One of the most sensitive topics in people management is the question of remuneration. Naturally, most employees join an organization and go to work because they want or need to earn money. So most care whether they earn little or much.
Today, I want to touch two questions or assumptions that reach me on a regular basis. And I want to share some HR thoughts with you.
Please note that - like always - there is no right or wrong. It depends on the country you live in and also on the specific organization you work for what kind of laws or rules might apply. I speak from my personal experience.
“I am longer with the company - I should be earning more than a new employee.”
Well, maybe, but not necessarily. Seniority does play a role in many companies I know and there are for sure good reasons to earn a higher salary if you have been with the company for 20 years in comparison to a new employee who just graduated from college.
But I want to focus on other perspectives which many employees have difficulties with seeing or understanding. It’s about why there might be good reasons to pay a new employee higher.
Let me repeat and highlight my key message:
You don’t necessarily qualify for a higher salary, just because of your (longer) seniority.
You might like it or not, but
Not all employees grow in worth regarding the role they get paid for just because they are present and have been with the same organization for a while.
Some become comfortable and lower their standards after some time, resulting in a poorer performance over the years.
Some do a solid job and perform as they did in the beginning, but decide (consciously or unconsciously) to stay where they are. They just don’t develop. Maybe in other areas, but not in their job role. This would qualify for an inflation relief, but not more.
Sometimes, a team is very homogeneous and all members do a good job, but there is someone external with totally different qualifications and the company wants to invest into this (maybe hard to find) external candidate.
Sometimes it is just about timing. When you were hired the labor market might have been easier and you had many competitors, but now the company needs to pay a competitive salary to attract any candidate at all and will accept that person entering overpaid. Of course, the other salaries could be raised as well, but depending on the organization’s financial situation and budget, this could be impossible to handle in the long run. So they accept payments which are not ideal, but would not be able to openly communicate about that.
These are all just examples to give you a bigger picture. You might say, that’s unfair and wrong, and I might even agree. Management and HR representatives for sure take the best decision possible, but it is true that this very decision can be fair and beneficial from one perspective and unfair and wrong from another perspective.
And maybe you won’t even get the chance to understand the real reasons for what seems unfair to you, because HR isn’t allowed to share historical or private data with you.
The second statement is similar to the first one:
"I have been with the company for three years - I should automatically receive a pay raise."
Here again, my general answer is similar:
If there is no pay system which guarantees automatic increases linked to time, then no employee is entitled for an automatic increase.
You might like it or not, but
You signed a contract and agreed to a salary when entering the company. If you don’t like your salary any longer, you need to agree to a contractual change with your employer.
Depending on the yearly inflation, you are absolutely right that you might be earning less, if you don’t receive an increase. Still, it is at the discretion of the company whether they give you more money or not.
And it is at your discretion whether your general job satisfaction is high enough to stay with the company, if you haven’t received a pay raise in many years. (I personally don’t believe in „job hopping“ for a minimal difference in salary, but I leave that up to your priorities and experiences.)
Some final thoughts on the topic: As I said before, each situation is individual, and I cannot speak for each employee worldwide. But there are some questions which can guide you:
Which priority does my salary have for me in my current life phase?
How much do I depend on the money or a potential increase?
What benefits does my employer offer which I should include in my consideration? These could include whatever is important to you, e.g. freedom in time management, remote working, good culture and work atmosphere, nice colleagues, interesting tasks, development opportunities, fancy office supplies, etc.
This being said, you can earn a lousy salary (or an average one), but still be very happy with your job. I don’t want you to accept poor work conditions, but don’t focus only on money and think that you will be happy with a high(er) salary, if the rest does not correspond with your priorities and values.
Last but not least: If you feel underpaid and think about approaching your supervisor or HR person, collect reasons for why you should be earning more. Focus on your personal value for the company and your recent successes instead of comparing yourself with your teammates and their salaries.
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