Big corp salary comp process

[Boom Boom]

The other salary thread got me remembering that most young employees of big businesses don't know and aren't informed of how the salary compensation process works, so I thought I'd give a primer. You HR and management types feel to help me out where needed.

For most of these places, each job has a title, that is part of a job family. Example, Electrical Engineer 2 (of 6 levels typically). Each title has a salary range. For this example, let's say $70k to $130k (with a midpoint of $100k). Each employee has a comp ratio, that is their salary divided by the mid point of the range. So for this example, a $100k salary is a 1.0 comp ratio. A $75k salary is a 0.75. The tables for these ranges are updated only infrequently.

Most employees will fall from 0.7 to 1.1 or 1.2 ratios. An offer for a new hire without much experience will probably be at about a 0.7. With a lot of experience for the level, you can probably get a 0.9 to 1.0. You'll have to negotiate to get more, but it's doable, with experience.

What your range is and your comp ratio is the first thing you need to know. You will never get anywhere saying Joe Blow makes $X and I think I should too. You WILL get somewhere saying I have 5+ years experience in this title and am a top performer, but my comp ratio is only 0.8.

Some managers are good at taking care of their employees. Others, not so much. I have seen great engineers with a 0.75 comp ratio despite years of experience, because their management screwed them. And they had no idea.

Personal example. My last job switch I got an offer that was more than I was expecting and thought fair for the position, i thought it was above a 1.0 ratio, so I took it without negotiating. Turns out they had just revised their compensation tables, and the offer was a 1.0 comp ratio offer despite excessive experience for the level. I absolutely should has said "do you mind sharing the salary range and comp ratio for this offer", then "with my X years of experience I think a 1.05 ratio is more appropriate compensation". That would have been entirely in bounds and probably accepted. But since I didn't, I have no good opportunity to get that now.

Another tip. Your past and current pay has a lot of factor into future pay. NO ONE will look at your current pay and current contributions and say this has gotten out of whack, let's throw a lot more money at you. It's all well and good to take a low salary when you need experience and have no leverage, but you need to plan on switching jobs once you have that experience and leverage, or you are leaving a lot of money on the table. If you take $100k, or negotiate to $110k, your raise the next year will be the same. And the next year. And the next. And so on. And don't expect to have the gap made up with a promotion. I've been in this game 20 years, and I've never once heard anything other than "there's not enough money allocated to promotions".

 

[MSUDAWGFAN]

Another tip. Your past and current pay has a lot of factor into future pay. NO ONE will look at your current pay and current contributions and say this has gotten out of whack, let's throw a lot more money at you. It's all well and good to take a low salary when you need experience and have no leverage, but you need to plan on switching jobs once you have that experience and leverage, or you are leaving a lot of money on the table. If you take $100k, or negotiate to $110k, your raise the next year will be the same. And the next year. And the next. And so on. And don't expect to have the gap made up with a promotion. I've been in this game 20 years, and I've never once heard anything other than "there's not enough money allocated to promotions".

This might be generally true, but it isn't absolute.

When I signed on at my current job, all they did was look at my past salary and add 10%. Well, I didn't add my bonus, so I knew I was getting kind of screwed, but I wanted out in the worst way. They offered me a moving package, but I asked for some money instead. They said they didn't do that ( I found out from someone else that they in fact do) and they said instead of that if I was able to complete a project that they would give me a pay raise.

About 7 months go by and I completed it. I go to the HR manager who interviewed me and asked. She said she didn't remember that, but someone would. She set up a meeting with my then boss with just my name. He left a meeting he was in because he thinking the worst and thought I was leaving. He went to her office and he said he didn't remember either, but it had to be written down somewhere and we would take care of me.

About a month goes by and I still haven't heard from anyone and I'm beginnnig to think I'm about to get screwed. He calls me into his office and gives me a sheet of paper. I figured it would be a little bit, but not too much - maybe $500 or $1,000. It was much more than I thought. I started shaking and said "Thank you". He told me that was the reaction they had hoped for and they wanted to keep me.

If an employee really is worth their salary, an employer would be crazy not to keep a good employee. And probably most employers know it.

 

[ckDOG]

This is solid advice for large companies with transparent comp policies and red tape. The only way you can work that system is being objective and bringing the data.

Being risk adverse, I do recommend anyone working a salary increase in your current job to 1) feel comfortable that the other side will be objective and not emotional and 2) be prepared for a poor reaction and worst case scenarios. Professionalism and objectivity offered is not always returned in kind. And really...if you feel 1 and 2 are legit risks where you are currently - it's probably time to focus your energies on your exit plan.

 

[MSUDAWGFAN]

This is solid advice for large companies with transparent comp policies and red tape. The only way you can work that system is being objective and bringing the data.

Being risk adverse, I do recommend anyone working a salary increase in your current job to 1) feel comfortable that the other side will be objective and not emotional and 2) be prepared for a poor reaction and worst case scenarios. Professionalism and objectivity offered is not always returned in kind. And really...if you feel 1 and 2 are legit risks where you are currently - it's probably time to focus your energies on your exit plan.

That was one thing I was prepared to do. I didn't want to leave, because I don't want to be a "job hopper" but sometimes it's necessary. I've almost been here 11 years and I'm on my 4th job. I hope to retire from here, but anything can happen.

 

[johnson86-1]

That was one thing I was prepared to do. I didn't want to leave, because I don't want to be a "job hopper" but sometimes it's necessary. I've almost been here 11 years and I'm on my 4th job. I hope to retire from here, but anything can happen.

Yea, it stinks that it's that way but that is generally the way to maximize your pay. The minimum time before leaving is different in every industry, but early on in your career, I really wouldn't hesitate to jump if you've been somewhere at least a year. Later on, you probably want to stick around longer, but it's a sliding scale. If you've been somewhere a year and you have the opportunity to take a 20%+ increase, I think you take it. If you've been somewhere 5 years and are topped out, I'd leave for a 5% raise if it also came with the opportunity to move up, or hell, even a similar pay package if it puts you in a place to learn something new or with a company that has a place to promote you to.

I've changed jobs twice where when I submitted my resignation, they asked why I hadn't come to them and asked for more money. One place it was a fair question, but there were reasons beyond money that I wanted to leave. The other place significantly changed the benefits package within 6 months of me getting there and then barely raised my salary with inflation. I didn't want to burn any bridges, but I really wanted to ask, "did I really need to tell you that if my total compensation went down I would be looking to leave?" I feel like if you are not raising an employee's wage over time to outpace inflation, you are telling him/her that you view them as replaceable and don't care if they leave. If you aren't at least keeping up with inflation, and it's not a one year thing due to tough times, then you are telling them you want them to leave if they can.

 

[Shmuley]

When I discuss compensation package with my supervisor, I tell him to get his @$$ bizzy earning some poultice. It's generally a short conversation without much back and forth. Sometimes I tell him that his sideburns are looking a little grayish these days. The mirror does not lie.

 

[Seinfeld]

The other salary thread got me remembering that most young employees of big businesses don't know and aren't informed of how the salary compensation process works, so I thought I'd give a primer. You HR and management types feel to help me out where needed.

For most of these places, each job has a title, that is part of a job family. Example, Electrical Engineer 2 (of 6 levels typically). Each title has a salary range. For this example, let's say $70k to $130k (with a midpoint of $100k). Each employee has a comp ratio, that is their salary divided by the mid point of the range. So for this example, a $100k salary is a 1.0 comp ratio. A $75k salary is a 0.75. The tables for these ranges are updated only infrequently.

Most employees will fall from 0.7 to 1.1 or 1.2 ratios. An offer for a new hire without much experience will probably be at about a 0.7. With a lot of experience for the level, you can probably get a 0.9 to 1.0. You'll have to negotiate to get more, but it's doable, with experience.

What your range is and your comp ratio is the first thing you need to know. You will never get anywhere saying Joe Blow makes $X and I think I should too. You WILL get somewhere saying I have 5+ years experience in this title and am a top performer, but my comp ratio is only 0.8.

Some managers are good at taking care of their employees. Others, not so much. I have seen great engineers with a 0.75 comp ratio despite years of experience, because their management screwed them. And they had no idea.

Personal example. My last job switch I got an offer that was more than I was expecting and thought fair for the position, i thought it was above a 1.0 ratio, so I took it without negotiating. Turns out they had just revised their compensation tables, and the offer was a 1.0 comp ratio offer despite excessive experience for the level. I absolutely should has said "do you mind sharing the salary range and comp ratio for this offer", then "with my X years of experience I think a 1.05 ratio is more appropriate compensation". That would have been entirely in bounds and probably accepted. But since I didn't, I have no good opportunity to get that now.

Another tip. Your past and current pay has a lot of factor into future pay. NO ONE will look at your current pay and current contributions and say this has gotten out of whack, let's throw a lot more money at you. It's all well and good to take a low salary when you need experience and have no leverage, but you need to plan on switching jobs once you have that experience and leverage, or you are leaving a lot of money on the table. If you take $100k, or negotiate to $110k, your raise the next year will be the same. And the next year. And the next. And so on. And don't expect to have the gap made up with a promotion. I've been in this game 20 years, and I've never once heard anything other than "there's not enough money allocated to promotions".

This is generally the way that it's always worked with my companies. A couple caveats that I might add

1) The structure does tend to a change a good bit as you move up the chain, and whereas there may be more focus on salary and comp ratios for entry level employees and middle management, things shift towards bonuses(we call it short term incentive) as you move into senior roles.

2) We sometimes have to be careful when talking about performance because that's one area that can vary wildly from one business to another in terms of how it's measured and used for compensation. For example, company ABC may be all about hitting a sales quota, and if an employee meets that number, he/she will be rewarded. In my line of work which has always been manufacturing, goal achievement is just one piece of the equation while the "how you got there" is equally important. In other words, an employee may be the best engineer in the world and hit every target, but if they're a royal pain in the a$$ to work with and people don't want to be around them, they're not going to be rewarded with a big pay day at the end of the year.

Lastly, I don't mean to go down some philosophical road with this, and I don't have any particular disagreement with the salary tips that have been shared over the last couple days. That said, I've rarely run into someone that is genuinely happy with his/her career or family life while constantly prioritizing salary and job hopping to make an income number look good. All that takes a toll

 

[Boom Boom]

This is generally the way that it's always worked with my companies. A couple caveats that I might add

1) The structure does tend to a change a good bit as you move up the chain, and whereas there may be more focus on salary and comp ratios for entry level employees and middle management, things shift towards bonuses(we call it short term incentive) as you move into senior roles.

2) We sometimes have to be careful when talking about performance because that's one area that can vary wildly from one business to another in terms of how it's measured and used for compensation. For example, company ABC may be all about hitting a sales quota, and if an employee meets that number, he/she will be rewarded. In my line of work which has always been manufacturing, goal achievement is just one piece of the equation while the "how you got there" is equally important. In other words, an employee may be the best engineer in the world and hit every target, but if they're a royal pain in the a$$ to work with and people don't want to be around them, they're not going to be rewarded with a big pay day at the end of the year.

Lastly, I don't mean to go down some philosophical road with this, and I don't have any particular disagreement with the salary tips that have been shared over the last couple days. That said, I've rarely run into someone that is genuinely happy with his/her career or family life while constantly prioritizing salary and job hopping to make an income number look good. All that takes a toll

Agreed. I'll put it this way: making sure to leave as little money on the table as possible.....leaves a lot of life on the table. It's one thing to cut some of the fat off your life to get ahead in your career. It's another to cut to the bone. And the ROI gets worse the more you cut.

 

[Yeti]

I find this very interesting. as a old senior big corp guy I know a ton about how pay works in my industry but you guys seem to be engineers…so I have a structural engineer in the immediate family. Seems under paid to me 5/6 years experience not a PE cause he is Australian. He is PE there but living in US. What is / should salary range be?

 

[msugolf]

A very wise and wealthy friend once gave me all the compensation advice I ever needed… “You can make a good living working a job, but you’ll never make any money.”

This ain’t the 80s anymore. And Michael J Fox ain’t walking through that door …or any door for that matter

 

[SwampDawg]

Rule No. 1: Be durn sure that what you do is in the mainstream of what your company does. I hired on with my MSU BS in Industrial Management for a decent salary. Worked my butt off, early and late, Saturday and Sunday quite often and got very modest raises. The classic case is, one time they decided they would give everybody with "Engineer" in their job titles substantial raises. Nobody else got anything.

 

[horshack.sixpack]

The other salary thread got me remembering that most young employees of big businesses don't know and aren't informed of how the salary compensation process works, so I thought I'd give a primer. You HR and management types feel to help me out where needed.

For most of these places, each job has a title, that is part of a job family. Example, Electrical Engineer 2 (of 6 levels typically). Each title has a salary range. For this example, let's say $70k to $130k (with a midpoint of $100k). Each employee has a comp ratio, that is their salary divided by the mid point of the range. So for this example, a $100k salary is a 1.0 comp ratio. A $75k salary is a 0.75. The tables for these ranges are updated only infrequently.

Most employees will fall from 0.7 to 1.1 or 1.2 ratios. An offer for a new hire without much experience will probably be at about a 0.7. With a lot of experience for the level, you can probably get a 0.9 to 1.0. You'll have to negotiate to get more, but it's doable, with experience.

What your range is and your comp ratio is the first thing you need to know. You will never get anywhere saying Joe Blow makes $X and I think I should too. You WILL get somewhere saying I have 5+ years experience in this title and am a top performer, but my comp ratio is only 0.8.

Some managers are good at taking care of their employees. Others, not so much. I have seen great engineers with a 0.75 comp ratio despite years of experience, because their management screwed them. And they had no idea.

Personal example. My last job switch I got an offer that was more than I was expecting and thought fair for the position, i thought it was above a 1.0 ratio, so I took it without negotiating. Turns out they had just revised their compensation tables, and the offer was a 1.0 comp ratio offer despite excessive experience for the level. I absolutely should has said "do you mind sharing the salary range and comp ratio for this offer", then "with my X years of experience I think a 1.05 ratio is more appropriate compensation". That would have been entirely in bounds and probably accepted. But since I didn't, I have no good opportunity to get that now.

Another tip. Your past and current pay has a lot of factor into future pay. NO ONE will look at your current pay and current contributions and say this has gotten out of whack, let's throw a lot more money at you. It's all well and good to take a low salary when you need experience and have no leverage, but you need to plan on switching jobs once you have that experience and leverage, or you are leaving a lot of money on the table. If you take $100k, or negotiate to $110k, your raise the next year will be the same. And the next year. And the next. And so on. And don't expect to have the gap made up with a promotion. I've been in this game 20 years, and I've never once heard anything other than "there's not enough money allocated to promotions".

Good advice for people in big shops. This primer is one reason that I would struggle to go back to a big company. The flexibility that I have in the SMB space is nothing like what I experienced under my corporate overlords AND there is room for common sense policies and flexibility in applying those policies. In larger companies, I butted up against the reality that my title completely controlled my salary range and unless something opened up "above" me, it didn't matter if I was 10x as efficient and effective as the next best guy, we were getting paid the same.

 

[engie]

Going through this a bit myself currently. Inherited a real s***show for Nascar Chicago and managed to pull it off, while really impressing our biggest(and only real) competitor. Said competitor has approached me in passing a couple of times in the two weeks since then. Not sure what to do personally and have thusfar done nothing, despite not being fully happy in my current situation. Not quite sure how to explore the option without at the same time appearing disloyal, as anything beyond what I've done so far would no doubt make it back to my current employer. While at the same time not thinking it would be at all unfair to assess my fair market value. I'll manage to screw up a situation that someone better than me at playing the game would parlay into a $20k salary bump, I'm sure