Are salary bumps getting any larger?  

 

Dave Jensen
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February 23, 2019 12:46 am  

For years, we've been seeing annual salary increases at biotech and pharma companies rise to as much as inflation rates -- you get 2.5 or 3% and you're doing great. But now, with the economy cranking along so well, how are people faring? I'm self employed, so my "salary" only goes up if I work harder, and I'm already maxed out. 

But how about people who are working in companies? What does it take to get the old-fashioned 8 or 10% bump in pay? Do people HAVE to leave their employers and go elsewhere to get a substantial increase?

Dave

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DX
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February 25, 2019 12:40 pm  

Hi Dave,

in my experiences salary raises withing company and with current role has not been keeping up too much - you're extremely lucky if you get a 2.5 percent merit based increase annually, that number hovers more around 1 to 1.5 percent, good if you get 1.8 percent.  

Even if you get a promotion, that bump can max easily at 4 to 5 percent, that's why negotiating the base at entry is so key for future compensation growth, both internal and external to the company.   If one wants 10 percent bump, well that's when one then enterains moving off to a different company - of course first linked to development or growth opportunity where then compensation then follows as part of the discuss after.

Sadly alot of company's do fail to reward on compensation of base salaries, they're more quicker to respond to development and training needs, or add-on to yearly bonus, but base-salary compensation - sadly when that discuss needs to happen many hiring managers shut down as do HR staff (then their uselessness really shines, HR staff that is).  And usually most people..don't leave for compensation reasons, its more development, change etc.  This has been my experience even after getting merit based bonus and promotions, they way to get to 8 to 10 percent if not more is by jumping companys.  Such as life.  I mean do the math.  Say you're makeing 100 K.  you ask for 1o percent, that's a 10K added to the fixed budget for your income...yeah, company's balk at that for internal employees...but for externals..well ...different story right?

DX

 


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Dave Jensen
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February 25, 2019 2:38 pm  

Here's a link to an article that talks about this DX. I'm not sure that I agree with the numbers here -- it's a bit radical ("Employees who stay in their companies are earning 50% less") but it makes your point, for sure.

Dave

https://www.forbes.com/sites/cameronkeng/2014/06/22/employees-that-stay-in-companies-longer-than-2-years-get-paid-50-less/#56e62e31e07f

 

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DX
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February 25, 2019 3:21 pm  

Interesting article and yes and no.  If you're stagnated and stick around a company too long or in a position with out advancement (linked to compensation), then you are at a loss per se in terms of maximizing your compensation/earning potential in terms of expertise gained.     Say you're in a role for 3 years and you're hired a the lower range of market value for a role , that max 1.8 percent you "may" get base quickly becomes a loss, if there is higher earning potential linked to market value for the job (i.e. that 1.8 max you can get these days ain't gonna take you to the upper range of the market value for the job, in this senario).  

So fast forward 10 years, assuming same company and the assumption is that even if you get a promotion you're mainly getting that measly 4 to 5 percent pay raise...well its a loss.

If you can consider jumping to aother company were you can easily raise the baseline by 8 to 10 percent say 3 years down the road.  Sadly, company's can be ignorant of internal talent compensation needs and well ignorant to the idea that an employee can 1. develop externally, 2. get better compensation.   Even when in this day and age, company's are losing left and right due to turn-over.  They down play it but I have yet to be in a company where there is a stable team for more than 8 months..somebody is ALWAYS leaving...can be 1 or 2 or 3 at worse i've seen half a team leave in a 6 month period (dropping like flies, or running to other companys).  That's the reality.  So that is other side of the problem, companys do fail massively on retention, due a myth that compesenation won't keep someone around for longer (much longer if paid well).

Cause when is is paid well, in role and position, you can have people..stick around (they won't get much more elsewhere so probaby not worth hasle to move, as was my last case in the last company I was in, compensation was in the upper range already, no need for me really to go jumping for that.  Thought twice or 3 times before jumping for a measely 3 to 4 percent (again I was upper range of my salary for my title without upward jump).  

Then made the upward jump - got about 12 perent "raise" putting me mid-range for my title and role (I can still maximize my earning potential for my role, lets see what happens in another 2 years as I'm planning to stick out this role for that much more amount of time).

 

DX

 

 


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Cory
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March 19, 2019 10:22 pm  

Hi,

Just some recent info - my company typically gives lots of HR direction in managing merit increases which keeps everything in a very narrow band.  Calling these percentages merit increases doesn't really suit  - the only message on merit is if you get 0% then you're having some issues.  Everyone else gets 2.25-2.75%

I'm seeing pretty slim increases for title promotions too - maybe 5-8%.  I think 10-15% used to be more common.  The real money comes in heading to a new company.  For my field which has reasonable demand, 20% or more isn't unheard of and it's reasonable to stack two moves into 5-6 years if you're a high performer.  But new company transitions are risky and always a bit challenging so that has to be factored in.

From my perspective it's worth really worth stretching to get the salary increases early in your career, it pays off over one's entire working life!

Cory

 


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Dave Jensen
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March 22, 2019 4:46 pm  

Cory,

You bring up a good point. The "get it done early" comment you made is so true . . . these early career salary bumps have a career-long impact on one's compensation. It's a good time to make a couple of career moves, especially if you are a high performer and you have great references you leave behind you. I'm not talking a year here and a year there . . . If you invest 3 years of solid performance in one organization and then leave to do another 3-4 somewhere else, that's just not an issue nowadays. And it's easier for most people to get this done in the early part of their lives, when there aren't the same family issues and dual career concerns that happen later in one's life. 

Thanks for the contribution Cory!

Dave

Dave Jensen, Founder and Moderator
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