Salary Compensation FAQs

by on June 11, 2009 · 0 Comment POSTED IN: HR Info Center

Common questions about Salary Compensation Increases

I got a 10% increase in salary compensation last year but only 5% this year even though you’re saying, I did great work, how come?

If that person somehow got promoted last year or if in a 3% budget, that seems like a lot or if there’s some kind of special salary compensation adjustment because they were low. That’s important to know, as well as the companies budget and comparatio before you can answer that question. So, the only way to answer that question intelligently is to have that background information.

I know I’m not management material but does that mean I’m stuck with cost of living salary compensation increases forever?

Well, the harsh reality is even managers get stuck with cost of living increases at some point in time. It may take them longer because they keep jumping up the ladder, they’ve got more rungs in the ladder typically for management. And what this is implying is if you don’t want to go to a higher level of responsibility, are you going to have inflationary adjustments? The answer is probably, yes. But it happens to all of us. It’s not something we do only for blue collar; it’s everybody. We’re all in this together. This year’s salary compensation increase isn’t all that important. What’s important is the total salary compensation. Everybody should think that way in context of whatever our market value is, meaning what are you paying me here relative to my market value outside.

I’m a 25 year old engineer and I do the exact same thing as a colleague who’s 50. How come she makes more?

Well, probably because she’s been in that salary grade longer and therefore has risen up the ladder. And if you’re lucky, you’ll do the same. Or it could be she is called the senior engineer and she’s actually at a higher salary grade then you and you may have even further to catch up to get to her. And there’s something that being in grade for a while will do for you. Continue working hard, you too shall rise up that ladder and you’ll rise up faster the harder you work and the better you perform.

Why does that guy who reports to me make more money than I do?

If you are young and you’ve moved up fast and that person has been around longer, it’s possible for them to be paid more for a short period and over time, it makes sense for you to probably catch up and pass them. But that’s the same, if you do good and continue to rise and they’re going to slow down once they’re near the top of the range and you still have some momentum to speed up. You’re probably at a higher salary grade than they are and you will eventually pass them.

Everybody knows what everybody else makes around here. How come I didn’t get as big a salary compensation increase as the guy in the cubicle next to me?

A lot depends on what that person does. You have to consider what they do, how long they’ve been around, and what they’re performance was like. We don’t know if you’re comparing to the same reference point in the market. So, the first question would be, you know, what’s their salary range look like compared to yours? And second is where are they in their comparatio as compared to you in yours? So, again, if it’s a person a lot further down and you’re way high in your range, that will explain it. It’s usually explained in either what salary grade are we talking about. Now, it could also be performance. That would be the third place to check.

Am I ever going to make as much in my job as my brother makes in his?

Well, what does your brother do? If your brother’s a, you know, a dentist, and you’re a cosmetologist, those are totally different sports. If you’re both architectural engineers and he works for a $5 billion company and you work for a $5 million company, that explains a lot too. You’d have to know what you’re comparing both in terms of the seniority in the job but more importantly in terms of the job, the size of the company, et cetera, et cetera. There’s a logical explanation here that anybody could probably explain if you have the data.

I’m one of the best workers around here. I’m in early; I stay late; I’m the one that makes sure the work gets done and now you’re saying no one gets raises, what’s up with that?

If no one gets raise it means there is a zero budget which means you’re probably in difficult economic times or your company is doing something that depleted the cash. And right now, companies are in a hunker down mode. And we’re not holding off increased salary compensation typically because everybody performed poorly, we’re holding off raises because we don’t want to spend additional fixed cost on payroll.

And don’t take it personally. It can affect some people more than others. In other words, if you’re already at the top of your salary grade, it won’t hurt as much. It’s that young person who’s at the bottom of their salary grade who is slipping further down as salary grades go up and theirs stays frozen. So, if we have no money, your performance doesn’t affect the size of your increase. There are none.

I think our performance reviews are rigged. You’re throwing minor negative feedback simply to justify these low salary compensation increases.

If you’re still tying salary compensation and performance reviews together, you may find yourself playing these little games. Suppose you give Sally the outstanding rating. If she’s already capped out, you’d rather save that for Peter here who still has some room. So, sorry, Sally. Then, you rig your way into somebody’s rating. That’s a very destructive thing. It’s going to cost you lots and lots of heartache. Don’t do it. Best thing, to do is quit rating and ranking for salary compensation purposes.

Edited Remarks from “How to Drain the Drama from Salary Reviews: A Conversation Roadmap” by Gary Markle

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