How to Deal

Understand Your Company's Salary & Compensation Strategy

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By Lily Garcia
Special to The Washington Post
Thursday, August 20, 2009; 5:03 PM

Lily, I recently found out that a colleague makes merely $15K less than I do when my job is much more demanding and requires my advanced degree and extra 7 years of experience. I try not to let this bug me, but it does. I am trying to focus on increasing my salary via promotion, but because she and I were hired at the same time I believe our boss lumps us together in terms of career path. Meaning that I won't get promoted until she can be too and she is a long way off from that. Any thoughts?

Although the $15 thousand dollar pay difference between you and your less educated and experienced co-worker may seem small to you, it might be significant in the eyes of your organization. Before making assumptions about your chances for promotion, you should try to understand your pay in the larger context of your organization's compensation strategy.

It is no news that employers on the whole are not able to compensate their employees as generously as they did a few years ago. This is challenging established pay practices, under which employees commonly expected to be paid a salary that reflected the prevailing market rate for their jobs, an annual pay increase of at least 3-4%, and incentive pay commensurate with seniority in the organizational hierarchy. As compensation budgets have shrunk, organizations have been forced to re-think how they allocate these dollars. Many have cut or frozen salaries. Many others are pursuing creative approaches to compensation that, despite the economy, allow for significant leverage in recruiting and retaining the best talent.

Yet, the conventional wisdom still seems to gravitate toward narrow pay bands and predictable rewards. By avoiding significant variation in the salaries and bonuses paid to employees in similar positions within an organization, employers hope to get as close as possible to market across the board and thereby do a decent job of retaining staff on the whole. Organizations that adhere to this philosophy do so, whether consciously or not, because it is patently egalitarian, makes budgeting easier, and tends to keep employees focused on their jobs rather than on each other's pay stubs.

In the minority of organizations, big distinctions are made at hiring and appraisal time based upon such factors as experience, education, and, most of all, performance. Organizations that make highly individualized compensation decisions believe in rewarding achievement and working aggressively to dispatch employees who do not measure up. Such organizations thrive on internal competition and they believe that a bit of the salary envy that you are experiencing is actually a useful performance enhancement tool.

If your organization is of the type that would promote two employees in lockstep merely because they were hired around the same time, then my guess is that its payroll does not reflect huge overall distinctions in the experience, education, and performance of employees in similar jobs. This does not necessarily mean that your boss does not understand the important differences between you and your coworker. It may just be that your organization is not using compensation to make sharp distinctions based upon factors beyond job title.

If you want to get promoted, your challenge will be to get your supervisor and your organization to think about you more as an important individual contributor rather than as a function. Rather than focusing on what your coworker earns, focus instead on what you have accomplished in your job. It is not enough to say that your education and experience ought to command a certain salary. You need to make a compelling case that you will be of even greater value to the organization if you are given greater responsibility, with a corresponding increase in pay. Approach your boss with big ideas for how you could fit into the organization's longer term plans and ask him or her for guidance on what you need to do to achieve your goal of being promoted. If you can manage to generate enthusiasm for your career plans from your boss, then he or she will become a valuable ally, which is just what you will need if your organization is indeed hesitant to single out employees for promotion ahead of their peers.

Lily Garcia has offered employment law and human resources advice to companies of all sizes for more than 10 years. To submit a question, e-mail HRadvice@washingtonpost.com. We reserve the right to edit submitted questions for length and clarity and cannot guarantee that all questions will be answered.


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