It’s about that time of year when performance appraisals start to rear their head in the business world. These conversations are important in their own right but also important because they form an input into your pay and reward which is often determined in the last quarter of the calendar year.
Most corporate organisations follow the same approach. Compensation is determined by organisational performance, your functions/divisions performance, and your personal performance (relative to your peers). Whilst you can’t control the organisations’ overarching performance, you can contribute to your functions/divisions performance and you can certainly influence your performance.
So given it is that time of year, you should be thinking about 1) your performance but also 2) your pay and reward and whether the latter in particular is fair for what you do. I don’t just mean equal pay. I mean fair pay. Are you commanding what you are worth?
The subject of pay is always a challenging one. Most organisations deliberately shroud employee’s compensation in secrecy. There are usually guidelines given to managers when determining their employee’s compensation but these are rarely disclosed to employees. Organisations stipulate that your compensation should never be discussed with others and trying to get some level of transparency on how you compare to your peers is tricky, awkward, and often fruitless.
So, how do you know you are being paid fairly and equitably for the work you do and how do you up the ante? Here is what you need to know:
- Do your research online
There are lots of tools out there that you can avail yourself of so do your homework. Monster.co.uk provides a salary calculator through its parent company Randstad. You do have to fill in some information so the tool does store your data and it’s a pretty basic check but it’s a good starting point if you are in an industry with standardised or clearly defined roles. Glassdoor, Payscale and Ladies Get Paid are also good resources and follow the same approach. Just note that these sites work best on easily classified jobs. Anything specialist may be more difficult to estimate based on average data.
Go onto job websites in your industry and look at the salary ranges for jobs similar or the same as yours. As a former financial services employee I know that E-Financial careers, LinkedIn, and Indeed all list a lot of jobs in the banking sector and give some indication of salary ranges in some examples. A lot of firms do not disclose salary on the job posting so you need to do some digging around. If you are familiar with the larger recruitment consultants in your industry (and you should be) then go onto their websites where the listings will be available and salary information is more commonly disclosed.
Doing research online will never really be illuminating or specific enough to pinpoint but it will give you some ideas. In addition, having online information is always helpful when going into a conversation. It shows that you have looked at a variety of information sources to back up your argument and that your reasoning is well thought through.
- Ask others for useful intelligence
If you want specific and good quality information then you have to ask around.
If you have good contacts in the recruitment industry, ask them for information. I have always stayed close to recruiters in the industry and still do. They have a wealth of information and are usually helpful when it comes to understanding and providing compensation information. Pick one you trust and get their view. Do more than one if you can to get comparisons.
The other approach is to ask a mentor or a sponsor. I was fortunate enough to have a great mentor at my previous employers and I spent one session asking him his advice on salary expectations and fair pay. Most mentors will be senior to you so should be familiar with what someone of your grade, role and experience should command. That’s one of the key reasons why they are there!
Finally, you can ask colleagues and/or friends in the industry. Now, I caveat this, you have to be very careful with this approach. Most organisations do not permit employees to discuss their salaries with each other. You can be in breach of contract for doing so, so this is not an approach I would advocate as your first choice. None the less it happens frequently amongst employees. Many years ago, a peer of mine volunteered his salary information to help me get clarity and it was one of the most useful pieces of information I was ever given. I find out that he was earning about 15% more than I was. He was very generous in his transparency and having that information in my back pocket helped me enormously. If you do choose this approach, note very carefully these guidelines:
- If asking someone, give context. This is not about simple nosiness but a desire to be better armed with information. Also, you must be explicit that you can be trusted and the information they give you will stay with you and you alone. With this in mind NEVER, EVER betray their trust and reveal the information they give you to someone else. If someone has shared that level of information with you, keep it in the vault.
- If someone you ask isn’t willing to offer their salary information, respect that and don’t press.
- Be prepared if someone else proffers up their salary information that you should do the same if asked. Don’t be prepared to ask for something you won’t do in return so choose wisely when asking people. Only ask people you trust implicitly.
- Stating the obvious but do ask people who are in comparable roles to you.
- Don’t do it on a work night out over a few beers and don’t engage if someone else does. These are serious conversations to be had when sober.
- Make it mutually beneficial. When I was a junior employee many years ago, a few women in my inner circle across the industry shared their salary information. We did it on the basis that knowledge was power and we would all be better armed if we had the information.
- If you are given information you clearly cannot relay this back to your manager in specifics. You cannot go into a meeting stating ‘such and such earns £10k more than me’ because you will be asked how you know. You will be in trouble and so will they. You can however allude to the fact that you believe you might be underpaid in comparison to your peers but do not elaborate further. Do not under any circumstances reveal that you have discussed salary information with your colleagues if you have.
- Better if you can, ask friends in other organisations in comparable roles than direct colleagues at your organisation as it is a lower risk approach.
I stress again, this is helpful but risky if your organisation frowns on sharing salary information so do this wisely.
- Ask your boss
Again, this depends on the trust and relationship you have with your boss but I have found this to be quite effective. Asking your manager whether you are being paid fairly does several things:
- It puts them on the spot so they have to answer the question. Some might, some might not. If you get an immediate and firm answer from your boss telling you that you are and preferably one backed up with evidence e.g., “HR has done a line-by-line review and you are comparable to the market and your peers”, you should trust that you are. If you get deflected or don’t get an answer, you should take that as your cue that you aren’t (or that they don’t know off the top of their head).
- If you get the impression you aren’t being paid fairly / not getting the comfort you seek in the conversation then it paves the way for a follow-up. Ask your boss to take the question away and check. You can ask that HR conduct an independent review. It puts the ball in his or her court to take some action. This approach is helped by doing the online research I suggested above. You may be asked by your manager why you are asking the question so it is helpful to contextualise and refer to any research you have done that suggests you might be below the average.
- Asking the question sets the tone. It tells your boss that this is something you feel inclined to ask so is something you have some reservations about. I have had bosses who have checked my compensation year on year simply because I have asked so they know I am keeping a watchful eye.
- If you are going to ask your boss, don’t do it on the day your compensation is being communicated to you. It’s too late by then and there is nothing you or your boss can do to address or rectify. Always ask before compensation review time when it prompts your boss to check and they can do something about it
- Ensure you are worth it
When I coach or mentor some of my clients on pay negotiations, one of the first questions I ask is whether they think they are worth it. This question needs serious consideration. Are you worth more than what you are being paid? If you were in your bosses or companies’ shoes, would you give yourself a pay rise over others? Simply being paid less than your peers or being paid less than the market in this day and age is no longer a de facto cause for an increase.
Less than 5% of a company’s population get a pay rise each year in the private sector. This varies from company to company but is about average. So, you have to be crystal clear that you are worth paying more. Is your performance and potential of real value to the organisation. Are you considered a top-performing employee? Are you considered high potential? Have you had consistently great feedback from your line manager/sponsor/stakeholders etc? Are you hearing all of the right noises about how well thought of you are? And so on. If after asking yourself those questions you believe you are, great. You stand a better chance of having a constructive conversation if you raise your pay with your boss. If you aren’t, then think hard before raising the issue of pay. If the organisation doesn’t feel you are a great loss to them if you left, your chances of getting a pay rise in the current climate are nil. They will resign themselves to you walking away rather than giving you an uplift. This may sound harsh but I can tell you categorically it is true.
- Move organisations
I have been fortunate that most of the organisations I have worked for have been enjoyable and rewarding employers. As a consequence, I have stayed in 2 organisations for 10 years and 12 years respectively. Whilst this is great, this is a cardinal sin when it comes to pay increases. A report by Forbes in 2014 says that staying with your employer for over two years (on average) will mean you will earn less over your lifetime by about 50 per cent. It is a well-known fact that moving jobs every few years increases your earning potential. In 2019 the Financial Service firm Nomura confirmed that changing employers will give you a bigger pay hike than staying with your current employers. Growth in what they called job ‘stayers’ was lower than job ‘switchers’. Job switchers earned about 1% more year on year than stayers, a minimal difference when only one year is considered but a significant loss of earnings over the length of your career.
Moving roles or ‘job hopping’ is now considered much more acceptable than it was historically and given employees no longer get quite the perks they used to for dedicating a career lifetime to one employer, moving companies is a worthwhile consideration. Ultimately it has to be weighed up against the satisfaction you get in your current employer but if you are finding fewer reasons to stay with your current employers, the impact on your renumeration of moving elsewhere should be factored into your equation.