, funds going to employees are turned around in the economy and generate more economic activity that money sitting in your bank account.
Certainly if I did decide to start paying considerably above-market rate, I would do it in the form of profit sharing, because anything else would be taking a considerable risk should profits decline. However, there's still the question of whether that's the thing to do. I mean, certainly it would be a nice thing to do. But so would giving more to charity, or to my parents. Or lowering the price of our product for that matter. The only difference is that, as you say, the employees help generate those profits. But only to a point; the first developer I hired was after the company was profitable, and she's actually moved on to her own startup. So it would be more about sharing the current wealth than rewarding people for getting us where we are.
Still, obviously it's something I'm considering, or I wouldn't have posted. And I guess it doesn't have to be all or nothing; I can obviously choose to share any amount of the profits.
Really don't follow the last argument. I would hope if my employees got a sudden large raise, they would put most of that money into their own retirement savings, rather than just increasing their spending. But even if they didn't, by your argument the best thing I could do would be to just blow the profits myself buying cars or whatever. I think the money does the economy just fine in an investment account, providing capital to public companies and the government.
The last argument was really more of a macro view. Economists have shown that reducing wealth inequality actually increases economic output more.
For example, for someone that makes $10k a year, give them an extra $10k, that whole $10k is going back into the economy as an increase in demand. For someone making $100k, maybe 50% of an extra $10k goes back into circulation through spending, for someone making $1m/yr, the extra $10k does nothing to increase demand.
Economic activity = spending. The more wealth that's concentrated in investments and saving, the less is available for increasing economic output.
This type of argument is used to explain how an increase in the minimum wage would actually make the economy better for everyone, not just those that get the pay increase.
Simple supply and demand. Increase demand (higher income for laborers) increases supply (which increases employment by requiring more workers).
Think of it another way, would $10k make a bigger difference to your employee or to yourself?
You successfully started a business. Not many people even try to do that, and of those who try, not many succeed. You have created jobs that people are evidently happy to have. In short, you have come by your wealth honestly.
The only other thing I would encourage you to do is, if any of your employees express interest in the entrepreneurial path, encourage and even mentor them. Maybe even be their angel investor, if you believe in them and like their idea. That would be a great way to give back to the world out of what you have received.
Thanks. My first employee did actually leave to start her own company, and I did try to be as supportive as possible, although I was sad to see her go. (I did decline to invest, as I wasn't really confident in the concept, but I certainly tried to give any useful advice I could.)
People with more to lose often imagine that they risk more than someone with little to lose. I think of it the other way around, do you risk more but betting a hundred k if you still have fifty in your pocket? or a hundred bucks if it's your last hundred? My take is, your risk gets higher as you get to the point of only having your health and future well being to lose.
And have you done your sums as to when your risk / reward profile starts getting even? maybe that is the point you start thinking about sharing the profit?
"It's just a job to them."
I have had a few jobs where my employers treated me as 'just' an employee.. though i never treated it as 'just' a job. If your employees stay with you for any length of time, then it is not 'just' a job, but a step in their career. You are in a position of power to help them in their career, or 'just' exploit them for profit. It is not all about money for employees.. if you are giving them a boost in their career, maybe that is more valuable than the cash for them?
Perhaps "just a job" was a poor choice of words. I certainly don't think of my employees as "just" anything. I do everything possible to help them advance in knowledge and abilities, and as I said, I have had extremely positive feedback. My meaning by both that and the risk comment was the same: as employees, they have a guaranteed salary from day one. They're not taking an appreciable risk, at least not as I understand the term to be commonly used. I spent years of my free time working on this project before I ever knew it would make money. Then when it started to look promising, I quit my day job, and built it to profitability myself before hiring anyone. It could have easily failed along the way, in which case I would have been out everything I could have earned in the meantime, not to mention all my free time invested, or the fact that unless I wanted to work at another startup I would've had more valuable experience in my day job.
I do agree with you that there is value in providing a positive work environment and helping further employees' careers, so I'm happy to be able to do those things.
cool.. thanks, i got the impression from your original comment that you are not a run of the mill employer. plus, it sounds like you did a fair bit to manage the risks appropriately for yourself.
but i also think employees risk a fair bit in moving to a new job, and in the the success or failure both of the job and the business. particularly if they aren't able to build savings of cash or spent time behind them to start the new step in their career, if something goes wrong. to add to that, they typically have no power in managing the risks of the business, and little power in how their efforts are valued in the job.
so, anything you can do to minimise those sorts of risks for employees—like you say, positive work environment and helping further employees' careers—also goes towards reducing their risk/reward profile.. and perhaps some way toward assuaging your doubt about pay?
Worry less about the average you're paying and focus more on the spread. Employees can always rationalize the big picture. (Our employer pays less but is stable. Our employer pays very well because they hire the best. Etc., etc..) It's a totally different story when a employee discovers that they are making $20k less than their comparable co-worker.
I've never understood the taboo for saying how much you make.
I've tried to avoid this taboo. When my previous employer closed the office I was in, I shared all the offers I got with a co-worker as did he. I was getting better offers, but I had more experience and neither of us felt embarrassed or insecure about it. We both ended up with pay increases at our new jobs.
Companies rely on this taboo to negotiate the lowest wages possible for each employee, to the point that I know managers that made less than the people they managed, or a developer doing the same level as work as me making $48 when I was making $83, because he came in as a junior developer rather than being higher at the level he was producing at. I encouraged him to ask for $70k or get another job. He got another job at $67k.
The only reason he knew he was underpaid was because I brought up the topic and shared what I was making.
Everyone takes a risk. It isn't just you. Your developers don't know whether the company's going under tomorrow, they don't know if you're running off to Mexico. They've thrown in their lot with you, and they have a ton riding on you being honorable, a good businessperson, etc.
Using your "risk" as a way of explaining why you take way more than one of your staffers sounds like the typical post hoc ergo propter hoc handwaving. Exploitation by any other name.
Sorry, I don't mean this to sound totally dismissive, it sounds like you run a decent shop and I like that your devs are happy, but talking about your pay disparity in terms of "risk" just sounds like a thin explanation for "because I said so".
I'm a guy, and I was underpaid for many years at $LARGE_CO. I finally found this out when the CEO gave "normalizing" raises to narrow the spread of salaries at the same position, and I got a nice raise. That left a bitter taste in my mouth, and I left shortly after.
Some of us (men and women) are just not cut out to play this salary game. :-(
There are two sides to this coin - if you are getting valuable experience or you really love your job, then you need to factor in the fact that you may get more elsewhere, but the working conditions or culture may not suit you.
It never hurts to keep tabs on the market by doing interviews outside. In fact, I'm pretty sure I know many folks that got promotions/raises simply because they bothered to look elsewhere.
Keeping in mind, of course, that monetary compensation is only one aspect of a rewarding job.
I experienced the two sides of the coin first hand. Right after college, I started to work at a start-up; everything was just awesome, people were cool, job was interesting, I was extremely happy. 3 months into the job, after I talked to my colleagues, I realized that I was severely underpaid. I asked for a raise, got something like 5%. After 2 weeks, I switch to a job paying me exactly x 2 of my salary.
Worst decision of my life, and I still regret it to this day. But knowing the fact that my old job was taking advantage of me just because I am a new-graduate, I couldn't return back there. But sometimes money isn't really worth comparing to being absolutely happy at work.
> Worst decision of my life, and I still regret it to this day.
Interesting framing. The way I see it, you were successful in determining that you're worth more, but you landed at the wrong place. Like, the issue isn't that jobs that are awesome AND that pay well don't exist, the problem was you just didn't land in one.
I really don't understand the reluctance of companies to pay their employees as much as they reasonably can. If a company is struggling or burning cash, sure I get it, but if you're Apple and have $200 billion in the bank, why are you not paying your employees significantly more? That money sitting in the bank isn't doing you any good, and there's something to be said for reducing turnover and generating loyalty by demonstrating to your employees that you recognize the full value they provide.
Seriously, unless you're deeply passionate about the vision of the company you're working for, it's super important to keep tabs on the market and leave companies that are (for lack of a better term) taking advantage of you. Unscrupulous employers, especially traditional scrooge-mcduck-business-entrepreneurs, will try to squeeze you as hard as they can while paying you as little as they can (a good rule of thumb for spotting these men and women is that they're in their business just to make money, not to chase some "nobler" vision). So it's critical that you get out as soon as you can not only because it'll be better for your financial and emotional well-being, but also so that you don't lower the market wage average of your profession and wind up hurting all the other people in your industry.
People can still be good bosses/owners if they're solely in it for the money. They important point is that they have an accurate picture of costs and value.
Some penny-pinching bosses can be annoying. One boss fired a guy that got paid a lot less than me, but then I had to take over his tasks, which meant I was doing a lot more low-value work (updating pages on his WordPress site) instead of higher-value work (programming).
Actually, the finance sector has this figured out better than most other sectors imo (just consider how much bonus they pay even their lowly analysts after working them to death). A good boss / company there ought to be more about earning money than having money, and so should spare no expenses rewarding employees who bring a lot of value to the corporation... So my point is you want an employer who has the character to reward everyone in the company (including him/herself) based upon some open and fair system of value contributed / need without being prompted, rather than someone who will pay you what he can get away paying you.
But deciding that most inner quality of character is difficult (since it's an hidden attribute on people), so it makes sense to look for various outward expressions of that hidden trait... one of which I postulate to be the question of whether your boss is in it for money, or in it for a vision. In the finance sector, where it's only about money, my postulate admittedly breaks down.
If you're going to sell something, you need to have some sense of what it's worth or you run the risk of being taken advantage of.
One of the most valuable things you will ever sell is your time and work energy. That's a sale worth tens or hundreds of thousands of dollars per year, every year.
It is incumbent upon you to understand the value of what you're selling, or else someone will lowball you and take advantage of the situation when you say "yes."
Maybe that's unfair. But it's just how things work.
How did it take this poor lady so long to figure out she was being paid too little? Me and my fellow coders are very aware of who is paying what. It's a daily conversation, what with linkedin and recruiters spamming us with job adverts.
I've always found that switching jobs is easier than getting a proper pay rise. Asking your boss for +10% and getting offered 2.5%. Go to some interviews, accept, hand in notice. Boss offers +15% for me to stay... wtf. Poor communication skills from both me and my boss I guess.
I've always found that switching jobs is easier than getting a proper pay rise.
I have found that to be the case as well. Using a combination of skillful salary negotiation, leveraging counteroffers (use sparingly), and hopping between companies, I have averaged 19.5% yearly salary increases for the past 10 years. Obviously this is not sustainable, since my current salary level limits the number of positions I can take without taking a pay cut.
For those who are curious, it took 6 companies over those 10 years, with 1 career change from teacher/manager to programmer. During that time, the largest year to year jump was 38% (2nd was 37%), the longest time spent at a company was 3 years, the shortest was 3 months. I used the counteroffer trick twice, once quitting and once staying.
Yep, I'm in the same boat. I've left two jobs over the past 3 years and have gotten a +25% "raise" both times, as well as a jump in job titles.
After seeing how difficult it is at any company with an HR department to approve raises or approve title changes, I'm not even going to bother in the future with trying to do that. Do a good job somewhere for 1-2 years, accept offer at new company, rinse, repeat.
Big companies seem to have it written in their DNA that 3-5% is a standard raise, and 10% is the theoretical maximum anyone could ever get. I've made it a mission to prove them wrong, even if it means switching companies every other year on average. The idea was to get all my raises upfront, instead of spread over 40 years.
I told them I realized pretty quickly after starting that it wasn't a good fit, but I stayed on long enough to finish my first project and for them to find a replacement. I got a 20% increase to work at this company and I would have taken a lateral move salary-wise to go to the next, but the new company ended up offering me 14% more than I asked for anyway.
I didn't interact with anyone outside my company, and pretty much the rest of my coworkers were the same. It was like we were in this little bubble and that's how we thought things were outside the bubble. Pretty much everyone in the company (<20 people) went to this startup right after college so AFAIK almost no one got recruiter spam because we didn't even have LinkedIn profiles. It was also over 6 years ago, so the ecosystem was a lot different too. But we were definitely in our own little bubble and it was only when I met my husband (a software dev) did I realize that I was being underpaid.
Sometimes and expensive lesson is a remembered lesson. I hope 'poor lady' came across as unfortunate, not lacking in money. Is 'poor <person>' a colloquialism? It's quite common here. And I didn't know your age, so lady seems to cover 18+ nicely.
Another rule: never take the counter-offer. Just go.
Reason #1 against taking the counter-offer: The boss is already planning to replace you, just on his terms instead of on yours. I.e., you could stay but get laid off as soon as they hire and train a replacement.
Reason #2: They didn't respect you properly before, and the information of a new job offer isn't going to fundamentally change that.
I took the counter and it worked out. They just didn't know what I really wanted, and I guess I never did a great job explaining it until I explained why I was leaving.
(anyone with other documentation that could easily be referenced in a salary negotiation?)
Another thing: I have an easy copy-paste response to recruiter cold contacts on linkedin where I say basically: I'm committed to my current company, but I'm always interested in real salary information, if you have something you can share I'd be happy to keep you in mind in the future. ... sometimes that gets me a number.
Having accurate information that you trust is half the battle IMO.
Uh...really‽ Is that range like [new grad - experienced]? Should I expect the same range from a software engineer at a device manufacturer not-on-one-of-the-coasts?
The doc. is published by a staffing agency, so they are on the sell side rather than the buy side, which means the numbers are higher, which is one of the reasons I like it as a reference!
Um... her conclusion is decent but she didn't learn much or gave much advice on how to find your worth. OP, had to date a cs dude and that dude pointed it out.
How to find out what you're worth without dating a programmer:
1. Save your vacation days. Apply for jobs, take vacation days for interviews and see how much your worth. You don't have to take the job but you're more than welcome to practice your interview skills, negotiation skills, and find out what you're worth (via how much they're willing to offer you before they tell you to screw off). Make mistakes in those interviews and learned from them.
2. Network with people and talk to them you might get an idea of what you're worth too.
3. Use sites like Indeed.com and search your particular title or skill set. They might give you an idea.
4. Talk to your head hunters. They might spam the crap out of you, but ask them about the position they're giving you and what their successful candidate got as salary. Remember job recruiters get paid via percentage of the negotiated salary. If they hired me for 80k and the recruiter contract with employer is 20% of the salary then they get 20% of 80k from the employer (NOT I, or out of my pocket).
And I really hate to be cynical since as you say, her conclusion is decent, but where she says:
> "PS: I left that job a few months later — one of the best decisions I've ever made!"
I would bet my first born and my entire life savings that she didn't leave voluntarily.
A good portion of my previous job was doing salary negotiations and personnel management. What I would bet the farm on, and would do so without hesitation, is that they gave her the raise, then immediately began looking for her replacement. Once they found a suitable candidate, they either canned her or found reasons to ding her on performance reviews, being late, etc, which would be justification to fire her with cause. I know because it's pretty much the operating manual for anyone who was in my position. Why pay someone double when you can find another sucker to work for half the pay? Even if it was 3/4 pay, it's still a savings and when we're talking tens of thousands of dollars, it's enough.
She was fired from her job and/or shown the door after asking for (and getting) her raise. I guarantee it.
Did the parent poster change their post? I ask because nothing in their post indicated to me that they were focussed on this person being a woman, that they were naive or that there was a suggestion of an indiscretion.
That is not to say that the parent poster and their employer/company does not sound sociopathic, just that we needn't bring sex warfare into this.
I have to say though, if the parent is being truthful (i.e. not trolling), it is a pretty sad state of affairs and pretty disappointing. If you ever find yourself working with/for such actors, start looking elsewhere. There are plenty of great employers/people in the world that you needn't waste your time working with scrooge-like caricatures.
> "Why pay someone double when you can find another sucker to work for half the pay?"
I see no mention of a "woman". Just because the person of interest was a woman, that doesn't make the comment sexist. Where I work (not in America), women get the exact same treatment as men. And when a women / lady gets a bad code review, she doesn't attribute it to being sexism and threaten to sue. She has the common sense to acknowledge her mistakes and improve upon feedback.
From my perspective (again, I'm not American), sexism is becoming a poor excuse for getting preferential treatment. And that's absurdly ironic.
Yes. It's an attitude promoted by management to keep people ignorant, divided and too paranoid to demand their fair market compensation from their employer.
You can try this experiment if you own some seriously effective asbestos underwear. Grab a random sampling of people at your office. Sit them down in a room and tell them that you want to try a game to see if they can select their own salary. Get some poker chips or monopoly money, or something like that -- maybe 10 per person. Put all the tokens in the middle of the table and ask them to decide amongst themselves how to split the pot based on their value to the business. In the likely event that the people don't agree to split the pot evenly, the person who wishes to make more money has to explain why they are justified in doing so by comparing their performance to the other people who would make less. Allow the other people to respond if they wish.
As organizer, you get a bonus if you manage to come to a consensus without having to call the police (and honestly, you are wasting your time as a programmer if you have such amazing people skills).
The current situation sucks. In an ideal world, management would say, "Here is how we ranked people. I'm sorry if it doesn't match your expectation. If you wish to move up in the rankings, come and see us and we will work together with you to create a plan for doing that."
In an ideal world, people upon hearing this would say, "Awesome! I'm going to work super, super hard to make sure that I do more of what my management values and less of what they don't. And if it turns out that I'm limited by a lack of talent, I will feel good about myself because I tried my best".
I really, really, really wish I lived in that world, but I suspect the current crappy situation is likely to persist for some time to come.
In an ideal world, people would be paid their fair market value compensation for their labor.
In a practical world, collective bargaining provides a front for fairer negotiations such that a compensation that's closer to what a free market would bear is met for the individual.
It's true that your best shot for a 15% raise is switching jobs, but there's no way that's sustainable (for a comparable position).
I think each year people should evaluate how they're expertise and duties differ from the previous year.
Many people I know inadvertently become team leads, head up projects, mentor others, or change roles entirely and wait for their old position's performance review to address it.
That's a mistake.
As a manager, I've had the best success with getting better comp for my team when giving a new title + bump around 4 months before review.
That way, the discussion with execs is closer to "what eould we pay for a new hire for this position?" and the upcoming review allows for minor comp tweaking.
That's assuming everyone has knowledge of their true worth. You can certainly find out, but some people only find out after years and others never do.
I've worked in companies that paid 1/3 less than others (management consulting), many people knew they were paid less, but few people left. Jobs can often be sticky.
My girlfriend was in a similar position. Her company knew it and knew that she knew it and eventually came through with a 55% promotion. Too little, too late.
She then took that confidence boost and changed companies with a further 30% salary boost!
Unfortunately you don't get what you don't ask for.
My brother did this at a small business. He worked there for a year or so and realized that out of the folks he worked with (his level and the next level up) he pretty much knew the most and actually did the most.
He went into his boss' office and said "It think I deserve a promotion" and his boss said "ok, I'm promoting you to X" and he said "no, I deserve two promotions to Y". His boss thought about it for a minute then said "you got it".
If your company has H1B workers, you can get an idea of what the base salary range is for a position by looking at sites like h1bdata.info. Unfortunately there's no information on stock and other benefits. The data comes from the US Department of Labor.
> I said that I reviewed other salaries for my level, and I felt that I deserved a raise to $85,000. At the last moment I panicked and lowered my ask from the planned $90k.
I suggest my friends to figure out how much they want and ask for 10 more (10k more/year, $10 more/hr). Best case they might not even flinch and pay it (it has happened to me a couple times), worst case they will counter-offer down to somewhere higher to what you originally wanted.
Question: If you find yourself being chronically underpaid like she was, is there any reason not to immediately demand an above market salary, rather than an at market salary? Call it a retroactive "correction", or something.
No, because market salary is all you can get by switching. You won't get an above-market salary by switching.
The fact that you were underpaid for a year is a sunk cost. That time is gone and wasted.
However, considering the costs of employee turnover, and the fact that top programmers are more productive than average, it probably does make sense to pay above-market. Plus, if you aim to only pay market, you'll be lagging due to inflation and rising salaries and the fact that your employees gain experience.
They really only need to pay you market to keep you. (But if your performance is above-average they should pay you above-average.) It is hard for an above-average employee to get an above-market salary when switching, because most employers don't have their interview process set up for that.
Remember that switching jobs is also risky for the employee, so switching for the same salary doesn't make sense unless your current environment is bad/toxic. I've had the old bait-and-switch a couple of times, where a job didn't turn out to be what I thought it would be. I've also had jobs where my boss wasn't the person I thought it would be when I was interviewing, and then my actual boss decided he didn't want to work with me.
The key is that if you're above-average for a given market, you're average in a higher-valued market. All you need is a single job offer in that higher market to force your current employer's hand one way or the other. When you are the product on offer, the employer doesn't get to define what markets you're available to; they have to play the hand you deal.
This applies geographically, as well - if an employer says "Well, they might be paying that rate in SV, but round here..." then you need to be applying for remote positions. They don't get to opt out of that market either.
Actually you can always play insane and demand a higher than market rate from your current employer - it will cost them a lot to replace you and train a replacement. The only problem is to find a way to get them to believe you are "insane".
My current employer doesn't give raises, for understandable reasons. The only way to get a pay raise is to get a promotion, or leave the company.
I am given great freedom to explore and learn, and my higher-ups are very willing to try new technologies and techniques if I suggest them. My peers are intelligent and have different areas of expertise, meaning I have plenty of learning opportunities and exposure to new ideas.
Would I change jobs if offered a higher salary? No, not unless the culture shift was also worth it.
I've hit that level of salary where increases are nice, but it's the other perks that make the job ideal. For those curious, it's $83,000 a year, in the Twin Cities region. I have nearly ten years of experience. I'm not a bad negotiator, and I know roughly what I'm worth (somewhere around $95-105k, for this geographic area).
There is a point where it's a no-brainer to switch.
For example, suppose you were offered 3X more for a job with a worse environment. If you kept your living expenses the same, you could save up the extra money and then, for each year worked in the lousy job, you could take 2 years off to do whatever you wanted.
This is why we all need to start talking about how much we make! Otherwise companies have hundreds of data points on average salaries, and engineers only have a handful. I talk about how much I make with people I am close to, and we get a better idea of our market worths.
I have a great experience which taught me a lot in negotiating for salary and keeping an eye on your check.
I worked at a telecom startup. Was given a beefy salary ($45K) plus commission. As a young sales guy, I had a blast. Then I scored a huge account, just as the company was about to go under. They paid me, then sent me a letter demanding I give back the commission check because they were going under and needed it to pay their attorneys and would file a lawsuit against me for a "fraudulent" sale.
I went back and started looking at my checks and realized they were only paying me $35K instead of the agreed upon $45. I sent them a letter stating if they wanted to give me my back pay (almost twice as much as the commission check) I'd be happy to send the commission check back.
Never heard from them again.
Just goes to show, you not only need to negotiate your raise or your salary, but always make sure the company does not pull a fast one and short change your paycheck.
This is so common, I helped my sister negotiate from 55 to 90 as well in one of her jobs. They also didn't blink, and that she's been able to keep her salary around that range even when moving companies.
It had me wonder if there was a gap for having professionals negotiate on your behalf as a service come these one to one reviews.
I remember asking Tracy for a website design quote back in the day, because I loved her designs, and she quoted me something like $2,000 for the whole thing, which was really cheap. I was surprised at how cheap it was, and I guess now I know why.
Found you! Your comment is disingenuous. I responded "As for price range... it looks to be a similar time commitment like Rapportive, so I would expect quotes of $2,000+."
I didn't say $2k, that was the floor — Rapportive was just design mockups + 1 main design. Also, this was five years ago.
Ha! I kind of prided myself how fast I would work. I don't remember you (though I have a terrible memory and I haven't freelanced in awhile), it might have been my first few months of freelancing when I was getting my feet under me.
I wonder if we, as an industry, need to learn to talk to each other better. We're very good at getting things done, but we rarely talk to each other about the hard economics of what we do.
I hate to be trite, but... is there an app for that?
Well, Americans (and probably nations) don't like to talk to each other about how much they make, and this information asymmetry benefits employers... Just be more open about how much you make, people will likely reciprocate, and it will go a long way towards being more informed of market rates.
Here in Greece, it's pretty common for us to ask "oh, hey, you got a new job? That's great, where is it/what will you be doing/how much does it pay?" as the usual, accepted questions of someone getting a new job. You're always happy for your friends if they are well-paid, after all.
Compared to the almost nonexistent salaries of Silicon Valley, I guess our 6000/yr does seem inflated, and not shying away from talking about salaries seems the only reasonable explanation for the phenomenon.
Less charitably, it seems to me that you saw the word Greece and figured you'd chime in with a cliché.
- Raises and bonuses go to sales and management, not developers and designers. A creative or infrastructure person's value is not seen until they leave or are replaced with someone cheaper.
- Domain experience and company-specific experience (and loyalty) are extremely valuable, but those tend to be completely overlooked in salary/raise computation. Unless you can specify dollar amounts (like sales) or acronyms (which management and HR love), the value of experience seems to be 0 or even negative (loyal employee won't leave if we skimp on their raise, and we paid for their training, so they owe us).
- If your initial salary was good, (you were able to pay down debts and save) and you haven't changed your lifestyle but now you're having trouble paying your bills (due to increased costs of living), then the company hasn't taken care of you. Their raises/bonuses have failed. You should not be as well off as you were when you started: having gained experience, you should be better off. If not, it will probably get worse.
- Raise = +1-5% (if you're lucky). New job = +20-50% + risk of being less pleasant. Your choice.
- If you're in the design/development industry, there's an ENORMOUS price range. Few people can readily tell the difference between a $12/hour developer and a $125/hour developer. Some of them have been bitten badly by guessing wrong. Expect to get some offers that are half what others are offering or less.
- If you ask a little higher than you believe you can get, and do it confidently (brand yourself as premium), people will tend to believe that you can get it elsewhere (or have got it) and offer much more than if you seem desperate and willing to take anything. That factor alone makes a huge difference, although it has nothing to do with skills, experience, or ability.
These things combined make switching much more profitable for the employee than sticking around, albeit risky. Perversely, they may also make it more profitable for employers to replace employees than give a decent raise, albeit at a risk. That's not really good for employers or employees - everyone's gambling while vast amounts of experience are being lost to churn. But that seems to be how the market's working.
Asking for a raise is not how its done. You just find another job and you'll get paid right. You can ask your current to match,but generally I'd just move.
My first job out of college was starting at 15/hr. I did that for three years, getting a $1/hr raise every year until I landed a "sweet" job for 55k/yr. It wasn't until a couple years after that I realized I was still underpaid. I'm not a ninja programmer, and I'm doing mainly web development, but I'm outside of the Seattle area, and there are places hiring jobs with my experience level paying 100k+.
In the end, this is also bad for the employer. Once someone discovers they've been underpaid for so long, the trust is gone. As in the article, a raise to an appropriate salary doesn't change that. You're going to lose that employee, who has proven for years to be valuable, has knowledge of all workings, etc. Training a new inexperienced employee is always more expensive.
You did the right thing. This is a flaw in the system and also the most efficient way on how it works. They did save a lot of money on you over many years though. So their $82K offer was to save you for a few months because they know that YOU know and they only have a few months left having you around.
I am not an HR wizard but in general, why don't companies like paying market value for people? If they underpay you're more likely to be disgruntled and leave right? Or worst case you get a rep for lowballing.
The initial number defines your trajectory. Then everything else is a fight for the "qualitative" process of yearly increases based on "qualitative" (read: arbitrary) opinions of performance.
Unless you are in Sales (in which the amount of revenue you have been able to bring speaks for itself), everything is arbitrary and it's up to you to identify the potential biases in the process.
Also, people think this is a women thing. It is not. I will venture to say that ordinary (i.e. NOT STEVE BALLMER) short guys or bald guys make less money, or "ugly" guys (i.e. not "attractive tall and handsome").
People, you need to fight for yourselves because it's only you in that room. Also, as somebody else said, KNOW YOUR WORTH and DONT DISCOUNT YOURSELF (i.e. immigrants, women, "stereotypical" gays, short folks, people with no degree but tons of experience, blacks, people with bad teeth, extra weight around the waist, etc. etc.).
Fact is, it's a discriminating world. Sorry, it's what it is.
I would not be surprised if the difficulty relevant to scenarios like the OP is the nature of re-negotiation.
She started at what was likely a quite reasonable $40,000 salary for an unproven undergraduate. Then was hired on shortly after at that rate because it was convenient for everyone.
The problem is that her performance (value) busted the curve and quickly out-paced the percentage-based raise system. Some companies do "corrections" every so often, in fact I have benefited twice from that sort of thing.
It's probably safe to say though, that you probably don't want to sit around waiting for "market corrections" if you're being underpaid.
Man...c'mon. Nobody goes from forty to eighty because they're an "unproven undergraduate." They go from forty to eighty when somebody's screwing them and gets called on it.
It isn't what I fail to grasp, it's that I reject the idea that one's performance can break such a curve in a developer job unless the person in question was underpaid to begin with.
That doesn't happen unless the deck is stacked. It just does not.
I have found from hard experience that when I lowball my asking pay, I am treated with profound disrespect.
That doesn't make a whole lot of sense to me as the usual reason I do so is not to get an offer, but to help out my potential employer, for example by enabling them to hire other people as well.
The actual result is that I get kicked in the teeth. Because of that I ask for what others of my expertise can command, despite that amount of money being far more than what I really require to be happy.
I've had the same thing happen. I went as a (relatively inexperienced) freelancer to heise (a large and old conservative company in germany) to a job interview and they asked me what i used to take (20$/hour remote internet work) and then told me they wouldn't even consider any freelancer below 60$ per hour.
Would you donate $10,000 to a random business off the street to help them out? Because that's all they will be once you leave that company. I suggest offering to take more options in lieu of cash if you want to help the company hire more people. If the company can't survive paying you a market salary that is due you, it doesn't deserve to survive at all. You are important, don't sell yourself short.
My point of view is you should ask for the value you provide your employer, not just your financial needs. In my case the value I provide is 3+ times my financial needs so that's what I ask and they happily pay based on the quality of my services. The rest goes to fund my retirement fund and pay off the remaining debts from that crazy dot-com era (strippers and booze, fun times)
You're being compensated for your work. If you don't want the money, donate it to help organizations that help other people. Leverage your work to help others people who could really use help, not just your business.
Consider donating the money to a third world country initiative. It will create a lot more happiness there than it will in the pocket of your employer.
Women, here is the deal: unless you are at the C-level, in which case I cannot offer help one way or another and have no data, ASSUME YOU ARE BEING UNDERPAID.
The bias is too powerful. It's like people saying "they are not racist." Almost everybody is! Same thing with salaries.
Always come up with something more aggressive than your original "feeling." Also, make friend with us guys. We can help you. Don't simply ask your girlfriends how much they are making or how much you should ask for. It's a vicious cycle! Ask the guys!
It amazes me when I have hired females how little they ask for, and the surprise when I tell them the range I am hiring them for.
> Women, here is the deal: unless you are at the C-level, in which case I cannot offer help one way or another and have no data, ASSUME YOU ARE BEING UNDERPAID.
I agree but only to a point: another poster said it better when you really do need to have some idea what you are worth (which is very difficult I know).
Because if you are in a decent situation making decent money and benefits for satisfactory performance, hardball negotiation tactics can absolutely backfire.
$40,000 initial starting salary * 1.10^3 = $53,240. Therefore, she was at her company for the first 3 years after college until asking for this raise after her third year. She characterizes this period as "many years" - this seems disingenuous to me. She took a $40,000 offer right after college, this is close to the median starting undergrad salary - therefore she was not underpaid for the first year. This limits the period of underpayment to about 2 years. Which is definitionally the shortest period of time it can be while still being described as "years of underpayment".
And still, it is very common for recent grads to endure 2 or 3 years right out of college at their starting plus a meager raise until they get that second job which requires education + experience. While I agree that employees should negotiate, this particular woman's plight is totally and massively overblown.
I was paid eighty grand my first year out of college and ninety-five my second. And I wasn't (yet) any good, even. She was real underpaid, and your post strikes me as tremendously weird in its attempts to discount reality.
And "this woman"--she has a name, you read her blog, don't be a jerk.
I'm sorry if you found my post to be tremendously weird, and congratulations for making so much more than the average undergraduate upon graduation. Was my math wrong?
I actually employ a large number of undergraduates (in non-developer roles) and it is really typical to pay them somewhere around $50k for the first 2 or 3 years (depending on geography + what year it is), the good ones are kept on and get substantial raises to low 6 figures. This is pretty typical across many companies. Her experience is pretty typical for recent graduates, not a special burden to bear.
Exactly. It doesn't matter what the average college grad makes, what matters is what eke average developer college grad makes. And "this woman" was getting screwed, so the attempts to disregard that are real hollow.
This story is boring. Another person complaining that he's underpaid, because he didn't negotiate. The fact that he had a job makes him lucky enough. He should be happy. Nevertheless, we've all been underpaid before, it happens to lots of people.
I guess don't hate the player hate the game as it is all game theory in the end and the complainers or negotiators will always tip in their favor. You can be a team player and get your worth but you have to speak up and be aware.
I think it is better to be fair at salaries even though you could pay the great developer you have lower than the good one that knows the market and is a negotiator. If you don't and they find out they are gone as happened in this instance. Open salaries might even be a good idea with bonuses for performance.