Taking on a new job that pays you less than what your experience levels demand comes with its consequences. In the world today, the competitive nature of the labour market places a huge amount of stress on workers. As a result, when going through the process of job search many people try to get as many job interviews as possible, an extra step towards job security.
This places an imbalance between job demand and supply as there are many people available for limited vacancies. This sometimes reduces job value as labour becomes cheap and employers may then decide to pay employees less than what they are supposed to earn.
When people begin new jobs, they usually do not feel that they are underpaid, probably because they are still pretty much excited about getting the job in the first place. Money may not be everything, but getting paid can be the single motivating factor for a lot of people. Regardless of how great your job may be, not getting paid or being underpaid can be frustrating.
Depending on the salary agreement at the beginning of the job, most companies offer a certain percentage increase in salary as you rank up. However, some of these salary increases do not reflect the amount of responsibility and effort you need to put in.
The average pay increase falls between 3-5%, which all depends on your level of experience working for the firm or company. The location of the company also determines to a great extent what percentage pay increase to expect. While evaluating your salary, consider that what you receive as base pay may not be the only way companies reward their employees.
Some employers may give generous incentives to employees which turn out to be much better than having a big raise. You should also consider the working conditions, some companies may offer a better pay-check for someone with your level of experience, but make balancing your work-life an uphill struggle.
Being underpaid is highly subjective. You are advised to do a lot of surveys to determine if you truly are underpaid before starting a salary negotiation with your boss. If you are caught in the dilemma of deciding if you are underpaid or not. Do not stress, below are some signs that will help tell if you are underpaid.
Co-workers are Better Paid
In most companies, information about compensation packages is kept private, employees are usually not aware of the earnings of their co-workers. However, sometimes you get this information by chance or by making enquiries.
The big question is how exactly to react when you find out your co-worker, who probably does the same job with the same level of experience has a better pay-check than you. You may be tempted to barge into your employer’s office demanding a raise. This is not the best approach. In such a situation staying calm will push you towards the right direction of action.
Understand the Situation
Placing yourself in the manager’s position may help you understand the reason why your employer pays your co-worker more. It may be that your higher-earning colleague is better qualified or more experienced in the field than you are. By carefully making these evaluations you place yourself in a better position when making a case for yourself in the next pay review that comes up.
Tell Your Employer
You should tell your employer about the differences in pay. Whether you found out through a document that found its way to your desk or you overheard someone say something about it isn’t important. The aim should be to let them know you are aware of the discrepancies. By doing this you make your boss take notice, making it easier when you begin negotiating a salary increase.
Do Your Research
Your relationship with your employers should not be taken for granted, that is why you need to get as much information required so that when making a case you are surely within your rights.
Better Positions That Require Your Expertise Have Better Pay
Even within your working environment, there may be better-paying positions which you are qualified for. What makes you feel underpaid may not necessarily be because you earn less than your market value, but because you chose a job that required less experience levels with lesser responsibility. You may have unique skills with an excellent resume but can’t seem to find an employer who is interested in the set of skills you possess.
In such instances, the best option will be to go into the labour market yourself and sell what you have to offer. Once you’re clear on the exact talent you wish to sell, then you should look for jobs that fit your specifications. Set your price and make sure you are comfortable with the salary arrangements before taking up the job.
Technology has come to stay and it can only get better, with automation many jobs are being replaced with software and computer programs. This is why people have to strive to remain relevant to whatever company they find themselves. Having a competitive resume will keep you in the business as well as improve your worth in the company.
No Increase in Salary Despite The Increase in Responsibility
This is one of the most alarming signs that you have been underpaid. A lot of people who work for SME’s face this challenge. Many small and medium-scale businesses take advantage of their workers, most especially those who haven’t worked for a longer period of time in the company, they often get the largest workload while receiving the smallest pay.
Most SME’s want to maximize their revenue while reducing their expenses, including payment of staff to the lowest possible. They sometimes try to minimise the number of staff working at the firm, so that their expenses do not outweigh their revenue, all in an attempt to ensure the continuity of business.
But the fact that you get more responsibility in your working place without any increase in your pay doesn’t always mean you aren’t treated fair enough. A lot has to be put into consideration first. For instance, in a situation whereby you are being given extra responsibilities to cover up for a colleague at your workplace, does not mean you are being underpaid.
Such situations are usually temporary for that reason asking for a pay rise may not be appropriate. Sometimes taking up more responsibility at work may be a step in advancing your career. It is important to thoroughly weigh the odds and make the right decision, whether to demand a pay raise or not.
Poor Initial Salary Negotiation
Most times during an interview most HR interviewers tend to be more interested in the salary discussion topic. When your resume earns you an interview, the company will send you the job offer specifying your starting salary range.
The interview is the best time to negotiate your salary especially if you intend working as permanent staff. Most individuals who accept the initial salary are more likely to be underpaid. Many companies will offer a mid-range salary at first. What most employees fail to recognise is the level of flexibility in the pay scale at the job interview.
By properly negotiating your salary you will save a lot of trouble in the future. Getting into a salary negotiation without having a number at the back of your mind will leave you at the mercy of employers. So if you feel you’re underpaid then maybe it’s time to renegotiate your salary. Build your case, write down how your experience and skills would help improve the productivity in your company.
While negotiating your salary bear in mind what is important to you, remember to put into consideration health insurance coverage as well as career advancement opportunities, so that you are better informed and properly guided when making the decision.
New Employees Are Better Paid
Being a senior employee often comes with its benefits but sometimes it doesn’t change much. Working for a company for a long period of time may lead to a rise in salary scale that isn’t proportional to the market trend.
When hiring new employees many companies tend to offer better packages to attract the new hires. Employers may offer higher salaries to new employees than older employees, which have a similar position, this is usually a form of pay compression.
Initially, the pay for new employees could have been lower, but over time due to inflation and other factors, the salary offer for new employees had to increase as well. For this reason, you need to understand the peculiarities of your situation, so you can properly manage the issue at hand.
For instance, the company may require new employees that are highly skilled with less work experience, in either instance, it may be appropriate to place these new employees on the higher pay range.
Another possible scenario could be if the employee is on a short-term contract with your company, this contract may include incentives that appear to bulk up their pay-check when compared to yours. Making salary adjustments due to discrepancies that occur as a result of pay compression may not be your best option.
Sometimes the highly competitive nature of the job market may place stress on the compensation schemes of companies, necessitating pay compression. However, if your company continues to pay new employees more than you, then you should consider the following:
- If your company’s compensation structure is based on the right market data.
- If your salary range is ideal considering the company’s skill requirement.
If the payment compression continues then it’s time to renegotiate your salary.
Better Paying Similar Jobs
If you find out that there are similar jobs that offer new employees better pay, then chances are you are likely underpaid. It is important to regularly look at the job postings of your company to get an idea, what new hires with the same set of qualifications will be earning.
This information will help you with your next salary review. As far as the job market is concerned, one of the best sources of information about job offers can be gotten from recruiters. Since they work with companies and employers, they are in the best position to know exactly the salary range companies are willing to offer. Firstly you should ensure you have a good relationship with the recruiter, even if you have to assist them with finding recruits for job offers.
By helping them out with information, they may return the favour by helping you with the information you need. Be sure to involve many recruiters, so you have a better picture of your market value. Also, ask recruiters to give you details from the last and recent position they filled.
Be sure to ask about the job requirements for the candidates, their compensation package and factors that influenced their compensation package. Note that being underpaid also depends on the number of hours or responsibility you are being charged with. Some jobs may offer better pay but have poor working conditions and poor work flexibility. You will need to make a proper enquiry so you can make an informed decision whether to ask your employer for a raise.
Company’s Revenue Increased But You Haven’t Gotten a Raise
Evaluate how much you have contributed to the company, try to get information on how good your company is doing in terms of revenue. Depending on your company, this data is often accessible in public company settings.
However, in a private company setting, you should already know how well the company is doing. If the company is flourishing, then you should consider asking for a raise. Companies often have to file a financial account of their revenue quarterly or annually.
You could ask your employer about the company’s profit in a meeting or any formal setting. If your payment has not increased despite working a long time in a particular company then you can be sure you are underpaid. Everyone wants a higher-earning job, especially one that offers lesser responsibility. The questions to ask are:
- If the opportunity to work with better-paying employees who will value the set of skills you possess is available.
- What is more important to you? A better paycheck, free time or a compensation package that offer better benefits in the future such as a savings retirement plan and health insurance.
Co-Workers Say You Are Underpaid
It is not uncommon for salary discussions to come up at your workplace. However, if your colleague in a similar position in the department tells you are underpaid then you most likely are. Co-workers may not bring up topics of employee salary to your conversations, but depending on your relationship with your colleague you may get to know this sensitive information.
Your colleague at work could have gotten the job much later than you did, probably under different circumstances and then, as a result, they got a better compensation package. If you are constantly being reminded by your colleague that you’re underpaid then maybe it’s time to talk to your employer about a raise.
Remember it’s not about asking for an increase in salary because you feel your co-worker is better paid. Be clear when telling your boss why you deserve a pay raise, justify these reasons with a solid backup. That way you can make your boss see reasons as to why you deserve the pay raise.
High Staff Turnover
Have you noticed your co-workers quitting their jobs in search of better job opportunities? If you find yourself in such a situation chances are you likely are underpaid. This is common in companies who do not pay salaries that reflect their market value.
If organizations “pinch pennies” when it comes to employee salary they might as well give them a good reason to leave their jobs for better job opportunities. Research has demonstrated that nearly half of employees who leave their jobs at a particular company for another if offered a 10% increase in the salary.
Replacing workers can be quite expensive. Many employers will opt for the better option of raising the salaries of their workers, rather than go through the troubles of having a new employee, who might not be as experienced at the job. Salaries remain one of the common causes of high employee turnover rate in the world.
Workers may choose to continue their struggles in the job market to find better-paying jobs, especially if the company they work for does not meet up to their expectation in terms of salary. Many employees may not know about the benefits available to them. That is the reason most of the time employers need to cut down on the unnecessary bureaucracy to ensure employees receive their benefits at the right time.
Career Websites Revealed That You Are Underpaid
You may not believe everything you see on the internet, but career websites like salary.com are quite reliable when it comes to information regarding salary. The exact figures may not be accurate, but they usually fall within the salary range. Other websites can also help you get an idea of what your salary should look like.
Check out many of these types of websites and compare so that you have a better picture of the whole idea. If a good number of these websites suggest that you are underpaid then chances are you most likely are. Do your research and properly evaluate the peculiarities in your situation. From there you can determine if you are underpaid for the services you offer. Another reliable website that will help you determine if you are underpaid is payscale.com.
Through a survey that asks you a series of questions, you would be able to determine how much you should be earning based on your job title, experience levels and qualifications within 10 minutes.
Your Boss Seems To Avoid Discussions Relating To Your Salary Or Long-Term Career Growth
This can be quite frustrating because you try as much as possible to find the right moment to bring up the issue only for him to “sweep it under the carpet” or change the topic entirely. But no matter how many times your boss evades this discussion, you shouldn’t give up on the idea completely. All you need to do is find the right moment and be prepared. Regardless of the situation of the economy, it is still possible to get a raise in salary, especially if you had to:
- Take on more responsibility to cover for another employee
- Work extra hours to help meet the company goals or;
- A recent work done by you benefited the company to a large extent.
Then it’s probably time you asked for improvements in your compensation package. Finding the courage to approach your boss for more money can be a daunting task especially if it’s your first time. Make your boss understand that the token is not to be given as a result of the inflation, but as a reward for your efforts and performance that contributed to the success of the company.
If you need a raise, you need to ask for it, staying quiet will never solve the problem. That is why you need to summon the courage to make the difference. By planning and making adequate preparation you will feel less tightened and more assertive when making your request.
Get Prepared Before You Take the Bold Step
Before taking the bold step of meeting your boss, make sure you have all planned out strategies that will help you justify your raise in pay. You need to convince your boss why the company needs someone with your skills, by demonstrating the value you add to the company.
That is why you are required to keep a log of significant achievements made by the company and how you have helped the company achieve them. Make it clear to your boss how much you would like to earn, especially if you know what other employees in your position are earning.
The raise may not necessarily be in cash, so before sitting with your boss to negotiate your salary you should consider other areas like working hours, vacation periods. If these are important to you as well as the money then be sure to include them when bargaining.