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11/5/2015
08:06 AM
David Wagner
David Wagner
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Is Your Company Underpaying You?

Most of us think we're underpaid, but are we really? If our own employers armed us with the right information, we'd all be better off.

10 Hot IT Jobs That Deliver Work-Life Balance
10 Hot IT Jobs That Deliver Work-Life Balance
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A new study by compensation software company Payscale shows that very few of us know whether we're underpaid, overpaid, or paid what we deserve. Worse yet, most of us assume we're underpaid. The lack of transparency leads a lot of us to look for new jobs -- or at least be very unhappy.

This study, combined with a more famous but less rigorous essay by actress Jennifer Lawrence, really makes the case that we need more transparency in the system.

Let's start with Jennifer Lawrence. In case you missed it, Lawrence recently chided herself for not negotiating a deal closer to that of what her male co-stars made in her movies. "I didn't get mad at Sony. I got mad at myself," she wrote. (Note: we're quoting her from this article because linking to her actual essay is not at all safe for work.) "I failed as a negotiator because I gave up early. I didn't want to keep fighting over millions of dollars that, frankly, due to two franchises, I don't need."

(Image: Gage Skidmore via Wikipedia)

(Image: Gage Skidmore via Wikipedia)

Keep this in mind as we discuss the Payscale study. According to an article in The Harvard Business Review written by Dave Smith, Payscale's Chief Product Officer, the company surveyed 71,000 employees and found most respondents -- 60% -- believe we're underpaid, regardless of whether it is true or not. The breakout of who believes they are underpaid might be more interesting, however.

A full 83% of respondents who actually are underpaid know it, which is good for them. But 64% of those who were paid at market rate also feel underpaid. Here's the stunner: Of those who are paid above market, 35% still think they are underpaid, and only 21% know they are above market.

Check out this video to see a total breakdown of the numbers:

Payscale also said that in cases where a company isn't able to pay to market standards, over 80% of respondents would still feel satisfied with their work as long as the company explained that to them. This makes sense. Not every company is going to be able to pay top market prices for talent. Also, "at market" is a moving target. As people shift jobs or locations and companies compete for talent, the market for a set of skills is bound to change. In a hot market, once-overpaid talent could soon be underpaid as salaries rise around them. As with any distribution, some people have to be below the curve.

In addition to selling its human capital management software to businesses, Payscale also provides a free tool employees can use to see how their salaries stack up against the compensation for others in their field. A number of job-search sites, including Glassdoor and Robert Half Technology, provide similar tools that enable you to evaluate your salary against averages in your city, your state, or nationwide.

Such tools can be helpful as you negotiate compensation or consider a new job. Still, averages mean nothing if the specific company you're working for, or considering working for, can't afford to pay you above market value. The real question is: How are you paid compared to the guy or gal in the cube next to you?

[Want another way to make more money? Try enrolling in these top schools. Read 10 Highest Paying Computer Science Programs.]

For the most part, we want to avoid the Jennifer Lawrence situation, not only from a gender imbalance point of view (which is extremely important), but also so you don't feel like a chump. If the person next to you negotiated a better deal and you're a better worker, you'll want to know.

There's a simple solution to it, too. Jennifer Lawrence's co-star Bradley Cooper vowed to tell his future co-stars what he's making. The shared information, will allow his female counterparts the information they need to tackle gender inequality. He's has the right idea.

It isn't just gender inequality. It is about everyone getting paid better. Here's the funny thing: salary transparency usually leads to higher pay. This article rightly points out (though it is admittedly an anecdotal argument) that the two jobs with the most salary transparency are Wall Street brokers and CEOs.

(Image: ktsimage/iStockphoto)

(Image: ktsimage/iStockphoto)

It is especially noteworthy that since the 2010 Dodd Frank "say for pay" provision was put in place (which allows stockholders to approve CEO salaries), CEO salaries at the top 350 US companies rose 21.7% in four years. In fact, there's a loose correlation between most major efforts to make CEO salaries more transparent and a rise in CEO pay. During the accounting scandals of the early 2000s, and in the early 1990s, when various CEO compensation tricks were made illegal and replaced by stock options, it was especially apparent.

You can't pin these directly to transparency, but it is logical that it's easier to negotiate when CEOs know what their peers are making. If the CEO of Coke knows the CEO of Pepsi is paid more than he is, guess what the CEO of Coke will want?

Companies don't want you to know what the people around you make, because you might realize how much they're taking advantage of you. The last thing most companies want is for you to have negotiating power.

It isn't likely you'll get companies to start publishing salary data (and you may not want them to) anytime soon, but it might behoove you to take advice from a Hollywood actor (on this point alone) and start sharing salary info with your colleagues. It might help everyone out.

David has been writing on business and technology for over 10 years and was most recently Managing Editor at Enterpriseefficiency.com. Before that he was an Assistant Editor at MIT Sloan Management Review, where he covered a wide range of business topics including IT, ... View Full Bio
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tjgkg
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tjgkg,
User Rank: Ninja
12/8/2015 | 10:01:56 AM
Re: Underpaid or undervalued
That is a busy area in NYC. I don't think there is a good retail job out there no matter how companies try to dress things up. Managers tend to be bottom of the barrel which i think is the key issue with how poor these jobs are. Poor leadership tends to attract poor workers. I'm glad i am out of that stop gap job myself.
tjgkg
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tjgkg,
User Rank: Ninja
12/8/2015 | 9:56:25 AM
Re: I've Got a Secret
All this is true which is why one really has to guage what the culture is in a company beffore deciding on which path to take when looking for a raise. Many companies today don't mind you making a case for a raise or adjustment. In fact that seems to be the trend. In older companies where they tend to be more traditional, doing that would signal that you are a "malcontent" and trigger a job search to replace you.
soozyg
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soozyg,
User Rank: Ninja
11/29/2015 | 4:47:35 PM
Re: Underpaid or undervalued
I'm glad I'm not in HR. I think I would be bad at judging all the factors that go into deciding on a candidate, interviews, and raises.
PedroGonzales
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PedroGonzales,
User Rank: Ninja
11/13/2015 | 1:00:17 PM
Re: Underpaid or undervalued
@ Li tan.  I agree. What would be the point of making 100k a year, when I work long hours and do not have time to spend with my family. I think often times  were are blinded side by compensation that we often do not see other benefits companies offer.    I wouldn't mind a lower salary if they offer good work and life balance, good benefits for me and my family.  
TerryB
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TerryB,
User Rank: Ninja
11/11/2015 | 2:44:01 PM
Re: Underpaid or undervalued
@vnewman  Thanks for clarifying, I did read that wrong way. Sounds like you are in situation that @SaneIT was getting at, your title doesn't match what you actually do. I'd like to think your boss would take better care of you than that but obviously not.

From reading your posts, I know you work on infrastructure side of things. For most part, you do get a raw deal when it comes to "bottom line". Business users, especially mgmt, just aren't bright enough to realize the bottom line could be a lot worse if you don't have talented people in those positions. They've taken their computer out of box at home and got it working, so they figure your job must not be very hard. They have no idea what it takes to keep an enterprise working. And especially that bottom line is much better with one talented employee instead of two mediocre ones.

But your boss has to stick up for you, be a believer, or you are screwed. We have a guy on Corp infrastructure who all of us in IT know is a rock star. He could probably demand whatever salary he wanted (within reason) and get it because his boss knows how good he is. But without that, if he had to make his case directly to business users, they would have no idea how good he is compared to 90% of people they'd hire off the street.

I wish you best on this, certainly sounds like you are getting taken advantage of. I gather from your posts you work for pretty large unit, that makes your situation much worse. There is a lot to be said for working at small companies, I'm pretty sure I never would have survived in larger organization. Especially in my younger days, if I thought something was stupid I flat out said it. Politics was not my strong suit, I was kind of like Trump on steroids.  :-)

 

 
vnewman2
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vnewman2,
User Rank: Ninja
11/11/2015 | 2:22:18 PM
Re: Underpaid or undervalued
@TerryB - Thank you for the compliment :)  I like to think of myself as a smart cookie :)

The person in my "sister" role, was actually a brother :)  He made 5K LESS, but only had a single role capacity - whereas I have a dual role.  He was also 5 years older than me.  So does it even itself out?  I made more (marginally) than him, he's older with (presumably) more experience, but I have a second "job" within the firm.  Doesn't a "second" role warrant twice the money?  Obviously not.

I have to disagree with you about HR - where I work, it's all about the bottom line.  I am not sure how else to say this, but unless you are actually bringing money into the firm, "talent" is not really a much higher priority than getting the new hire at the lowest salary possible.  This is especially true in areas seen as "cost-centers" - all the "internal service" departments.
TerryB
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TerryB,
User Rank: Ninja
11/11/2015 | 12:49:39 PM
Re: Favoristism
@kstaron, I'm sure you know negotiation is all about leverage. If, for whatever reason, your job is perceived as "dime a dozen", you have no leverage and you can be best negotiator on planet and will get nowhere.

The thing that intrigues me about your post is whether your company has formal annual reviews. If you do, and your reviews are as good as these people making more, your favortism claim is proven and that boss should be shown the door.

Doesn't mean he can't get away with it if he is smart enough to give you worse reviews than the higher paid people.
kstaron
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kstaron,
User Rank: Ninja
11/11/2015 | 10:51:24 AM
Favoristism
I know someone who stumbled upon the pay for the rest of the IT group. It was shocking to see how disparate the pay was. In this case it wasn't broken down along gender lines, or even seniority, but across who seemed to be the best friends with the boss. Transparency can also help mitigate favoritism such as this, because when you can go in and say this person who started around the same time I did is earning $30k more, it's time I got a raise to close that gap a little.

Are there any studies on negotiating skill vs. productivity at work. Are the skilled engotiators the one worth over paying?
SaneIT
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SaneIT,
User Rank: Ninja
11/11/2015 | 8:32:19 AM
Re: Underpaid or undervalued
The positions a lower levels are easier to define and implement especially entry level jobs.  Those should all be able to fall into a tight pay range that isn't going to lead to a situation like @vnewman had.  As you move up the chain I do agree that it can be difficult but not impossible, for instance there were years that I held two titles, one for the "local" position and one for the "global" position that defined my pay rate.  While the office I worked in didn't have a position to match what I did they gave me the title that most closely resembled my role, as part of a large company though that position did exist on a global level and that is how my compensation was determined.  As for new employees coming in at much higher rates than your existing employees, if you value the people who have been with you for some time then I think you should look at what you've been paying them and determine how valuable they are to you because chances are the company that your new employee just left is hiring...
soozyg
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soozyg,
User Rank: Ninja
11/10/2015 | 3:44:50 PM
Re: Underpaid or undervalued
@vnewman2

If you decide to say something, as a woman I propose you avoid prefacing your request with, "I'm sorry...." which is a hot topic right now in the battle of the sexes. Women apologize before they ask for something in the workplace. Men just ask.
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