24 Mar. 2016 | Comments (0)
At most organizations, compensation information isn’t made public. Most of us don’t know how much money our coworkers make. But what happens when you do stumble on this sort of information — and discover that a peer makes more money than you do? How should you react? Should you tell your colleague that you know? Talk to your boss? How can you use the information to ask for a raise?
What the Experts Say
The truth is that workplace compensation is “never perfectly egalitarian,” says Karen Dillon, coauthor of How Will You Measure Your Life? There are plenty of examples: the Ivy League bonus, the external hire advantage, the he-was-friends-with-the-big-boss-before-he-even-got-here supplement. Not to mention the larger macro issues that affect us all: thegender pay gap and rising income inequality. “A good salary is only relative,” adds Tanya Menon, associate professor at the Ohio State University’s Fisher College of Business and coauthor of the forthcoming Stop Spending, Start Managing. When you learn that someone in a job similar to yours is paid more than you, “it’s natural to feel angry or frustrated,” she explains. But “your goal should be to move beyond those feelings and to ultimately get a raise.” Here are some pointers on how to do that.
Your impulse might be to storm into your boss’s office and demand that he fork over more cash. Or maybe you just feel like scowling across the cubicle at your higher-earning colleague with a sneer: “Seriously? You?” These actions, of course, are not advisable. “Take a breath. Take a walk,” says Dillon. “Do not make any rash decisions. And do not confront anyone.” Menon acknowledges that you’ll feel some “psychological pain,” and you may think, “I must not be valued” or “My company isn’t fair.” But try to stay clear-headed. “Recognize your emotions; appreciate them.” Then move on. “You need to change the way you are talking to yourself about the situation,” she says.
Take time to process
To digest the news, Menon recommends considering the situation from your manager’s perspective. “Think about why certain pay decisions might have been made,” she says. Perhaps the higher-earning colleague has more seniority, more experience, or better qualifications. Maybe he was recruited away from another company. Think, too, about your performance, productivity, and contributions. The point of this exercise is to ask yourself, “Am I, in relative terms, paid fairly?” Dillon says. If the answer is yes, all things considered, “use the knowledge to help make a better case for yourself when your next review comes up.” If the answer is no, you need to talk to your boss. It’s probably not a good idea to broach the subject with your higher-earning coworker unless you’re looking for “general support and guidance,” says Dillon.
Talk to your manager
The way you found out about the pay discrepancy — whether it was through the rumor mill or because a document was mistakenly left on the copy machine — is not relevant. But your awareness of the gap most certainly is. When you talk to your boss, say something like, “It has come to my attention that others make much more for doing the same job,” suggests Dillon. “You’re not being hostile or demanding; you’re telling your boss that you know the score,” she says. Then say something like, “I’ve been working hard and I love working here. What can I do to improve my chances of getting a significant raise at my next review?” This tactic “puts your boss on notice and lets him know that you’re not going to be placated with a tiny raise,” she says. Do not mention any particular coworker by name if you can help it, advises Menon. “This is a conversation about you, the value you bring to the company, and how you can get the money you want.”
Get more context from HR
You don’t want to undermine your relationship with your manager, which Dillon describes as “the single most important relationship you have at work.” But when it comes to bolstering your argument for a raise, you need as much information as you can get. She recommends reaching out to your organization’s HR department for context, with your boss’s blessing. “HR will likely have a very clinical conversation with you about your company’s pay scale bands [but] it will give you a better sense about the salary range for positions equivalent to yours.” When you know where you fall — top, bottom, or somewhere in the middle — you can better understand the extent of room for growth and “where your company is in terms of its ability to give raises,” adds Menon. She advises approaching the conversation from a point of “curiosity and cooperation” and having “specific questions” at the ready. “Don’t accuse and don’t be presumptuous.” If you discover you’re in a “lower pay bracket, and you’re a high performer, the onus is on HR to explain it to you in the name of transparency.”
When it comes time for your official salary review, it’s important to “be realistic about what’s possible,” says Dillon. The fact is that “you’re unlikely to dramatically change your fortunes at a company unless you get a promotion or a new position altogether. “It’s corporate protocol.” But if a big raise isn’t in the cards, think about other ways to “redress the gap,” says Menon. Perhaps a one-time performance bonus, an extra week of vacation, or additional support staff would provide sufficient “recognition and reward.” If alternatives don’t pass muster, it may be time to start looking for a new job. The search process is a way to “test your market value” and “see what you’re worth,” Menon says.
Principles to Remember
- Consider your manager’s perspective
- Think creatively about other ways to redress the gap if a big raise isn’t immediately possible
- Try to get more context from HR
- Be rash. Your frustration is understandable, but do your best to stay calm and clear-headed.
- Mention your higher-earning coworker by name during your salary review. Focus on the value you bring to the company.
- Stay in a job if your employer refuses to pay you market value for your role
Case Study #1: Do your research before taking a new job
A few years ago, Adarsh Thampy had a good job in marketing — or at least he thought so. He liked the work, was friends with several of his colleagues, and believed he was earning good money. After all, he had nearly doubled his salary from his previous job. But when one of Adarsh’s coworkers confessed that he earned 30% more than his friend and also had stock options in the company, things changed. “I was in shock because I was clearly more experienced, and it made me feel exploited,” Adarsh says.
Still, he didn’t make any rash moves. “There wasn’t much I could do,” he says. The company mandated that salaries not be disclosed, so “openly talking about the issue with my manager wasn’t an option.” He also realized he was partly to blame. “Before taking the job in the first place, I should have done proper research” into what others were paid at the company.
But when it came time for his salary review, Adarsh did ask for a raise. He didn’t reveal that he knew about his colleague; he simply cited his own strong performance. His boss agreed to give him a 5% increase. “It wasn’t much,” he says, but it was something. Adarsh was soon promoted to head of marketing but left the job soon after.
He says the experience taught him to better prepare for salary negotiations in the future. “Companies typically have a predefined range for jobs they are hiring for, and you should be able to figure out the band either online or by talking to current employees,” he says. “Using this knowledge, I was able to negotiate a 200% hike for my next job and [ended up] with a salary number significantly higher than the rest of my colleagues.”
Today Ardarsh runs LeadFerry, a content marketing automation software company, where “there is no secrecy and employees are free to discuss salaries,” he says. “I believe this also holds the hiring manager responsible for equal pay.”
Case Study #2: Talk to your boss about other ways to redress the gap
Erin Engstrom returned from maternity leave to a promotion, a raise, and a new team member to manage. “My boss gave me the new employee’s file, which included his contract, and imagine my surprise when I learned that he was earning more than I was,” says Erin, who worked in higher education at the time. She had more experience than her direct report and a master’s degree; he had a bachelor’s. “I felt insulted and as if I was on the wrong side of institutionalized sexism,” she says.
She didn’t wait long to speak with her manager about the discrepancy, but the response was “surprise,” Erin recalls. “The gap hadn’t seemed to occur to her.” Her boss told her that since she’d just gotten a raise, nothing could be done until the next salary review period, in a year’s time. “She also claimed that she would pay [the new hire] more than she paid herself if she had to, so highly did she value his talents.”
Erin was disappointed but decided not to take the issue up with HR. “My boss said HR would come back to me with the same response as she had, and I ultimately trusted her,” she says.
A few weeks later, Erin went back to her boss and asked if she could work from home two days a week instead of one. Her manager “chewed on this” for over a month, so Erin decided to start looking for other opportunities. “I ended up giving my notice before ever hearing back, so it was a moot point.”
Today Erin works for Recruiterbox, the online recruiting and resume management software company, and says she would advise companies to be more transparent about salaries. “Full-on transparency can be difficult, but at least make sure the bands for each role are publicly available, both in job postings and among existing employees,” she says. “Ensure that candidates and employees know what level of experience and seniority are necessary to achieve the upper end of each band.”
This blog first appeared on Harvard Business Review on 03/07/2016.