3 ms·
An explanation I saw lately about misalign between salaries of newly hired people and existing employees is due to budgeting. The budget for new hires comes fr
by jakub_g 5y ago
An explanation I saw lately about misalign between salaries of newly hired people and existing employees is due to budgeting.
The budget for new hires comes from one budget line, and budget for increases comes from another.
A manager has $N to distribute among fixed number of existing employees (typically a few % of existing salary mass). They can't 2x everyone's salary. And the budget for this is approved long in advance.
OTOH they have some a budget of $X to hire M new people. They might not be able to hire M people if market is hot, so they hire fewer people at elevated salaries and still stay within the overall budget $X.
- pc86 5y agoThis may be how it works at large companies or places with more complicated accounting practices, but my department simply has a payroll budget and when we want to make a hire we argue for it and the budget is increased. Raises and bonuses are distributed out of the yearly budget increase.