2018 Update: I’m now over at SalaryMatters–my new project. Thanks to the popularity of this post, it’s evident that an entire project needs to focused to this topic. So please visit and leave a comment on this the SalaryMatters version of this post. Thank you! – Steele
Is your company robbing you of the salary you deserve? Possibly.
The one thing I painfully figured out early in my young career is — the method in which companies are able to cheat many of their employees out of the salary they rightfully deserve.
Are you wondering if you’re one of the many victims? Keep on reading because you probably are.
Aside from the most popular method of salary thievery, which is, the initial salary the worker receives upon being hired, the next method of thievery is executed through a series of internal promotions.
So how do they rob me of the salary I deserve?
Companies use the internal promotion, or the practice of hiring an internal candidate for an open role, to secretly whittle away at their employees’ salaries. I painfully uncovered this discreet practice from a personal experience with one of my first employers. And to ensure that I wasn’t being picked-on, I validated my suspicion of this practice by conducting interviews of over 50 professional colleagues from varying years of experience, organizational rank, industries and corporations (and about 50% of them were HR executives).
It works like this; with each internal promotion a worker receives, the company will strategically pay the worker below the market rate, which allows them to save money (an external candidate will more than likely get the market rate). Add up a few of those salary haircuts with each promotion and before you know it, your poor salary could be significantly lower than the going rate for that role (well in the double digits from a percentage stand-point).
But how can these companies do that and get away with it?
OK, so now that you understand how they go about executing their ruse, let me quickly outline how they’re able to get away with it again, and again. But in order to understand the “how,” you must take a peek into the psychology of the ruthless corporate jungle you work in.
The first thing that you need to realize is that companies love internal candidates as much as they love making profits. And that wasn’t just a catchy phrase – in actuality, employers love promoting internally because it creates an opportunity to increase profits by offering the promoted worker a modest salary increase usually below market for that role.
They get away with this for many of reasons but I’ll give you the two most important.
- They got your number: You can’t expect to seriously negotiate salary when the employer knows exactly what you currently take home in pay (unless of course you have a competing offer from another employer in-hand). It’s almost a futile attempt. This, my friends, is where the proverbial dagger gets lodged into the spine of the internal candidate. You see, the company’s rationale is simple – they know that you can support your family on your current salary, so they figure that they’ll pay you a little more because if you can manage to get by with what you’re currently making, surely you can manage to live on this modest increase. And don’t get me wrong; it’s only modest compared to the salary an external would likely receive if they were to get the exact same role. To that end, many companies literally have a HR policy that puts a 10% salary increase cap on most internal promotions. Now that’s just wrong.
And if you are thinking about making a claim to HR for a higher salary, be prepared to hear a talk-off, which is a generic, predetermined response to common questions. The common HR talk-offs we observed went along the lines of: department budget restraints and the macro-economic forces that are currently placing a strain on the company’s financial resources (sounds like bull to me).
- Pressure: Finally, companies get away with their scandal by benefiting from the internal pressures that workers face when presented with an opportunity of advancement. How difficult would it be to tell your boss that you don’t want to accept a promotion and would rather stay in your current role because the salary is not what you were expecting? Pretty darn hard I suppose. It’s almost sacrilegious to turn down a promotion that you were being groomed for, regardless of the reason. Not to mention the bridges you’ll undoubtedly burn as a result of your decision to not get screwed out of a fair salary. A worse scenario that commonly occurs is when the employer phases out your current role and replaces it with a more senior role (promotion). When that occurs, it is almost as if you have to take the promotion because you have no other role to go to if you pass it up (talk about pulling the rug out from under you). That once happened to me and many other professionals I interviewed.
So what should I do, avoid promotions all together?
Of course I’m not proposing that you turn down promotions—my goal is to make you aware of this practice so that you can better equip yourself. That being said, for the reasons I mentioned above, there might not be much you can do about this salary haircut ruse when you get promoted. But there’s hope for you and your malnourished salary. And that hope will likely come in the form of you leaving your current company (when the time is right) and going to another company who would be more than happy to pay you what you deserve, and then some. That’s exactly what I and countless others did.
Please don’t pay him any mind…
As I write this, I know there’s a legion of HR professionals that will claim that what I’m saying is completely false and that their “blameless” employer always compensates their workers in line with the market and within the salary range for all positions. And of course my snarky response to that is, “sure they do.” I have interviewed a countless number of workers shortly after they have been promoted and they specifically told me that they were getting paid significantly below (sometimes even double-digit %) the market rate and/or salary range for their new position (companies still have the arrogance to think their workers won’t find out the salary range).
Although I understand that not everyone is a victim of a corporation’s salary stealing methods, I can say that there are many organizations that employ these tactics at the expense of faithful, hardworking employees. I am of the belief that in the long run, companies that engage in these practices will eventually lose in at least two ways. First, their underhanded ways will force their once faithful, engaged worker to look elsewhere for fair compensation. Lastly, the victimized few that decide to stay will become jaded, actively disengaged workers who will literally destroy the company from the inside out (disengaged workers cost companies billions).
Down goes Goliath…
Corporations once had the advantage of having salary figures cloaked behind the veil of limited access to information. And then came the internet and now workers are no longer the underdog because salary data is readily available for anyone willing to put forth minimal effort to obtain it. When (not if) workers find out that their employer is paying them significantly less than their colleagues and/or the market, the company will inevitably feel the pain of a worker scorned. And speaking from my own experience with this matter, that pain does not easily go away if it ever does.
If you had your salary stolen by a greedy corporation, I’d love to hear your story. Likewise, if you disagree with the points made in this article, I’d love to understand your experience and perspective. Constructive dialogue helps everyone grow smarter.
A Champion’s Cause:
“No one sat me down and taught me this stuff. I had to learn it all on my own by bumping my head and watching others do the same…so I freely give away all that I know to help others just like me.”
- Steele A. Champion
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