External hires earning more

I was talking to a member of my team yesterday and it came out he was earning more than double my salary for the same role. Granted he has been on the team 2 years longer than me but it seems as if the company has a set of payscales applicable to internal promotions and moves (me) and a policy of paying external hires the rate which it takes to entice them to join.

Just wondering how widespread this practise is?

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Essendon

While this may be happening in your org, more often that not remuneration is based on skills and experience over anything else. While 2x your salary does seem a lot, maybe he's a contractor? Maybe he's got some skills other don't have? Other than this, don't you have a policy which says colleagues shouldn't be discussing salaries?

Welly_59

He's a permanent hire, same as me.

It's not an issue, in face it gives me incentive to prove I can earn the same. I was just wondering of its standard practice

Danielm7

That's a big difference but it's not uncommon. Internal shifts are often capped at a lower rate, which is why many/most people say your best path to a higher salary is to jump companies. If you start at 35K and your next job might pay 55K, that's not really uncommon, but to get a 20K a year promotion in the same company is rare. I've seen people at my workplace go from helpdesk I, to II to sysadmin I and maybe go up to 50K, then find the same job elsewhere for 80.

mbarrett

Standard practice is for the HR people to negotiate the lowest price they can for new hires. Unless it's a Civil Service job, I don't think there are many places that do the standard base salary that's almost the some for everyone, and periodic performance+longevity raises. It's likely that the other guy had a different idea of his market value based on qualifications, and he was able to negotiate a higher salary.
I doubt your managers even know or care how much each individual makes, just as long as people show up every day + things get done.

JoJoCal19

Experienced the same myself at several past jobs, and at one of my more recent jobs I left exactly because of that. It was really bad there too. Sitting in one job hoping to get raises to bring you up to market value for your current level of experience and credentials rarely ever works. Every once in a while you'll see someone here post about a nice raise bringing their salary up, but that's the exception and not the norm. As a matter of fact, at the job before my previous one we had a guy get hired and the only reason he left his previous job was because they wouldn't give him a raise to be inline with market value and folks they were hiring in. He was with us for 3-4 months and then left to go back to his old employer and he got a huge raise. When I left that job due to the exact same reason I was unhappy at the next one and they really wanted me to go back so I talked to the Security Director and while HR couldn't come up to close to the new salary I had, what they were offering was $13k more than I left at. It's just a fact of life I suppose.

iDShaDoW

Happens all the time if you ask me.

Some interview specialists suggest that you avoid telling a company that you're applying to your current salary and ask what the pay range is for the job - as soon as they know, you lose some leverage.

Easier said than done when HR tends to keep pressing you for how much you make. If the job pays $80k/yr and they find out you make $50k/yr and are capable of doing the work; they'll hide the fact that they could afford $80k/yr and offer you $55k or $60k. Or they might think that you're only worth $50k and not that good at what you do even if that's not the case.

If you're an internal move/promotion, they already know how much you make and will give you a small bump (if at all) and spin it as "hey, you're getting a better title and on-the-job training".

The company I used to work for always told people that they had an internal cap of 15% raises. My managers somehow got me like 25-35% raises a few times, but they also re-classed my position and pay grade or pulled some strings. I lucked out because I ended up with a good group of guys and they all realized I was making half what they were even though I was able to learn the stuff quickly and doing the same job they were (it was all new work to everyone).

You have basically 3 options:
1) Go to another company and get a big pay increase.
2) Get an offer letter from another company and get a salary match to stay - can be risky if you don't want to actually leave as they can say thanks for your service and wish you well, or you now have a target on your back as the guy who wanted to leave.
3) Stay and settle for small annual raises.

Either way, your best bet is to learn everything you can on the job and look for your next opportunity. Don't get too comfortable and stagnate. You can do that later on at the tail-end of your career when your pay is good and you just want to coast on some level.

DatabaseHead

I've seen it happen before, not A LOT but it has happened in my world. Never 2x but I've seen 20-30% higher rates. Essendon makes a good point, a lot of time it's related to skill level.

Little insight into this as well, which might make sense of it.

HRIS has datafeeds that come into their organization, showing market data. A lot of time there are flags in these tables (bare with me I am a database guy so I apologize for all the slang talk), I digress...... They can run a query against market rates on job title, years of service etc. Based off those results they make a financial decision. There are also flags (conditions) in the tables that can be omitted or called upon. For instance, in these systems you can look at the market rate for a senior software engineer in your area etc etc etc. It may return a result low 80,000 mid 105,000 and high 140,000. This gives them a bench mark to start at. If they feel his/her skills are on the high end they can adjust. In turn..... If you are already in the organization again there is data to recommend the amount for increase. For instance if you management staff feels you are a superstar they can look at the low, mid, high and make a decision based off that. I will tell you this, most of the time it doesn't favor the internal employee. JUst saying.....

tunerX

Essendon wrote: »

While this may be happening in your org, more often that not remuneration is based on skills and experience over anything else. While 2x your salary does seem a lot, maybe he's a contractor? Maybe he's got some skills other don't have? Other than this, don't you have a policy which says colleagues shouldn't be discussing salaries?

In the US it is illegal to bar employees from discussing wages. The most they can do is bar you from sharing compensation information while at work.

anhtran35

There has been discussion about salary several times on this forum. My advice. If they ask how much you are making? Tell them how much you are worth. If you tell them you are making 80k. They will prob. offer 85k. HR is dishonest with the MAX they can offer you because they are told to lowball. If they can pay me what I'm worth then bye.

Welly_59

Sounds like the best route to go in the way of salary is to hop about employers.

It's not unheard of where I am for people to leave for 6 months then to return as an external hire and reap the rewards of increased salary

beads

This used to be common back in the late 80s and early 90s when people felt forced to leave one employer for a year and come back for literally twice the money. Today, it would be considered a really bad compensation (comp) policy and opens up a wide array of headaches for HR.

Be careful in validating this issue as it can also blow straight up in your face.

- b/eads

networker050184

You're much more likely to get a big bump in salary by making an external move than an internal one. This is very common in this field in my experience. Guys staying with the same company for 10 years and moving up make significantly less than the guys hired on at the senior level.

NOC-Ninja

That would be unfair. IF its the same job then why is he making double your pay? I would think 10k more or 20k more but double is a lot for the same position. I guess if he was a CCIE then maybe , just maybe it counts since he is giving his number for a cisco gold partnership which brings discounts.

I definitely would like to know how much my co-workers gets paid. I actually know how much it is on some of them. All this company policy of not sharing your pay just means so that they dont pay their engineers the right salary.

NOC-Ninja

Let me just add that its normal to get paid more if you leave your old job.

The increase is 3%. IF you move to a different company, you get more than 3% increase.

iDShaDoW

NOC-Ninja wrote: »

I definitely would like to know how much my co-workers gets paid. I actually know how much it is on some of them. All this company policy of not sharing your pay just means so that they dont pay their engineers the right salary.

Yeah, this whole corporate culture of not discussing pay has been put in place to benefit the employer. If they were more transparent and paid everyone accordingly based on job duties/title it'd be better and you wouldn't have people who are bad at talking and negotiating getting the short end of the stick.

I worked with an interesting group of guys and eventually the subject came up with a couple of them. The others overheard some of the conversation without specifics and I told them straight up "I'm not secretive about this kind of stuff and have no problem saying what I make as long as I know the other person is willing to respond in kind."

If anything, it made everyone realize they could trust each other more as teammates lol. That and we all started to figure out ways to help each other get raises; one guy got me an interview through his network, and I got a match with an offer letter in hand to stay.

One guy who was closer with management (wasn't actual management) and acted like he was buddy buddy with, asked us what was going on. Asked if we were discussing salary stuff when several of us had offer letters and asked for matches within a small time frame lol. Everyone was like "no clue what you're talking about".

Danielh22185

This is a pretty normal thing. Most companies don't value employee tenure and loyalty anymore so most times the best you can hope for are the "cost of living" increases in pay annually. You really do have to jump ship to find decent increases in pay.

TechGromit

Welly_59 wrote: »

It's not an issue, in face it gives me incentive to prove I can earn the same. I was just wondering of its standard practice

There are so many variables it's really not possible to draw conclusion a set number of years experience or skills equals X salary. When your co-worker was hired, the company could have been desperate for talent in his area of expertise, he played hardball during negotiations and the company paid him what he wanted. Now that the team is more matured, with several members having the same skill set, they are paying a lot less and threatening them if you don't get the same as Bob is making you'll quit could seriously backfire.

Or maybe he's banging the bosses daughter and he got the potential son-in-law sweet salary deal.

Or he could be straight up Bullshitting you, some people like to brag about their new Porsche, the supermodel they are banging or how much more money they make than you.

You could see how much higher you can push the company for more money next raise time, but use the information with caution, whining about you want more money because Bob is making more than you rarely works out for you in the end.

TechGuru80

2x is a lot but in general, pay scales change and in large organizations this could happen yearly but to keep progressing you need to get promoted or change roles. The best time to negotiate is when you are first starting, and then again when you change roles...when you get promoted it will be harder to do.