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Why new hires often get paid more than existing employees

178 points by altdataseller 3y ago

jonascabrera 3y ago
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kirchlwalter 3y ago
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mariealfrey78 3y ago
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mariealfrey78 3y ago
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chpatrick 3y ago
Isn't it just because new applicants have a much better bargaining chip - "I'll just start working at another place that will have me" (believable and easy for them) vs "I'll quit and start job hunting" (less believable and much more work) for existing employees.
- corethree 3y ago
  It's not a better bargaining chip. It's just a more "believable" bargaining chip. A company loses far more, far more if an existing employee quits, versus losing a potential new hire. This is just one of the illogical things about life. Either the company is illogical, or employee behavior is illogical in that the threat of quitting with a better bargaining chip is just lower.
  - buzzerbetrayed 3y ago
    > A company loses far more, far more if an existing employee quits, versus losing a potential new hire. On an individual level maybe. But it doesn't benefit the company for news to spread that they'll bump your pay a significant amount if you threaten to quit. If the company has 100 employees working for a salary that is 80% of their fair market value, it's worth losing one of those employees to keep the discount on the other 99.
    - djtango 3y ago
      in other words there's a spread between what employees will take as pay and what employers could pay but usually employers are arbing that spread because employees lack price transparency.
    - corethree 3y ago
      That's why swes need something union like. Not a union according to the legal definition, but some way to do collaborative negotiation so they get paid what they are worth.
      - zeroonetwothree 3y ago
        Switching employers works well
        corethree 3y ago
        That was my strategy for the last decade. The problem with it is it gets tiring. I'd like to switch because I want to switch, not because I want to get paid what I'm worth. Additionally in the current market for the past year, software engineers aren't getting hired as fast anymore. The crazy hiring has slowed down and many companies are actually offering lower salaries. It's much harder to land a job.
      - redserk 3y ago
        That's... a union. A union can limit their involvement to strictly salary negotiations if it's members choose to do so.
        corethree 3y ago
        Thanks for not understanding. I mean there's other things associated with a union that people don't like about it. Why do I have to pay to have collaborative negotiation? I'm just saying I acknowledge those parts and I want to avoid it. I think in theory people can band together and collectively negotiate without actually forming a legal union.
  - charrondev 3y ago
    My experience is that as a higher level IC your ability to get that raise from your current place requires you to shop around a bit and have the confidence that you can walk away and find land another job that pays more. It’s not a bad idea to do a couple interviews before your annual review comes up, even if you don’t have to say in quite so clear terms that you are ready to jump ship. Confidence helps a lot.
    - corethree 3y ago
      Yeah. That's stupid right? Companies should prevent you from shopping around in the first place. They are exploiting your laziness and under confidence.
      - nerdponx 3y ago
        Don't give the lobbyists any ideas.
- kamikaz1k 3y ago
  TFA goes over 5 potential reasons, the author cited their insider knowledge. None of those points cover what you said. The closest thing the author said was external experience is valued higher, which rings true to me.
ironmagma 3y ago
> because your company can only give 5% maximum raises every year (because it’s tied to inflation, cost of living increase, or another metric), your salary will continue to lag the market average OK so tie it to the market average instead? > our current team led to us being in a stagnant market position: So we need someone new The diagnosis here is ego. The thought doesn't even cross their mind that the leadership might be the actual reason, rather than the ICs who really have very little agency.
- ok_dad 3y ago
  The last place I worked hired a new team and fired the old one. Surprise, the same problems remain.
- giantg2 3y ago
  "OK so tie it to the market average instead?" My company does do market adjustments. We're were still hiring in people for more money than existing people were making. Mostly because the average hadn't shifted much since the new salaries only affected a small population. The new people we were higher were above the average they were using. Eventually they did do some adjustments for the lowest employees, but it was a bit lackluster.
- jordinl 3y ago
  > > our current team led to us being in a stagnant market position: So we need someone new > The diagnosis here is ego. The thought doesn't even cross their mind that the leadership might be the actual reason, rather than the ICs who really have very little agency. Do we work for the same company?
deleted 3y ago
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ozr 3y ago
I always figured the explanation was much simpler than this. As a general thing, someone meeting expectations and performing their current role should expect a nominal raise each year. Cost-of-living sort of thing. When you hire someone new from the market, you need to figure out the market price and pay that. There's no particular reason these two should be in lockstep besides, as the author mentions, a vague sense of inequity.
- kamikaz1k 3y ago
  It’s not a vague sense, and it does cause real painful attritions. I’ve seen it happen many times. I think the author is right in that HR doesn’t do a good job of quantifying the hit, and line level managers are not incentivized to burn their social capital on a flight risk just on principle.
  - ozr 3y ago
    This is true. It's a result of poor management, as you said. Either a lack of incentives or a lack of skill. If someone leaving represents a substantial risk, then a) that role should be derisked, and b) that individual should be recognized via whatever process the company has (leveling, etc) to keep them on board.
- happytoexplain 3y ago
  Vague? It's pretty concrete. You may make a perfectly logical business-related argument as to why this compensation difference is acceptable, but why would that have any effect on the obvious, intuitive perception that it's unfair from the point of view of a rational human? Businesses do inequitable-by-definition things all the time. It's part of their DNA. They make measured trades, and often those trades involve mistreating humans, betting that the practical consequences of that will be worth whatever the upside of the trade is. That's why we have so many laws and organizations protecting people from businesses.
  - ozr 3y ago
    Is it inequitable and mistreating an employee to pay them what we agreed to?
femto 3y ago
> Hand in a competing offer Unless (even if?) the counter-offer is significantly higher, I'd say just take the competing offer. Chances are HR will put a target on your back for being "disloyal".
- kamikaz1k 3y ago
  Why would “HR” put a target? Your manager wants to retain you. If you don’t think your manager has your interests in mind, then why stick around? HR DGAF IMHO.
  - jliptzin 3y ago
    I think they mean that now that you’ve outed yourself as someone who shops around, the next time you try to do it they’ll already have your replacement prepared.
- dartharva 3y ago
  You are severely overestimating HR's willingness to engage. If they are tardy enough to not be competent in managing basic employee expectations, they sure as hell are not going to maintain a grudge ledger against every candidate to target them.
  - giantg2 3y ago
    My company used to blacklist employees that left. If you left the company they would never hire you back. They stopped doing that around 4-5 years ago.
    - shermantanktop 3y ago
      I got that speech on the way out the door. I laughed and laughed, right in the cubicle where the HR lady (nice enough) was going through the process with me. I was already in the mindset that the bridge had been burnt—by them, not me. Between the stress of quitting, the relief of having another job lined up, and now this bizarre empty threat to be blackballed from a place I’d never want to work for again…I just had to laugh.
onionisafruit 3y ago
I worked with somebody who applied for the same job on another team without disclosing he already worked at the company. It turns out that’s not something they actually check for. He got an offer for about 15% more than his current salary. I think he should have just accepted that job and gone through the motions of quitting his current position and starting the new one with the same company. Mostly because I wanted to see how that played out. Instead he showed the offer to our manager and asked her to match it. That went to HR and the offer was rescinded. He left a few weeks later.
- tomwojcik 3y ago
  Additionally he should have used a referral /s
  - jareklupinski 3y ago
    brb referring myself for every internal role :P
    - otteromkram 3y ago
      Probably better to use a referral that you're on good terms with.
      - null0pointer 3y ago
        I’m on good terms with myself.
      - wsc981 3y ago
        I’m on excellent terms with myself.
- steveBK123 3y ago
  This is hilarious and speaks to HR incompetence for not knowing they already worked there before making an offer, if not much earlier in the process.
tmsh 3y ago
A smart company is constantly raising its hiring bar (or over time it will not survive). So by nature it’s aiming to hire better than 50% in the role/level. So by definition a new hire should be paid more than someone at the median for that role/level. This is the root reason.
- jamestimmins 3y ago
  "constantly raising its hiring bar" is a nice idea I often hear repeated but rarely see in practice. In fact, when companies are incredibly successful based on early 10x employees, you're almost guaranteed to see the hiring bar go down over time.
  - tmsh 3y ago
    A 10x engineer does not stay in the same role/level as a company grows. They’re very important though. And it’s a good reminder that roles/levels don’t necessarily matter compared to the relevant work. All FAANG and other smart companies hire at better than 50% at the role/level in order to constantly evolve.
    - Infinitesimus 3y ago
      No they don't. They _say_ they do (really mainly Amazon) and the rumor develops legs and gets repeated. To actually do this, you need an objective measure that is repeatable over many different kinds of products, domains and people and they is a very hard problem no one has cracked. Career ladders and some calibrations help to do this but it'd never perfect and people slip through the cracks. If you're at a big company, you've seen people get a rating that seemed misaligned to their work because an arbitrary curve is enforced or a project has high visibility by sheet luck because an exec was adamant that the project be on the roadmap.
    - neilv 3y ago
      > All FAANG and other smart companies hire at better than 50% at the role/level in order to constantly evolve. Do you mean that they keep hiring people better than 50% of the current people in that role/level? That's not my impression from Big Tech. All the chatter I hear is that, until very recently, they kept hiring more and more people, and over time have been getting lower capability, and more towards worker grunt drones. (Though I've often heard that the better people already at the company couldn't pass or do as well at the Leetcode-like interview metrics performance as the current candidates often do, because they have huge masses of people training for the metrics specifically.) Have I heard wrong, or do I misunderstand?
reactordev 3y ago
Nowhere mentioned did it say that “if you have X experience and Y degree you get Z amount of salary”. It’s always a range. If you’re in a situation where someone with the same job title and same “pedigree” as you is making more money, ask yourself “How can I negotiate more effectively?” Bob gets paid $40k more because Bob has a personality they like and want to groom him for leadership. Ben doesn’t socialize and his ego is often confrontational in meetings. Ben is hurt because he’s not getting paid the same as Bob. It’s sometimes that simple. If you want top pay, negotiate it and deliver that value. Life isn’t fair, salaries are a range, and if you decide to slack off because you aren’t getting “paid what you’re worth” - you’ll be the first one cut. That said, new talent comes with new ideas - sometimes that’s worth more. Instead of being hurt by someone making more than you in the same position - use it as fuel to go better yourself. If you still feel like you deserve Bob pay, talk to your manager about it. Tell them how it makes you feel without getting overly emotional about it. Let them know, that you know, and most good managers will do whatever they can to make it right by you.
- saagarjha 3y ago
  What happens if you don't have a good manager?
  - reactordev 3y ago
    I think the answer to that is quite obvious. If you have a bad manager and you aren’t getting paid what you think you should be paid - there’s only one option.
- otteromkram 3y ago
  The best way to negotiate is to have a safety net. Either a significant other who will support you or you rely on your own savings if things backfire. Once you don't have to worry about the "what ifs," negotiation is a cinch.
  - ahepp 3y ago
    Getting to Yes calls this the BATNA: Best Alternative to Negotiated Agreement, and one of the first steps to negotiating is figuring out your BATNA
jareklupinski 3y ago
Reason 6: The only way you can get a sense of how the world truly works outside your company is by going outside your company the truly confident teams are the ones who know you'll come back at the end of your https://en.wikipedia.org/wiki/Rumspringa https://en.wikipedia.org/wiki/Rumspringa , and throw you a party on your way out
AngeloAnolin 3y ago
It's just reality that (most) companies with no transparent in their compensation, existing employees will be put on the salary bracket that will give the company the most leverage - either by being able to dangle a good counter offer (whenever the employee is about to transfer to a different company) or simply saving on salary expense. Corporations will always mark an employee simply as an entry on their ledger. When the time comes to get new hires on similar work level, they know they need to up their game in terms of how much they can generously pay while still maintaining the bottom line of the organization.
BobbyTables2 3y ago
To me, there is zero upside to staying. The whole counteroffer thing is politically uncomfortable. Even if successful, it means one’s resume will be more monochromatic than if they had left! If one interviews well and gets a juicy offer, the company can simply “make it back” through lower raises, and HR gets a pat on the back for leveling compensation. I’ve also noticed that the nature of work stagnates after about 5yrs. Sure, there are little learnings after that, but it’s too easy to fall into a “sustaining” role with very little hope of real growth.
- giantg2 3y ago
  "fall into a “sustaining” role with very little hope of real growth." Yep, happened to me and now I'm fucked.
- nerdponx 3y ago
  The only long-term career/financial benefit to staying anywhere ever is experience building/shipping stuff, and goodwill from people who might be positive references down the line. Beyond that, staying anywhere for too long is just leaving money on the table. Employers of course have the power to change this. Any individual employer even, it's not a Nash equilibrium. If they wanted to, they would. They don't because they don't care. You don't owe your employer any more respect than they show you, which is generally close to "none".
- mesarvagya 3y ago
  This may not hold true for companies that gives your RSUs and you want it to get vested.
- pjmlp 3y ago
  Depends pretty much on the market condition, if one has family, is keen in having less vacations during the year switching companies, not being terminated during the probation time on the new company,.... Job hoping is not a big deal in markets that support it, it isn't always like Silicon Valley everywhere.
  - red-iron-pine 3y ago
mtillman 3y ago
We don’t do this. If we hire someone for the same role and level as we already have on the team (ie sr devops) they either get paid the same (CoL index adj)as the existing person or we adjust the existing person up to the new salary. In the event of a fundraise, or equivalent growth of a new round size, we adjust everyone to the new comp that we’d pay an outsider to join for that role. Our opinion is that if you aren’t willing to pay an existing person the same that you’d pay an outsider with the same role & level, just let them go. It’s unkind and unnecessary string them along at a marginal advantage.
- SamuelAdams 3y ago
  How many people are in your organization? The article specifically mentions this usually happens at larger organizations that are not start ups.
  - mtillman 3y ago
    That’s fair, we’re a small but mighty 75 going on 100. I hope this attitude sets a standard for years to come though.
- paiute 3y ago
  I wish more people thought this way. No wants to think about games with salary. People expect to be paid similar to others like them, it’s pretty simple. Anything less is a ticking time bomb of discontent.
- torginus 3y ago
  Well congrats on your org for having integrity - but the math is simple, let's say the median employee has been at the company for 2 years, during which his market rate has jumped by 20%. To hire a new employee at market rate, you have to give your team of lets say 10 employees that much money, which is euqivalent to hiring another 2 people for 'nothing'.
  - lukeramsden 3y ago
    If you can’t afford to pay the current employees that raise, you certainly can’t afford new people - the market rate is the market rate.
627467 3y ago
In my experience, pays issues only get solved during hiring negotiations. That's it. During hiring (as author mentions) you have several people aligned to hire you at almost any cost. But after being hired - at most - you have only your manager. And for promotion you're competing against everyone, all departments.
beachy 3y ago
This leaves out the most obvious reason - it's better financially for the company. If every employee was highly mobile, aware of their own value and motivated to be always on the hunt for new opportunities, then yes, companies would need to have some system for making sure new starter salaries were in line with existing employees. But they are not. Bob is highly introverted and it took him years to make the workplace bonds he now has with his colleagues. He doesn't want to start over. At Carols previous startup, the CEO turned out to be a psychopath. She values the stable leadership at this company. Tim is an idealistic junior. He know his friends earn more but he's drunk the Koolaid and he believes in the company's mission. And Mary likes this company because it means her family can live next to her parents. For any number of reasons, it's just not necessary for the company to pay market rate to every existing employee. Inevitably some will leave to get higher pay - they will be balanced out by new people coming in, also at market rate.
SamuelAdams 3y ago
> In short, there’s a lot more corporate bureaucracy in giving a raise than there is to giving a higher offer to a new hire. As an IC, it’s hard to sympathize with this argument. This is corporate bureaucracy that a company *chose* to create. How they got here is a matter of debate, but this doesn’t feel like a good justification for not rewarding loyal, high level performers. This argument always stuck me as a weak appeal to (an ambiguous) authority.
- Aeolun 3y ago
  While that is true. It's also not helpful. You are working for a company with a corporate bureaucracy. It's not going to disappear just because you think it's unfair, so you have to get your raise within the bounds of that system.
  - habitue 3y ago
    You're both right, this is an is vs. ought problem
- hapless 3y ago
  It is a fact of life. You don't have to like it, or embrace it, but it remains true. It is generally easier to get a raise than to get promoted. It is generally easier to get a new job than to get a raise. On balance, if you want to maximise earnings as an IC, you are gonna change jobs more often than you get an above-inflation raise.
blastro 3y ago
Kudos to my company, who will reset comp if new employees are brought in at a higher rate
- human 3y ago
  Do you think hiring takes longer at your company because of this policy?
zeroonetwothree 3y ago
The author misses a key reason, which is the winner’s curse. I’m going to take the job that offers me the most money, which means it’s likely I ended up near the top of their salary band (maybe I did well on the interview or they like me for some reason or random luck). That means I will be likely paid more than other employees at my level.
- nerdponx 3y ago
  That only applies to applicants who have competing offers, with substantial variation between offers in terms of compensation. That happens to very few people.
ne0flex 3y ago
At my current firm, I found out that my co-worker, a new hire (22-year about a year out of college) was making $3k more than me, who is 10 years older than him. Spoke with my boss about this and they gave me a 30% bump. The HR reasoning was that they thought I was 'happy' with my current salary and that I had loyalty to the company because I've been with them for 5 years. A former coworker went to get an offer from another firm and tried to use that as leverage for a salary increase and ended up getting fired.
- selcuka 3y ago
  > A former coworker went to get an offer from another firm and tried to use that as leverage for a salary increase and ended up getting fired. This is normally what HR does. I'm surprised that they didn't do the same to you. They probably needed you more than the other person, or even with a 30% raise you were still cheaper than a new hire.
- torginus 3y ago
  I've also had the 'oh I didn't know you wanted to make more money!' discussion with my manager, and it seems just so non-genuine.
Sparkyte 3y ago
Because often the annual % doesn't meet the rate of inflation which a new wage must be derived by. However where I work now I will be willing to give 10 years or more to. I'm loyal since they've been with me through all of the worst of things.
deleted 3y ago
[deleted]
neilv 3y ago
> Reason 2: [...] In short, there’s a lot more corporate bureaucracy in giving a raise than there is to giving a higher offer to a new hire. The reason is that this is an accident of corporate bureaucracy? Or is the root reason that companies consciously believe they save money if they cap raises low, regardless of the degree to which this causes regretted attrition?
- nerdponx 3y ago
  Right, this article reads like a bureaucrat trying to shift blame to forces beyond what they control, when in reality it's very much in their control. > regretted It's not regretted if 1) employees are considered fungible, and/or 2) it's expected and planned for. One of both of those things tends to apply in most workplaces.
LanceH 3y ago
> While this probably doesn’t apply for small startups with no formal compensation structure, large companies often have strict policies around the how much of a raise they can give to any employee. I know every company will say this, but every single one I've run across has someone who can sign off on something and change it. "Everyone starts with 2 weeks of PTO per year." -- I've started with 3 or 4, amazingly -- actually entered into the systems, not an informal agreement to allow me to take it. I've found PTO to be the easiest thing to negotiate at the end of the hiring process for a senior+ position. "Band 6 has a maximum salary of xxxx" -- I've been hired above that. And these are big companies with formal rules. They all have formal rules for breaking their formal rules, and the person telling you it's a firm rule knows it. All of this lends itself to new hires getting paid more, of course.
- rand846633 3y ago
  Wonder if the person in op story could have negotiated better and won against HR…
- hnbear 3y ago
  I had a previous boss who had a personal rule that he always wanted to only hire the best and would pay for it. If every hire didn't involve paying above band and having to get an exception the hire wasn't good enough. He fought and won every time. This was a very big, very formal company. All rules are guidelines if you know how to request exceptions.
- caseysoftware 3y ago
  A few years ago, I figured out that in dealing with companies (beyond the earliest startup stages), you can ask a few questions that work pretty consistently: - What's the average for this role? Explanation: Odds are, they've only given ranges up until now. This helps lock them down to a smaller range and should be closer to what the actual team looks like. - How do I compare to the average candidate? Explanation: If you're below average, they wouldn't be talking with you. Therefore, you are likely above average and now have a new floor instead of the generic range. Further, now they're likely going to describe what unique aspects you bring to the table and why you fit the role. No matter how many times you say "I'm great for this role!" it's 100x more powerful for THEM to say "you're great for the role because of A, B, and C!" And hopefully now you fit A, B, and C into your talking points and questions to the team, hiring manager, etc.
BenFranklin100 3y ago
Here is a tip about getting raises at work: ask for them. Here’s another tip for growth while staying within the same company: ask for a new/higher level role. Managers are people, not all are mind readers, and in many instances, rightfully try to stay out of your private life and may not know what you presently want career-wise. Communication is key. At our company we implement annual ‘performance reviews’, which are really 1-1 career path discussions where we try to align a person’s desired career trajectory along company objectives. I’ve found this to be a useful exercise in gaining a better understanding of where a person is in their life and career, especially with those who don’t like to volunteer information. This is also a good venue to keep salaries up with market wages.
- sumedh 3y ago
  > Here is a tip about getting raises at work: ask for them. HR normally will say no, then you find another job and tell your manager that you are going to resign, manager talks to HR and HR gives you a small bump. Then you have to decide whether you stay or leave.
  - BenFranklin100 3y ago
    HR is not the place to ask for a raise. Your manager is. The manager will then make the case to upper management. HR is the place you go to ask questions about your benefits package, not career path.
rqtwteye 3y ago
That would get resolved quickly if salaries were transparent. They are are already transparent for the employer so a functioning market would require transparency also for employees.
otteromkram 3y ago
I love how there are zero citations or other references, and the author doesn't provide any qualifications, yet everyone seems to believe this nonsense. Bloomberg used to be a decent media outlet, but maybe that's chsnged. This feels like an AI-generated article (probably with some light editing). Finally, if it was actually written by a human, way to stem future job prospects. Calling a prior company out by name and making the two salaries easy to figure out ($40k more == 40% more == $100k for the author and $140k for the coworker) are not bright moves for a burgeoning writer.
- number6 3y ago
  > Bloomberg used to be a decent media outlet, but maybe that's chsnged This happend to me too, I just noticed it because the site has a Wordpress favicon. Its not Bloomberg but Bloomberry - don't know if this is intentional but nice hijack
  - AznHisoka 3y ago
    How did you mistake it for Bloomberg when the logo on top was clearly different?
    - number6 3y ago
      Yeah - the brain does curious things... Pattern matching hijacking I guess
deleted 3y ago
human 3y ago
As a manager, I often need to hire someone fast and will end up having to go above market to get good talent to make the move. I can’t afford to increase everyone else’s salary by the same amount. I will do it because I want to add help quickly to the team to avoid burnouts. It’s such a tough spot to be in. On top of all that, it’s hard to judge the level of experience compared to current employeed before the person gets onboarded.
selcuka 3y ago
The article mentions a few reasons, but I believe the most important reason is the fact that they can reduce the average salary they pay by doing this. A new hire will obviously seek the market average, so there is not much you can do about that. However, existing employees will not renegotiate their salaries every month, so the company will end up paying less than the market average per person. If the company raises everyone's salaries to align with the market average, they will be paying substantially more.
bawolff 3y ago
Feels like they are missing the obvious one - new employees have more leverage than existing employees. If they are hiring that means they need that person. They also have to get them over the bump of joining. Old employees they just have to pay enough to stay. Staying involves doing nothing, switching jobs involves making decisions and taking risks. It always costs more to change something then it does to let it ride on inertia.
throwxzx 3y ago
This is why you should never stay with a company for more than a year
hapless 3y ago
This whole thing is bad advice * New hires get paid more because they are worth more to the employer. Point blank. You don't have to pay existing employees more to keep them working there. "A bird in hand is worth two in the bush" was meant to be a parable but it turns out to be rather more literal * Never accept the counter-offer. If you have gone as far as interviewing outside, you are already checked out, and you are already branded as disloyal. It's time to make your exit! If you ask for a counter-offer, it should be a move to squeeze more out of your offers, not a real attempt to "stay" where you have already decided to leave * Arguing about a raise is almost always a waste of time. If you are not happy with your 3% COLA, will 5% really mollify you? LOOK FOR NEW WORK
- silisili 3y ago
  Disagreed on point 2. I was at a company more than a decade, and the only sizeable raises I got were counteroffer matches. I liked my job and company, and it made me feel valuable. And if you say 'well if you were valuable you shouldn't have had to', you're absolutely right, but it's the way things work. My first manager told me I was underpaid, that he couldn't fix it unless I had another offer in hand as he was capped by the company at 4% raises. So I did, and he did. And I did it 4 more times, in total 4xing my pay. I did leave eventually, but that had nothing to do with pay.
- ironmagma 3y ago
  > If you are not happy with your 3% COLA, will 5% really mollify you? Most of the jobs I had didn't even have a COLA. So yes 5% would be fine. > New hires get paid more because they are worth more to the employer Anyone who manages a company should put their money where their mouth is and fire their whole team, and hire a new one. Those new hires are worth far more than the existing team was. Except, we all know it's BS, and existing employees are what keep a company in existence.
  - hapless 3y ago
    I mean, they ARE putting their money where their mouth is They pay existing employees less, and new employees, more. If a whole team quits, a replacement will be more expensive. That's the state of the game!
n_ary 3y ago
This problem is extra hard in my side of EU. In here, talking about one’s pay is somehow considered a big taboo so no one talks and many get underpaid. The key to the game is always negotiate higher number in the beginning or go to one of the employers using union(e.g. IG Metall) which might not have a position you want. This is usually very prevalent in startups and they can cite their size and budget and continue underpaying someone. Usually, unless your employer has a formal open scale or was part of Union tariff, knowing who was being paid what is nearly impossible.
jredwards 3y ago
I'm deep in the sausage making. This reasoning is mostly spot on, though I've never heard anyone directly admit to his first reason. At the end of the day, it's not that hard for me to get a req for a new hire bumped up, but giving an existing employee a raise turns out to be almost impossible excepting a yearly cost of living adjustment that absolutely will not keep up with inflation.
- grumpy_coder 3y ago
  I think the article does miss that a raise for exactly one employee is fairly easy each year. Two, maybe three is normal. But I have nearly a hundred, so virtually everyone is falling behind eventually, even the ones that do get a raise one year in five.
slyall 3y ago
One company I was with had a rule that former employees couldn't be re-hired for 18 months after they left. This was to stop employees getting pay rises by via the hiring process rather than the standard review process. At another we had somebody from the helpdesk join our team, he rapidly skilled up but the company had a rule that max pay-rise was 20% annually and he was on half what everyone else was on. Problem was escalated until an exception was approved by senior manager and he got a big 1-off payrise.
- Rainymood 3y ago
  So, effectively, there was... no rule.
  - TheCoelacanth 3y ago
    There's always a way to make an exception to any rule. The question is how high you have to go to find someone who is allowed to make an exception.
shdh 3y ago
I applied for a company, nailed the interviews, received an offer Friday and they told me they wanted a decision by EOD Tuesday. I asked for a one day extension I could compare another offer I was receiving tomorrow, and the HR recruiter began trying to manipulate me with reasoning as to why he could not extend it. I ended up declining the offer because of how the interactions went.
deathanatos 3y ago
Calling these "reasons" is a farce. "Salary raises are capped every year, and hiring budgets > budgets for raises"? "HR teams don’t realize the long-term implications of paying new employees more than tenured employees"? "Employers overvalue experience collected elsewhere"? That's not a reason — that's gross incompetence. An experienced (i.e., retained) employee is one who knows the codebase, the in-and-outs of the process, where things are, what tools do what, and what people are responsible for what. That's — at minimum — 6 months of knowledge and "training"¹ that the new hire lacks, and will require 6 months to spin up on. The real insightful stuff — deep expertise, real ideas about systemic improvements? That's another 6 months, if not a year. To let that slip away and unnecessarily need to replace it is a 6-figure error, each time it occurs. Reason 5 is where we start being intellectually honest with ourselves: "Retaining employees is a problem very few want to solve because of inertia" … tough cookies? This is literally the job of management, and that it's become so acceptable in the corporate world for management to just abdicate it is infuriating. Yet ICs are supposed to Get Stuff Done, but that's real hard to do when products are ghost-towns because the people who built it have just moved on, because they couldn't get a raise. Why does management think they can build literally anything while effectively firing via attrition their best people? This has personally been the hardest part of attempting to build a career. Bloomberg doesn't get it. My father's generation got rewarded for the work they put into a job. I should ask him sometime what he thinks a "decent", nominal %'age for a raise is. But I have no doubt that he thinks it is a positive number, whereas employers appear to have different ideas. ¹in quotes because I've seen exactly 2 companies do this sort of training; the rest it was "you just try to make do on your own". One no longer does the training, and IMO, is suffering because of it, and one is a FAANG.
mike503 3y ago
To me it's the same bs as giving new customers better incentives vs. rewarding loyal existing customers.
bomewish 3y ago
The piece gives a lot of superficial reasons, but they just push back the level of explanation. Reading between the lines, the ultimate reason seems to be something like “because they can.”
SadCordDrone 3y ago
Because HR departments are full of morons. Very easy explaination but not politi
ukoki 3y ago
When choosing how to reward existing employees, companies have to choose a point between two extremes: Increase salary too quickly and you leave money on the table by wasting raises on employees who would stay for less Increase salary too slowly and you cripple your business with unsustainable turnover This is simply a disagreement about where the “sweetspot” lies that generates the most profit for the company. The general opinion on reddit / hacker news is that big companies choose a balance that doesn’t reward employees enough. But that’s not surprising because users on these platforms are mostly employees.
jc_811 3y ago
There’s an easy explanation I haven’t seen anyone touch on. When you’re an existing employee, the company has more power. When you are a candidate, you have more power
sokoloff 3y ago
It's very easy to follow the chain of evidence from Employer: "how about $X?" "No, I need $X * 1.15 or I won't join." "OK, how about X * 1.15?" "Done." It's much harder to follow the chain from Employee: "I'm resigning and my last day will be Y." Exit interview: "Reason for leaving?" "Professional growth." "OK, glad it wasn't pay." That combination leads employers to believe that "compensation is obviously important, but isn't the reason that most of our employees leave". People who are leaving aren't going to tell you the entire, crystal-clear truth because there's usually nothing in it for them. Maybe if they really like their co-workers and think there's a tiny chance you'll adjust will they tell you that they're leaving over comp.
NoPicklez 3y ago
From my perspective in my industry it is because the skills have been hard to find and the need to hire has fluctuated to different degrees. Sometimes the company is desperate, other times not. When finding talent in a competitive market, particularly if a company find themselves desperate they often find they need to go above market averages in order to attain people. It's not that they don't value you, it's simply the entry cost the company has found themselves needing to pay at that point in time. If it an unfortunate reality for those already at the company, that those hired years after you may have found the position during a competitive period in the market, mixed with greater needs of the company. Having said that, in my experience when REM has been subpar the company has performed a REM review and increased salaries. Occurred once or twice in nearly a decade.
getpost 3y ago
In my startup experience (in the 1980s) as a recent CS graduate, there were 2 disheartening situations: 1) An intern was paid 25% more than me. The disparity was even greater, since he was paid on a hourly basis, and I was salaried, working 60 hr+ weeks. It was baffling, the intern wasn't a family relation, and had no special skills. In fact, I had to onboard him. But, for whatever reason, he got an absurdly high wage. I suppose the hiring manager (who later went on to be an early Microsoft VP) wanted to be magnanimous and help a college student, but why not also be magnanimous with your regular employees who are busting their butts? 2) Starting salaries for new grads were increasing faster than salaries for existing employees, and salaries for existing employees weren't adjusted accordingly. Existing employees got stock options on more favorable terms though (having started earlier).
SergeAx 3y ago
> but by then, I felt too offended The situation is essentially this: someone from the market just got a better deal. Maybe because of the current market situation, maybe because they are just good negotiator. How on Earth does it entitle everyone else to the pay raise? And if you think so, do you also think that when the next hire accepts an offer with less comp - everyone else should have a pay cut too? > someone who had the same job title and the same experience There's no such thing as the same experience. Every human being is unique, and every experience is unique too. Anyway, getting offended without even talking to your manager, let alone just plain asking for the raise, is sooo counterproductive.
EriannaEsfahani 3y ago
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hn1986 3y ago
where do people get location-specific, accurate salary numbers? especially for places not in SF/NYC?
the-Black-Dread 3y ago
One of thing that I feel and worked well for me is to keep having open conversations with your manager about pay before the comp cycle. And make sure to tell him that your know the market rate. TBH managers also some time are not aware of the market rate. They usually compare your pay with theirs when they were at your stage.
JenniferBazan 3y ago
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jonascabrera 3y ago

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kirchlwalter 3y ago

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mariealfrey78 3y ago

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mariealfrey78 3y ago

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chpatrick 3y ago

Isn't it just because new applicants have a much better bargaining chip - "I'll just start working at another place that will have me" (believable and easy for them) vs "I'll quit and start job hunting" (less believable and much more work) for existing employees.

corethree 3y ago
It's not a better bargaining chip. It's just a more "believable" bargaining chip. A company loses far more, far more if an existing employee quits, versus losing a potential new hire. This is just one of the illogical things about life. Either the company is illogical, or employee behavior is illogical in that the threat of quitting with a better bargaining chip is just lower.
- buzzerbetrayed 3y ago
  > A company loses far more, far more if an existing employee quits, versus losing a potential new hire. On an individual level maybe. But it doesn't benefit the company for news to spread that they'll bump your pay a significant amount if you threaten to quit. If the company has 100 employees working for a salary that is 80% of their fair market value, it's worth losing one of those employees to keep the discount on the other 99.
  - djtango 3y ago
    in other words there's a spread between what employees will take as pay and what employers could pay but usually employers are arbing that spread because employees lack price transparency.
  - corethree 3y ago
    That's why swes need something union like. Not a union according to the legal definition, but some way to do collaborative negotiation so they get paid what they are worth.
    - zeroonetwothree 3y ago
      Switching employers works well
      - corethree 3y ago
        That was my strategy for the last decade. The problem with it is it gets tiring. I'd like to switch because I want to switch, not because I want to get paid what I'm worth. Additionally in the current market for the past year, software engineers aren't getting hired as fast anymore. The crazy hiring has slowed down and many companies are actually offering lower salaries. It's much harder to land a job.
    - redserk 3y ago
      That's... a union. A union can limit their involvement to strictly salary negotiations if it's members choose to do so.
      - corethree 3y ago
        Thanks for not understanding. I mean there's other things associated with a union that people don't like about it. Why do I have to pay to have collaborative negotiation? I'm just saying I acknowledge those parts and I want to avoid it. I think in theory people can band together and collectively negotiate without actually forming a legal union.
- charrondev 3y ago
  My experience is that as a higher level IC your ability to get that raise from your current place requires you to shop around a bit and have the confidence that you can walk away and find land another job that pays more. It’s not a bad idea to do a couple interviews before your annual review comes up, even if you don’t have to say in quite so clear terms that you are ready to jump ship. Confidence helps a lot.
  - corethree 3y ago
    Yeah. That's stupid right? Companies should prevent you from shopping around in the first place. They are exploiting your laziness and under confidence.
    - nerdponx 3y ago
      Don't give the lobbyists any ideas.
kamikaz1k 3y ago
TFA goes over 5 potential reasons, the author cited their insider knowledge. None of those points cover what you said. The closest thing the author said was external experience is valued higher, which rings true to me.

ironmagma 3y ago

> because your company can only give 5% maximum raises every year (because it’s tied to inflation, cost of living increase, or another metric), your salary will continue to lag the market average OK so tie it to the market average instead? > our current team led to us being in a stagnant market position: So we need someone new The diagnosis here is ego. The thought doesn't even cross their mind that the leadership might be the actual reason, rather than the ICs who really have very little agency.

ok_dad 3y ago
The last place I worked hired a new team and fired the old one. Surprise, the same problems remain.
giantg2 3y ago
"OK so tie it to the market average instead?" My company does do market adjustments. We're were still hiring in people for more money than existing people were making. Mostly because the average hadn't shifted much since the new salaries only affected a small population. The new people we were higher were above the average they were using. Eventually they did do some adjustments for the lowest employees, but it was a bit lackluster.
jordinl 3y ago
> > our current team led to us being in a stagnant market position: So we need someone new > The diagnosis here is ego. The thought doesn't even cross their mind that the leadership might be the actual reason, rather than the ICs who really have very little agency. Do we work for the same company?

deleted 3y ago

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ozr 3y ago

I always figured the explanation was much simpler than this. As a general thing, someone meeting expectations and performing their current role should expect a nominal raise each year. Cost-of-living sort of thing. When you hire someone new from the market, you need to figure out the market price and pay that. There's no particular reason these two should be in lockstep besides, as the author mentions, a vague sense of inequity.

kamikaz1k 3y ago
It’s not a vague sense, and it does cause real painful attritions. I’ve seen it happen many times. I think the author is right in that HR doesn’t do a good job of quantifying the hit, and line level managers are not incentivized to burn their social capital on a flight risk just on principle.
- ozr 3y ago
  This is true. It's a result of poor management, as you said. Either a lack of incentives or a lack of skill. If someone leaving represents a substantial risk, then a) that role should be derisked, and b) that individual should be recognized via whatever process the company has (leveling, etc) to keep them on board.
happytoexplain 3y ago
Vague? It's pretty concrete. You may make a perfectly logical business-related argument as to why this compensation difference is acceptable, but why would that have any effect on the obvious, intuitive perception that it's unfair from the point of view of a rational human? Businesses do inequitable-by-definition things all the time. It's part of their DNA. They make measured trades, and often those trades involve mistreating humans, betting that the practical consequences of that will be worth whatever the upside of the trade is. That's why we have so many laws and organizations protecting people from businesses.
- ozr 3y ago
  Is it inequitable and mistreating an employee to pay them what we agreed to?

femto 3y ago

> Hand in a competing offer Unless (even if?) the counter-offer is significantly higher, I'd say just take the competing offer. Chances are HR will put a target on your back for being "disloyal".

kamikaz1k 3y ago
Why would “HR” put a target? Your manager wants to retain you. If you don’t think your manager has your interests in mind, then why stick around? HR DGAF IMHO.
- jliptzin 3y ago
  I think they mean that now that you’ve outed yourself as someone who shops around, the next time you try to do it they’ll already have your replacement prepared.
dartharva 3y ago
You are severely overestimating HR's willingness to engage. If they are tardy enough to not be competent in managing basic employee expectations, they sure as hell are not going to maintain a grudge ledger against every candidate to target them.
- giantg2 3y ago
  My company used to blacklist employees that left. If you left the company they would never hire you back. They stopped doing that around 4-5 years ago.
  - shermantanktop 3y ago
    I got that speech on the way out the door. I laughed and laughed, right in the cubicle where the HR lady (nice enough) was going through the process with me. I was already in the mindset that the bridge had been burnt—by them, not me. Between the stress of quitting, the relief of having another job lined up, and now this bizarre empty threat to be blackballed from a place I’d never want to work for again…I just had to laugh.

onionisafruit 3y ago

I worked with somebody who applied for the same job on another team without disclosing he already worked at the company. It turns out that’s not something they actually check for. He got an offer for about 15% more than his current salary. I think he should have just accepted that job and gone through the motions of quitting his current position and starting the new one with the same company. Mostly because I wanted to see how that played out. Instead he showed the offer to our manager and asked her to match it. That went to HR and the offer was rescinded. He left a few weeks later.

tomwojcik 3y ago
Additionally he should have used a referral /s
- jareklupinski 3y ago
  brb referring myself for every internal role :P
  - otteromkram 3y ago
    Probably better to use a referral that you're on good terms with.
    - null0pointer 3y ago
      I’m on good terms with myself.
    - wsc981 3y ago
      I’m on excellent terms with myself.
steveBK123 3y ago
This is hilarious and speaks to HR incompetence for not knowing they already worked there before making an offer, if not much earlier in the process.

tmsh 3y ago

A smart company is constantly raising its hiring bar (or over time it will not survive). So by nature it’s aiming to hire better than 50% in the role/level. So by definition a new hire should be paid more than someone at the median for that role/level. This is the root reason.

jamestimmins 3y ago
"constantly raising its hiring bar" is a nice idea I often hear repeated but rarely see in practice. In fact, when companies are incredibly successful based on early 10x employees, you're almost guaranteed to see the hiring bar go down over time.
- tmsh 3y ago
  A 10x engineer does not stay in the same role/level as a company grows. They’re very important though. And it’s a good reminder that roles/levels don’t necessarily matter compared to the relevant work. All FAANG and other smart companies hire at better than 50% at the role/level in order to constantly evolve.
  - Infinitesimus 3y ago
    No they don't. They _say_ they do (really mainly Amazon) and the rumor develops legs and gets repeated. To actually do this, you need an objective measure that is repeatable over many different kinds of products, domains and people and they is a very hard problem no one has cracked. Career ladders and some calibrations help to do this but it'd never perfect and people slip through the cracks. If you're at a big company, you've seen people get a rating that seemed misaligned to their work because an arbitrary curve is enforced or a project has high visibility by sheet luck because an exec was adamant that the project be on the roadmap.
  - neilv 3y ago
    > All FAANG and other smart companies hire at better than 50% at the role/level in order to constantly evolve. Do you mean that they keep hiring people better than 50% of the current people in that role/level? That's not my impression from Big Tech. All the chatter I hear is that, until very recently, they kept hiring more and more people, and over time have been getting lower capability, and more towards worker grunt drones. (Though I've often heard that the better people already at the company couldn't pass or do as well at the Leetcode-like interview metrics performance as the current candidates often do, because they have huge masses of people training for the metrics specifically.) Have I heard wrong, or do I misunderstand?

reactordev 3y ago

Nowhere mentioned did it say that “if you have X experience and Y degree you get Z amount of salary”. It’s always a range. If you’re in a situation where someone with the same job title and same “pedigree” as you is making more money, ask yourself “How can I negotiate more effectively?” Bob gets paid $40k more because Bob has a personality they like and want to groom him for leadership. Ben doesn’t socialize and his ego is often confrontational in meetings. Ben is hurt because he’s not getting paid the same as Bob. It’s sometimes that simple. If you want top pay, negotiate it and deliver that value. Life isn’t fair, salaries are a range, and if you decide to slack off because you aren’t getting “paid what you’re worth” - you’ll be the first one cut. That said, new talent comes with new ideas - sometimes that’s worth more. Instead of being hurt by someone making more than you in the same position - use it as fuel to go better yourself. If you still feel like you deserve Bob pay, talk to your manager about it. Tell them how it makes you feel without getting overly emotional about it. Let them know, that you know, and most good managers will do whatever they can to make it right by you.

saagarjha 3y ago
What happens if you don't have a good manager?
- reactordev 3y ago
  I think the answer to that is quite obvious. If you have a bad manager and you aren’t getting paid what you think you should be paid - there’s only one option.
otteromkram 3y ago
The best way to negotiate is to have a safety net. Either a significant other who will support you or you rely on your own savings if things backfire. Once you don't have to worry about the "what ifs," negotiation is a cinch.
- ahepp 3y ago
  Getting to Yes calls this the BATNA: Best Alternative to Negotiated Agreement, and one of the first steps to negotiating is figuring out your BATNA

jareklupinski 3y ago

Reason 6: The only way you can get a sense of how the world truly works outside your company is by going outside your company the truly confident teams are the ones who know you'll come back at the end of your https://en.wikipedia.org/wiki/Rumspringa https://en.wikipedia.org/wiki/Rumspringa , and throw you a party on your way out

AngeloAnolin 3y ago

It's just reality that (most) companies with no transparent in their compensation, existing employees will be put on the salary bracket that will give the company the most leverage - either by being able to dangle a good counter offer (whenever the employee is about to transfer to a different company) or simply saving on salary expense. Corporations will always mark an employee simply as an entry on their ledger. When the time comes to get new hires on similar work level, they know they need to up their game in terms of how much they can generously pay while still maintaining the bottom line of the organization.

BobbyTables2 3y ago

To me, there is zero upside to staying. The whole counteroffer thing is politically uncomfortable. Even if successful, it means one’s resume will be more monochromatic than if they had left! If one interviews well and gets a juicy offer, the company can simply “make it back” through lower raises, and HR gets a pat on the back for leveling compensation. I’ve also noticed that the nature of work stagnates after about 5yrs. Sure, there are little learnings after that, but it’s too easy to fall into a “sustaining” role with very little hope of real growth.

giantg2 3y ago
"fall into a “sustaining” role with very little hope of real growth." Yep, happened to me and now I'm fucked.
nerdponx 3y ago
The only long-term career/financial benefit to staying anywhere ever is experience building/shipping stuff, and goodwill from people who might be positive references down the line. Beyond that, staying anywhere for too long is just leaving money on the table. Employers of course have the power to change this. Any individual employer even, it's not a Nash equilibrium. If they wanted to, they would. They don't because they don't care. You don't owe your employer any more respect than they show you, which is generally close to "none".
mesarvagya 3y ago
This may not hold true for companies that gives your RSUs and you want it to get vested.
pjmlp 3y ago
Depends pretty much on the market condition, if one has family, is keen in having less vacations during the year switching companies, not being terminated during the probation time on the new company,.... Job hoping is not a big deal in markets that support it, it isn't always like Silicon Valley everywhere.
- red-iron-pine 3y ago

mtillman 3y ago

We don’t do this. If we hire someone for the same role and level as we already have on the team (ie sr devops) they either get paid the same (CoL index adj)as the existing person or we adjust the existing person up to the new salary. In the event of a fundraise, or equivalent growth of a new round size, we adjust everyone to the new comp that we’d pay an outsider to join for that role. Our opinion is that if you aren’t willing to pay an existing person the same that you’d pay an outsider with the same role & level, just let them go. It’s unkind and unnecessary string them along at a marginal advantage.

SamuelAdams 3y ago
How many people are in your organization? The article specifically mentions this usually happens at larger organizations that are not start ups.
- mtillman 3y ago
  That’s fair, we’re a small but mighty 75 going on 100. I hope this attitude sets a standard for years to come though.
paiute 3y ago
I wish more people thought this way. No wants to think about games with salary. People expect to be paid similar to others like them, it’s pretty simple. Anything less is a ticking time bomb of discontent.
torginus 3y ago
Well congrats on your org for having integrity - but the math is simple, let's say the median employee has been at the company for 2 years, during which his market rate has jumped by 20%. To hire a new employee at market rate, you have to give your team of lets say 10 employees that much money, which is euqivalent to hiring another 2 people for 'nothing'.
- lukeramsden 3y ago
  If you can’t afford to pay the current employees that raise, you certainly can’t afford new people - the market rate is the market rate.

627467 3y ago

In my experience, pays issues only get solved during hiring negotiations. That's it. During hiring (as author mentions) you have several people aligned to hire you at almost any cost. But after being hired - at most - you have only your manager. And for promotion you're competing against everyone, all departments.

beachy 3y ago

This leaves out the most obvious reason - it's better financially for the company. If every employee was highly mobile, aware of their own value and motivated to be always on the hunt for new opportunities, then yes, companies would need to have some system for making sure new starter salaries were in line with existing employees. But they are not. Bob is highly introverted and it took him years to make the workplace bonds he now has with his colleagues. He doesn't want to start over. At Carols previous startup, the CEO turned out to be a psychopath. She values the stable leadership at this company. Tim is an idealistic junior. He know his friends earn more but he's drunk the Koolaid and he believes in the company's mission. And Mary likes this company because it means her family can live next to her parents. For any number of reasons, it's just not necessary for the company to pay market rate to every existing employee. Inevitably some will leave to get higher pay - they will be balanced out by new people coming in, also at market rate.

SamuelAdams 3y ago

> In short, there’s a lot more corporate bureaucracy in giving a raise than there is to giving a higher offer to a new hire. As an IC, it’s hard to sympathize with this argument. This is corporate bureaucracy that a company *chose* to create. How they got here is a matter of debate, but this doesn’t feel like a good justification for not rewarding loyal, high level performers. This argument always stuck me as a weak appeal to (an ambiguous) authority.

Aeolun 3y ago
While that is true. It's also not helpful. You are working for a company with a corporate bureaucracy. It's not going to disappear just because you think it's unfair, so you have to get your raise within the bounds of that system.
- habitue 3y ago
  You're both right, this is an is vs. ought problem
hapless 3y ago
It is a fact of life. You don't have to like it, or embrace it, but it remains true. It is generally easier to get a raise than to get promoted. It is generally easier to get a new job than to get a raise. On balance, if you want to maximise earnings as an IC, you are gonna change jobs more often than you get an above-inflation raise.

blastro 3y ago

Kudos to my company, who will reset comp if new employees are brought in at a higher rate

human 3y ago
Do you think hiring takes longer at your company because of this policy?

zeroonetwothree 3y ago

The author misses a key reason, which is the winner’s curse. I’m going to take the job that offers me the most money, which means it’s likely I ended up near the top of their salary band (maybe I did well on the interview or they like me for some reason or random luck). That means I will be likely paid more than other employees at my level.

nerdponx 3y ago
That only applies to applicants who have competing offers, with substantial variation between offers in terms of compensation. That happens to very few people.

ne0flex 3y ago

At my current firm, I found out that my co-worker, a new hire (22-year about a year out of college) was making $3k more than me, who is 10 years older than him. Spoke with my boss about this and they gave me a 30% bump. The HR reasoning was that they thought I was 'happy' with my current salary and that I had loyalty to the company because I've been with them for 5 years. A former coworker went to get an offer from another firm and tried to use that as leverage for a salary increase and ended up getting fired.

selcuka 3y ago
> A former coworker went to get an offer from another firm and tried to use that as leverage for a salary increase and ended up getting fired. This is normally what HR does. I'm surprised that they didn't do the same to you. They probably needed you more than the other person, or even with a 30% raise you were still cheaper than a new hire.
torginus 3y ago
I've also had the 'oh I didn't know you wanted to make more money!' discussion with my manager, and it seems just so non-genuine.

Sparkyte 3y ago

Because often the annual % doesn't meet the rate of inflation which a new wage must be derived by. However where I work now I will be willing to give 10 years or more to. I'm loyal since they've been with me through all of the worst of things.

deleted 3y ago

[deleted]

neilv 3y ago

> Reason 2: [...] In short, there’s a lot more corporate bureaucracy in giving a raise than there is to giving a higher offer to a new hire. The reason is that this is an accident of corporate bureaucracy? Or is the root reason that companies consciously believe they save money if they cap raises low, regardless of the degree to which this causes regretted attrition?

nerdponx 3y ago
Right, this article reads like a bureaucrat trying to shift blame to forces beyond what they control, when in reality it's very much in their control. > regretted It's not regretted if 1) employees are considered fungible, and/or 2) it's expected and planned for. One of both of those things tends to apply in most workplaces.

LanceH 3y ago

> While this probably doesn’t apply for small startups with no formal compensation structure, large companies often have strict policies around the how much of a raise they can give to any employee. I know every company will say this, but every single one I've run across has someone who can sign off on something and change it. "Everyone starts with 2 weeks of PTO per year." -- I've started with 3 or 4, amazingly -- actually entered into the systems, not an informal agreement to allow me to take it. I've found PTO to be the easiest thing to negotiate at the end of the hiring process for a senior+ position. "Band 6 has a maximum salary of xxxx" -- I've been hired above that. And these are big companies with formal rules. They all have formal rules for breaking their formal rules, and the person telling you it's a firm rule knows it. All of this lends itself to new hires getting paid more, of course.

rand846633 3y ago
Wonder if the person in op story could have negotiated better and won against HR…
hnbear 3y ago
I had a previous boss who had a personal rule that he always wanted to only hire the best and would pay for it. If every hire didn't involve paying above band and having to get an exception the hire wasn't good enough. He fought and won every time. This was a very big, very formal company. All rules are guidelines if you know how to request exceptions.
caseysoftware 3y ago
A few years ago, I figured out that in dealing with companies (beyond the earliest startup stages), you can ask a few questions that work pretty consistently: - What's the average for this role? Explanation: Odds are, they've only given ranges up until now. This helps lock them down to a smaller range and should be closer to what the actual team looks like. - How do I compare to the average candidate? Explanation: If you're below average, they wouldn't be talking with you. Therefore, you are likely above average and now have a new floor instead of the generic range. Further, now they're likely going to describe what unique aspects you bring to the table and why you fit the role. No matter how many times you say "I'm great for this role!" it's 100x more powerful for THEM to say "you're great for the role because of A, B, and C!" And hopefully now you fit A, B, and C into your talking points and questions to the team, hiring manager, etc.

BenFranklin100 3y ago

Here is a tip about getting raises at work: ask for them. Here’s another tip for growth while staying within the same company: ask for a new/higher level role. Managers are people, not all are mind readers, and in many instances, rightfully try to stay out of your private life and may not know what you presently want career-wise. Communication is key. At our company we implement annual ‘performance reviews’, which are really 1-1 career path discussions where we try to align a person’s desired career trajectory along company objectives. I’ve found this to be a useful exercise in gaining a better understanding of where a person is in their life and career, especially with those who don’t like to volunteer information. This is also a good venue to keep salaries up with market wages.

sumedh 3y ago
> Here is a tip about getting raises at work: ask for them. HR normally will say no, then you find another job and tell your manager that you are going to resign, manager talks to HR and HR gives you a small bump. Then you have to decide whether you stay or leave.
- BenFranklin100 3y ago
  HR is not the place to ask for a raise. Your manager is. The manager will then make the case to upper management. HR is the place you go to ask questions about your benefits package, not career path.

rqtwteye 3y ago

That would get resolved quickly if salaries were transparent. They are are already transparent for the employer so a functioning market would require transparency also for employees.

otteromkram 3y ago

I love how there are zero citations or other references, and the author doesn't provide any qualifications, yet everyone seems to believe this nonsense. Bloomberg used to be a decent media outlet, but maybe that's chsnged. This feels like an AI-generated article (probably with some light editing). Finally, if it was actually written by a human, way to stem future job prospects. Calling a prior company out by name and making the two salaries easy to figure out ($40k more == 40% more == $100k for the author and $140k for the coworker) are not bright moves for a burgeoning writer.

number6 3y ago
> Bloomberg used to be a decent media outlet, but maybe that's chsnged This happend to me too, I just noticed it because the site has a Wordpress favicon. Its not Bloomberg but Bloomberry - don't know if this is intentional but nice hijack
- AznHisoka 3y ago
  How did you mistake it for Bloomberg when the logo on top was clearly different?
  - number6 3y ago
    Yeah - the brain does curious things... Pattern matching hijacking I guess

deleted 3y ago

human 3y ago

As a manager, I often need to hire someone fast and will end up having to go above market to get good talent to make the move. I can’t afford to increase everyone else’s salary by the same amount. I will do it because I want to add help quickly to the team to avoid burnouts. It’s such a tough spot to be in. On top of all that, it’s hard to judge the level of experience compared to current employeed before the person gets onboarded.

selcuka 3y ago

The article mentions a few reasons, but I believe the most important reason is the fact that they can reduce the average salary they pay by doing this. A new hire will obviously seek the market average, so there is not much you can do about that. However, existing employees will not renegotiate their salaries every month, so the company will end up paying less than the market average per person. If the company raises everyone's salaries to align with the market average, they will be paying substantially more.

bawolff 3y ago

Feels like they are missing the obvious one - new employees have more leverage than existing employees. If they are hiring that means they need that person. They also have to get them over the bump of joining. Old employees they just have to pay enough to stay. Staying involves doing nothing, switching jobs involves making decisions and taking risks. It always costs more to change something then it does to let it ride on inertia.

throwxzx 3y ago

This is why you should never stay with a company for more than a year

hapless 3y ago

This whole thing is bad advice * New hires get paid more because they are worth more to the employer. Point blank. You don't have to pay existing employees more to keep them working there. "A bird in hand is worth two in the bush" was meant to be a parable but it turns out to be rather more literal * Never accept the counter-offer. If you have gone as far as interviewing outside, you are already checked out, and you are already branded as disloyal. It's time to make your exit! If you ask for a counter-offer, it should be a move to squeeze more out of your offers, not a real attempt to "stay" where you have already decided to leave * Arguing about a raise is almost always a waste of time. If you are not happy with your 3% COLA, will 5% really mollify you? LOOK FOR NEW WORK

silisili 3y ago
Disagreed on point 2. I was at a company more than a decade, and the only sizeable raises I got were counteroffer matches. I liked my job and company, and it made me feel valuable. And if you say 'well if you were valuable you shouldn't have had to', you're absolutely right, but it's the way things work. My first manager told me I was underpaid, that he couldn't fix it unless I had another offer in hand as he was capped by the company at 4% raises. So I did, and he did. And I did it 4 more times, in total 4xing my pay. I did leave eventually, but that had nothing to do with pay.
ironmagma 3y ago
> If you are not happy with your 3% COLA, will 5% really mollify you? Most of the jobs I had didn't even have a COLA. So yes 5% would be fine. > New hires get paid more because they are worth more to the employer Anyone who manages a company should put their money where their mouth is and fire their whole team, and hire a new one. Those new hires are worth far more than the existing team was. Except, we all know it's BS, and existing employees are what keep a company in existence.
- hapless 3y ago
  I mean, they ARE putting their money where their mouth is They pay existing employees less, and new employees, more. If a whole team quits, a replacement will be more expensive. That's the state of the game!

n_ary 3y ago

This problem is extra hard in my side of EU. In here, talking about one’s pay is somehow considered a big taboo so no one talks and many get underpaid. The key to the game is always negotiate higher number in the beginning or go to one of the employers using union(e.g. IG Metall) which might not have a position you want. This is usually very prevalent in startups and they can cite their size and budget and continue underpaying someone. Usually, unless your employer has a formal open scale or was part of Union tariff, knowing who was being paid what is nearly impossible.

jredwards 3y ago

I'm deep in the sausage making. This reasoning is mostly spot on, though I've never heard anyone directly admit to his first reason. At the end of the day, it's not that hard for me to get a req for a new hire bumped up, but giving an existing employee a raise turns out to be almost impossible excepting a yearly cost of living adjustment that absolutely will not keep up with inflation.

grumpy_coder 3y ago
I think the article does miss that a raise for exactly one employee is fairly easy each year. Two, maybe three is normal. But I have nearly a hundred, so virtually everyone is falling behind eventually, even the ones that do get a raise one year in five.

slyall 3y ago

One company I was with had a rule that former employees couldn't be re-hired for 18 months after they left. This was to stop employees getting pay rises by via the hiring process rather than the standard review process. At another we had somebody from the helpdesk join our team, he rapidly skilled up but the company had a rule that max pay-rise was 20% annually and he was on half what everyone else was on. Problem was escalated until an exception was approved by senior manager and he got a big 1-off payrise.

Rainymood 3y ago
So, effectively, there was... no rule.
- TheCoelacanth 3y ago
  There's always a way to make an exception to any rule. The question is how high you have to go to find someone who is allowed to make an exception.

shdh 3y ago

I applied for a company, nailed the interviews, received an offer Friday and they told me they wanted a decision by EOD Tuesday. I asked for a one day extension I could compare another offer I was receiving tomorrow, and the HR recruiter began trying to manipulate me with reasoning as to why he could not extend it. I ended up declining the offer because of how the interactions went.

deathanatos 3y ago

Calling these "reasons" is a farce. "Salary raises are capped every year, and hiring budgets > budgets for raises"? "HR teams don’t realize the long-term implications of paying new employees more than tenured employees"? "Employers overvalue experience collected elsewhere"? That's not a reason — that's gross incompetence. An experienced (i.e., retained) employee is one who knows the codebase, the in-and-outs of the process, where things are, what tools do what, and what people are responsible for what. That's — at minimum — 6 months of knowledge and "training"¹ that the new hire lacks, and will require 6 months to spin up on. The real insightful stuff — deep expertise, real ideas about systemic improvements? That's another 6 months, if not a year. To let that slip away and unnecessarily need to replace it is a 6-figure error, each time it occurs. Reason 5 is where we start being intellectually honest with ourselves: "Retaining employees is a problem very few want to solve because of inertia" … tough cookies? This is literally the job of management, and that it's become so acceptable in the corporate world for management to just abdicate it is infuriating. Yet ICs are supposed to Get Stuff Done, but that's real hard to do when products are ghost-towns because the people who built it have just moved on, because they couldn't get a raise. Why does management think they can build literally anything while effectively firing via attrition their best people? This has personally been the hardest part of attempting to build a career. Bloomberg doesn't get it. My father's generation got rewarded for the work they put into a job. I should ask him sometime what he thinks a "decent", nominal %'age for a raise is. But I have no doubt that he thinks it is a positive number, whereas employers appear to have different ideas. ¹in quotes because I've seen exactly 2 companies do this sort of training; the rest it was "you just try to make do on your own". One no longer does the training, and IMO, is suffering because of it, and one is a FAANG.

mike503 3y ago

To me it's the same bs as giving new customers better incentives vs. rewarding loyal existing customers.

bomewish 3y ago

The piece gives a lot of superficial reasons, but they just push back the level of explanation. Reading between the lines, the ultimate reason seems to be something like “because they can.”

SadCordDrone 3y ago

Because HR departments are full of morons. Very easy explaination but not politi

ukoki 3y ago

When choosing how to reward existing employees, companies have to choose a point between two extremes: Increase salary too quickly and you leave money on the table by wasting raises on employees who would stay for less Increase salary too slowly and you cripple your business with unsustainable turnover This is simply a disagreement about where the “sweetspot” lies that generates the most profit for the company. The general opinion on reddit / hacker news is that big companies choose a balance that doesn’t reward employees enough. But that’s not surprising because users on these platforms are mostly employees.

jc_811 3y ago

There’s an easy explanation I haven’t seen anyone touch on. When you’re an existing employee, the company has more power. When you are a candidate, you have more power

sokoloff 3y ago

It's very easy to follow the chain of evidence from Employer: "how about $X?" "No, I need $X * 1.15 or I won't join." "OK, how about X * 1.15?" "Done." It's much harder to follow the chain from Employee: "I'm resigning and my last day will be Y." Exit interview: "Reason for leaving?" "Professional growth." "OK, glad it wasn't pay." That combination leads employers to believe that "compensation is obviously important, but isn't the reason that most of our employees leave". People who are leaving aren't going to tell you the entire, crystal-clear truth because there's usually nothing in it for them. Maybe if they really like their co-workers and think there's a tiny chance you'll adjust will they tell you that they're leaving over comp.

NoPicklez 3y ago

From my perspective in my industry it is because the skills have been hard to find and the need to hire has fluctuated to different degrees. Sometimes the company is desperate, other times not. When finding talent in a competitive market, particularly if a company find themselves desperate they often find they need to go above market averages in order to attain people. It's not that they don't value you, it's simply the entry cost the company has found themselves needing to pay at that point in time. If it an unfortunate reality for those already at the company, that those hired years after you may have found the position during a competitive period in the market, mixed with greater needs of the company. Having said that, in my experience when REM has been subpar the company has performed a REM review and increased salaries. Occurred once or twice in nearly a decade.

getpost 3y ago

In my startup experience (in the 1980s) as a recent CS graduate, there were 2 disheartening situations: 1) An intern was paid 25% more than me. The disparity was even greater, since he was paid on a hourly basis, and I was salaried, working 60 hr+ weeks. It was baffling, the intern wasn't a family relation, and had no special skills. In fact, I had to onboard him. But, for whatever reason, he got an absurdly high wage. I suppose the hiring manager (who later went on to be an early Microsoft VP) wanted to be magnanimous and help a college student, but why not also be magnanimous with your regular employees who are busting their butts? 2) Starting salaries for new grads were increasing faster than salaries for existing employees, and salaries for existing employees weren't adjusted accordingly. Existing employees got stock options on more favorable terms though (having started earlier).

SergeAx 3y ago

> but by then, I felt too offended The situation is essentially this: someone from the market just got a better deal. Maybe because of the current market situation, maybe because they are just good negotiator. How on Earth does it entitle everyone else to the pay raise? And if you think so, do you also think that when the next hire accepts an offer with less comp - everyone else should have a pay cut too? > someone who had the same job title and the same experience There's no such thing as the same experience. Every human being is unique, and every experience is unique too. Anyway, getting offended without even talking to your manager, let alone just plain asking for the raise, is sooo counterproductive.

EriannaEsfahani 3y ago

[flagged]

hn1986 3y ago

where do people get location-specific, accurate salary numbers? especially for places not in SF/NYC?

the-Black-Dread 3y ago

One of thing that I feel and worked well for me is to keep having open conversations with your manager about pay before the comp cycle. And make sure to tell him that your know the market rate. TBH managers also some time are not aware of the market rate. They usually compare your pay with theirs when they were at your stage.

JenniferBazan 3y ago

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