Time for a Raise – Or Not
Over the years I’ve received calls from various clients wondering how to best respond to the following employee question:
“I was searching on the Internet and discovered that I am being underpaid for my position. According to the Web, I should be making $1,000,000 per year. So I think you should increase my pay.”
Of course the $1,000,000 is a slight exaggeration. But typically the employee’s request seems like $1,000,000 to the manager or business owner.
My most recent example was an inexperienced employee, training into a new position and with only 4 months of service.
Here’s a modified version of the response I gave my client.
- Considering the employee has only been in the position for 4 months and has not performed the work previously, his request for a pay increase seems unreasonable to me. If he wanted more pay at hire, he should have researched the position and its pay prior to taking the job.
- Frequently employees check out salary data on the Internet and assume that they should be earning the average pay as reported on these websites. However, what they don’t realize is that the data reported in many of these surveys are collected by random people entering what they make into the website’s data base. This is an unscientific method, is not used by knowledgeable employers as valid data, and could be subject to wage inflation. For example, if reporting individuals enter higher salaries than they’re actually earning, then they’re skewing the data and the average pay reported on the site.
- Online survey data doesn’t always take into consideration the industry that you’re in, the company size, and other important demographics. For example, a 3M marketing assistant is likely to be paid more than a marketing assistant at a smaller company. Generic survey data doesn’t provide an “apple to apple” comparison. That’s one of the reasons employers use industry-specific salary surveys for more accurate market data.
- When a salary survey reports market wages for a position, they’re reporting the mean or midpoint of individuals who range from having no experience to those that have 20, 30 or more years of experience in the position.
- Considering the employee in this scenario was new to the job, he should be making much less than the market midpoint, which typically reflects an employee with several years of experience and proficiency in the position.
- Lastly, when determining whether an employee merits a pay increase outside of the normal schedule (as well as in the normal review schedule) we should also evaluate the individual’s job performance and contribution to the organization.
- There are those occasions when an employee’s performance is so exceptional that it merits an unplanned increase. Has he created new systems and efficiencies? Has he saved the company 1000s of dollars?
How would you have responded to this employee? Do you have an internal system for how you determine employee compensation? Do you have a compensation structure with minimums, midpoints and maximums for each position? Have you checked your external market to analyze the competitiveness of your employees’ pay? Have you analyzed pay inside your organization to make sure that employee compensation is fair and non-discriminatory?
There’s so much to take into consideration when determining employee pay – much more than merely checking generic salary information on the Internet.
As you can surmise, this employee’s request for a wage increase was denied.
©2015 Arlene Vernon
About Arlene Vernon
Arlene has provided HR consulting and management training services to over 500 organizations since starting HRx, Inc. in 1992.
If you’re seeking a hands-on, practical HRxpert to assist your organization with employee relations, policy development, strategic HR activities or fun/doable management training, call on Arlene – Your HRxpert.
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