On being paid less than your subordinate

November 15, 2007 · Filed Under For the love of HR 

From the mailbag:

Dear HR Guy -

I started work at a fortune 50 company just over 2 years ago, with a fresh MBA in hand, and 5 plus years work experience. My starting grade level was a 13, with a salary of $64k. After 18 months I was promoted within position to the next grade level (15), and my salary increased to $77k.

I’ve just taken a lateral move to my first managerial role, and my new pay is $84k. The position has the flexibility to be promoted to the next level (17), which would get me close to, or over, the $100k range.

I felt very happy with this until I learned that one of my direct reports who is a level 13 earns $85k per year. She was hired just 3 months ago, is my same age, has a similar background to when I was first hired, and is also a fresh MBA (from a lesser known school).

My manager has told me that her hands were tied when she offered the $84k salary due to pressure from HR (they felt an 8% raise was enough).

My manager is planning to retire or move within the next 9 to 12 months, and I have been told that I am the successor. My manager’s manager is thrilled to have me in our department, and has pretty much told me that I’m on the fast track. So, the question is….how much do I let this inequity bother me?

I have some great long term potential at this company, but isn’t this just a matter of principle?

Benjamins in Need

I have to admit, whenever I started reading I was firmly in the “the principle” camp but I sort of floundered when you talked about the future potential. Under most circumstances, the boss should make more. It didn’t sound like it was one of those exceptions where I could see it.

Still, there are certain situations where it is perfectly fine to have a subordinate make more than a manager. That includes:

  1. More education or experience in a field that pushes their pay at the top end of the range while a manager with little management experience is stuck at a lower level of an upper pay range.
  2. The employee is in a field where the pay rate is much higher. For example, a middle manager who also has responsibility over a programmer might be paid less depending on their skill level.
  3. It is a particularly tight labor market. Either for that position, the region or just an overarching problem.

I don’t think your situation is addressed there so I will give you a couple different options.

One: You can approach a compensation specialist and figure it out. At a company your size, these things are pretty standardized. Going at your manager again probably isn’t the best approach and if you do decide to go that way again, you will be armed with more information.

Two: Suck it up and put in your time and it won’t matter in a year.

I think the route you take depends really on your level of comfort with your current salary (independent of comparisons, how happy are you at that level). If you are happy at that level and you can put away your principles, then you should be happy to be on such a great path. If not, then pursue it but don’t bang your head against the wall and try to figure out what basis your salary was computed as.

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Comments

5 Responses to “On being paid less than your subordinate”

  1. A.N. on November 16th, 2007 3:00 am

    A somewhat similar problem: I was “under hired” when I joined my company just under 2 years ago — I knew this, they knew this. I got what I needed (a job after a significantly life changing event and relocation), and they got an employee with “significant potential”.

    That potential (IT skills, strong business acumen, and analytic skills in a position that didn’t call for them at first) has been recognized and put to use. I’ve been given 2 promotions of “job band” (9 to 0, 0 being CEO - 6 being line management or equivalent in an individual contributor) from 8 up to 6.

    The problem has come, in that despite a stated policy of “equalization”, the cash raises have left me with the distinct impression that I’m at the very low end, or quite possibly even below “range”. This is further complicated by the fact that there isn’t “officially” a range for any given position, and it’s certainly not something published or publicly discussed.

    My boss’s boss fought quite strongly at the first promotion (primarily against HR who claimed the ‘no range’ stance), and was allowed only to give a 15% increase, the second netted 13.5%. Yes, of course I’m happy to not be making the original salary, but it still burns that they’re getting the skills “on the cheap”.

    My next move is likely going to be over the fence from operations into IT, where the “scale” is generally much higher — and where I fear that I’ll continue to pay for my original low entry point. I don’t want to be in a position of making 50-60% of my peers, when my performance has been rated exceeds expectations (and included an annual award given to the top 1% of the company (200K+ employees) in my first year of service.

    How is an employee supposed to make the strong argument when you have little to no data to go on? (other than a casual remark from a band 4 manager who said his entry level hires (of band 6 or 5) in his tech division made twice my salary?)

  2. Barbara Safani on November 18th, 2007 8:26 pm

    Since you’ve been identified to replace your boss once he retires, I would recommend sticking it out until that time. However, over the next year be sure to carefully document all of your success stories and write notes to yourself about how you have helped the company make money, save money, and save time over the year. When you are promoted, you will be able to articulate your consistent value-add and leverage this information to secure a promotional increase that places you competitively within your new salary range.

  3. Rita Stuart on November 19th, 2007 5:16 pm

    Starting salaries are key. Who said ‘never take the first offer’? She negotiated better than you did. Live with it for now. Next class change negotiate better. Have all the starting salaries changed that much in the past 2 years? What kind of a manager will you become?

  4. Kathy on November 28th, 2007 3:50 pm

    If you aren’t satisfied with your new pay, ask for a raise. If you don’t ask, you’ll never know. But before you ask, know exactly what you want. Need help figuring out what you want? Check out realraise.com!

  5. VP Making Less Than Subordinate? | YourHRGuy.com on June 16th, 2008 4:23 am

    [...] have already talked about making less than your subordinate so I won’t try to hit too many of those points [...]

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