Am I underpaid?
Only 34% of Americans are satisfied with how much they are paid at work (Pew Research Center, March 2023), so it’s not unusual if you are raising the question.
There are two major considerations that will make you ask yourself if you’re being underpaid: compared to the market or compared to your coworkers. The former involves comparing your salary to the broader industry standards, while the latter examines whether you are earning less than your colleagues who hold similar positions within your organization. Both scenarios lead to frustrations, but understanding these distinctions can help you better advocate for fair compensation.
Scenario 1: You have just discovered your coworker makes more than you
Finding out that your coworker, someone who performs the exact same job, is making more than you is never fun, but don’t fall into the trap of immediately requesting a raise solely because your coworker is earning more. Instead, focus on comparing your skills, outputs, and the value you add—not just your salary.
In addition, remember that the best choose would always be to compare your salary and the value you bring to the market. This approach will provide a stronger foundation for your request and demonstrate your understanding of fair compensation practices.
So where do you start? Research is key. Let’s dig into this.
Understanding the value of your work
The number one rule is to start by understanding the market value of your position. Many factors contribute to this, including your level of experience, the industry you’re working in, the geographic location of your job, and the demand for your particular skill set. You can use this framework:
- Assess Your Experience: Document your current level of experience in the role, your achievements, gaps compared to other professionals, strengths, and weaknesses. Tools like HelloI can help you track and analyze this information.
- Analyze Your Role in the Organization: Consider how crucial you are to your organization. Do colleagues seek your advice? Are you involved in new projects? Do you provide valuable insights?
- Evaluate Your Impact: Honestly assess how your work influences the company’s growth or key aspects. Are you helping the company grow or significantly contributing to its success?
- Research Salary Benchmarks: Use websites like Glassdoor to get a ballpark figure for your salary.
- Seek Personalized Insights: Reach out to professionals within your network for more personalized insights.
Benchmarking Against Industry Standards
Once you have a ballpark figure of what your role should command salary-wise, it’s time to benchmark that against industry standards and to get more granular. Each industry has its unique pay scales, influenced by factors such as technological advancements, economic shifts, and evolving skill requirements. To get an accurate comparison, utilize a combination of online resources and professional organizations.
Research Online Resources for Salary Research & Expectations
- Glassdoor: Provides detailed salary information based on anonymous employee submissions. You can filter by job title, company, and location to get a comprehensive view of what your peers are earning.
- PayScale: Offers a personalized salary report after you input your job title, skills, experience, and location. PayScale’s reports also provide insights into the factors that might be affecting your salary.
- Pave: Allows you to explore salary data collected from a variety of data points, helping you understand how salaries vary by industry, location, and company size.
Review Professional Organizations and Industry Reports:
- Professional Associations: Many industries have professional associations that publish annual salary surveys or compensation reports. For example, the Society for Human Resource Management (SHRM) for HR professionals, or the American Medical Association (AMA) for healthcare professionals.
- Industry-Specific Reports: Look for industry-specific reports published by consulting firms, market research companies, or industry groups. These reports often provide a detailed breakdown of salary ranges based on job role, experience level, and geographical location.
Tips for Effective Salary Comparisons & Benchmarking:
- Use Multiple Sources: Don’t rely on a single source of information. Cross-referencing data from various platforms and reports will give you a more accurate and comprehensive picture.
- Consider the Big Picture: Take into account additional benefits and perks that may be common in your industry, such as bonuses, stock options, or health benefits, which can significantly impact total compensation.
- Adjust for Local Variations: Salaries can vary widely based on geographical location due to differences in the cost of living. Make sure to adjust your expectations accordingly if you’re comparing salaries across different regions.
Evaluating Job Offers & Salary Negotiations
While online resources like Glassdoor, PayScale, and Pave provide valuable insights into industry pay trends, there can sometimes be a “time gap” in the data, potentially reflecting outdated pay rates. So how can you ensure you’re accessing the most recent salary information?
One effective strategy is to explore job postings for roles similar to yours. Many companies, and in some cases, states, are required to disclose a salary range for job listings, providing real-time data on current market rates. By comparing these figures with your own compensation, you can quickly assess whether you’re in line with industry standards.
However, evaluating a job offer involves more than just comparing base salaries. It’s crucial to consider the entire compensation package. This includes benefits such as health insurance, retirement plans, bonuses, stock options, and other perks like flexible work arrangements or professional development opportunities.
To accurately gauge the value of these benefits, calculate their monetary worth alongside the base salary. This comprehensive approach ensures you have a clear understanding of your total compensation package.
If your evaluation reveals that your package falls short compared to industry averages, it could indicate that you’re being underpaid. So should you now go and ask for a raise? Not yet, you need one more data point, which is your performances.
Assessing Personal Performance and Growth
Beyond market trends and industry standards, personal growth and job performance play pivotal roles in determining whether your compensation is fair and reflective of your contributions. Consider the following factors to evaluate your position:
- Expanded Responsibilities: Have you taken on additional tasks or leadership roles since your last compensation review? If so, your increased workload should ideally be reflected in your pay. Keep track of any added responsibilities and articulate how they have contributed to the success of the team or organization.
- Skill Development and Achievements: Are your skills evolving, and are your accomplishments being acknowledged? Continuous learning and professional development should be rewarded, particularly if they enhance your effectiveness in the role. Highlight any new skills acquired or significant achievements attained since your last salary negotiation.
- Performance Reviews and Recognition: Many companies conduct regular performance evaluations to assess employees’ contributions and provide feedback. Use these opportunities to discuss your achievements, areas of improvement, and expectations for compensation. If your performance consistently exceeds expectations but your salary does not reflect this, it’s essential to address the misalignment during these discussions.
- Career Growth Opportunities: Consider the potential for career advancement within your current organization. Are there opportunities for promotion or lateral moves that align with your career goals? Factor in the long-term growth prospects and advancement opportunities when evaluating your compensation package.
- Market Value of Your Skills: Stay informed about the market demand for your skills and expertise. Are you being compensated competitively compared to professionals with similar qualifications and experience? Use online salary resources and industry reports to benchmark your pay against market rates.
If you find that your performance and contributions warrant higher compensation than what you’re currently receiving, that the market is generally paying more and that you are key to your company, than it’s essential to advocate for yourself during salary negotiations!
Approaching the Topic of Salary with Your Employer
Addressing salary issues with your employer can be daunting, but it’s a necessary step to ensure that you’re being paid what you’re worth. Preparation is key:
- Arm yourself with research you made (as above)
- Provide concrete examples of your achievements, quantify your impact whenever possible
- Provide market remuneration comparison
- Keep the discussion professional and fact-based
And remember:
- Stress that you want to stay at the current company and never end up “threatening” that you could leave because… at the end of the day, your employer could always decide to go out and scout for someone else
- It’s not just about asking for more money, it’s about aligning your compensation with your professional worth and the value you provide to the company. It could be that you end up having more PTOs or stock option or anything else that could be valuable for you.
Conclusion
In conclusion, regularly assessing your salary against industry benchmarks and your own performance is vital to ensure that you’re being compensated fairly. If you find discrepancies, take considered steps to address them with your employer or by seeking new opportunities that match your worth. Remember, knowing your value is the first step towards achieving the compensation you deserve.
