The Secret Language of Salaries
Dear Evil HR Lady,
While I felt like I was extremely prepared to go up to bat for the salary negotiation (even if it could be just for an extra dollar or two per hour), I was taken off guard a little bit when the HR Business Partner immediately went into how my salary would be paid some percentile or another (I don't remember what percentile it was exactly-I want to say that it was in the 90th percentile). She didn't even miss a beat to get that in there.
At the time, I didn't even really know what that meant that their offering was in such and such percentile. The HR Business Partner didn't say it in so many words, but I remember she worded it in a way that made it sound like they wouldn't negotiate because I was getting paid in X percentile. I accepted their initial offer because they matched my salary from the company that I used to work for as a contractor, so I was happy with it, plus all the other perks that came with the job.
So I guess my reason for writing you is to find out what your advice might be for a situation like that? Obviously, I could have just opened my mouth and asked, but at the same time I never really went up to bat for the salary negotiation before either, so I feel like I may have rolled over too soon. Maybe this could be a good learning opportunity for some of your other readers that may not know what it means to be paid in a certain "percentile". Do you have any general salary negotiation tips you think are good to share?
First of all, it's not every company that low balls people on an offer. You were happy with the offer--good salary, plus additional benefits, so there's no reason not to jump on it. No point in second guessing yourself--maybe you could have gotten more, but you didn't. And it's a good offer. So, congratulations on the good new job! May you have a wonderful experience with this company. And now, let's talk about language.
In Monday's post about low pay, the letter writer spoke about being below the 25th percentile and I spoke about being in the 50th percentile. He's looking at something like this:
To be honest, that's not normal HR speak. We use the term "compa-ratio" and describe it around a midpoint, which we label as 100%. It's the exact same graph, except we label it differently. Like this:
So, when the HR Business Partner said you were getting paid at 90%, she wanted you to think in terms of the first graph--so you'd think that you are getting more money than 90% of the people who do similar jobs! Sounds fantastic, doesn't it? The reality is, a compa-ratio of 90% means you're getting paid less than the average person in the job. Not so fantastic, now is it? (I may get my HR card revoked for sharing this little secret.)
But, before you panic, understand that compensation isn't an exact science. There is a ton of guess work involved in it. Yes, companies do salary surveys, but no two jobs are identical across organizations. (Even a grocery store cashier has different expectations depending on the company.)
Then, determining what salary band to slot a particular job in depends a lot on what the manager is willing to pay for the positions. Job descriptions are often written to fit a certain salary, not the other way around. Additionally, many companies don't allow your salary to be much more than 105% of midpoint anyway. There's no way on God's green earth that you'll ever get 125% of "midpoint." Just not happening.
Your potential for raises are also determined by your percentile. If you're at 75% and have a fantastic performance rating, you can expect a big raise. However, if you're at 100% and have an even better performance rating, you may end up with a tiny raise--all because of that little curve up there. We don't want you going over 100% (or at least not much), so you won't get a big raise no matter how fabulous you are. In order to get a good raise, you have to get promoted, which is a whole different ball of wax.
So, in reality, 90% is a great place to be. You're near the top of what can be expected in that job, but you still have room for an increase in salary. And to be honest, if I were given a salary offer I was happy with, I would ask, "What is my compa-ratio?" and if they said, "You're at 100%!" I would ask, "Is it possible for this job to be upgraded?" Because while I may be happy with the salary, I know that come year end raise time, I'm getting squat. (Or rather the cost of living raise as they adjust the salary bands upward.) At this point the hiring manager would roll her eyes and probably say no, but hey, you gotta try.
And negotiating salary is all about trying and taking risks. Sometimes offers are firm. Sometimes they are not. Sometime things like vacation and commute and schedules are more important to you than a dollar figure. But, hopefully now you can be a little better armed when you walk into a salary negotiation.
For further reading:
- Why It's Better to be Under Paid
- Why It Doesn't Matter That Your Coworker Makes More Than You
- Why Are Salary Ranges Secret?
Photo by Trevor Blake, Flickr cc 2.0.
