Are You Being Paid Less Than the New Hire Sitting Next to You? Here's Why!

Have you ever found out that the new person on your team is making more than you? It's a situation more and more of us are running into these days. Let's say you're like Alex, who's been with the company for years, working hard and knowing the ins and outs of the job. Then there's Jordan, who just joined on the same level and is already earning more than Alex. It doesn't seem fair, does it?

This isn't just happening in one or two places; it's a growing issue across many industries. So, why does this happen? What's behind this difference in pay between new hires and those who've been around for a while? And as leaders or team members in engineering, what can we do about it?

In this issue, we're going to get into why this is happening and look at ways engineering leaders can help make things more balanced. We'll also give some tips for anyone who finds themselves in this tricky situation, just like Alex.

So, why is this happening?

🤔 Strategy or Survival?

Companies may intentionally underpay current employees to encourage turnover. Believe it or not, some companies intentionally keep salaries low for their current staff. It's a bit rough, but the idea is to keep bringing in new blood. While this might freshen up the team, it can also leave people feeling undervalued and looking for the exit.

💼 The Raise Issue.

Salary raises are often capped, making it hard to match market rates for existing employees. When it comes to raises, many companies have a limit on how much they can bump up your salary, usually a percentage of what you're already making. This can leave long-term employees like Alex earning less than new hires over time, especially as market rates for salaries go up.

🏢 HR’s Blind Spots.

HR teams may overlook the long-term effects of paying new hires more. Sometimes, HR teams are so focused on filling positions quickly that they miss the bigger picture. Paying new hires more might solve one problem, but it can also lower the morale of the team that’s been there all along.

🌟 The Appeal of the New & Market Pressure.

New external experience is often valued more than internal experience. New hires often have the upper hand in salary negotiations, especially if they're coming in with a strong resume. Companies are willing to pay more for that perceived value they bring from outside. There's this thing where companies value the experience you've gained elsewhere more than the time you've spent with them. It's like they're always looking for the next best thing, even if it's right in front of them.

🔄 A Tough Problem to Crack.

Retaining employees is a complex issue that many companies struggle to address. Keeping your best people around is a complex problem, and not a lot of companies are jumping to solve it. It's easier to hire new people than to figure out how to keep the good ones you already have.

The Leader’s Role in Fair Compensation

As engineering leaders, you're in a unique position to influence how your team and company handle pay. Here's how you can make a difference:

🔍 Spot and Address Pay Inequity

Keep an eye out for signs of pay compression and discrepancies. If you see it, speak up. It's about making sure everyone's getting a fair deal for their hard work and skills.

🌟 Champion Internal Talent

Show your team that you value the experience and loyalty they bring. Encourage promotions from within and ensure these folks are not left behind in the salary game.

💬 Open Communication

Create an environment where it's okay to talk about salaries. This kind of openness can clear up a lot of misunderstandings and show your team that you're on their side.

⚖️ Push for a Better Compensation Strategy

Work with HR to develop a pay structure that's fair and transparent. This might mean pushing for bigger raises for your long-term team members or rethinking how new hires are compensated.

📣 Advocate for Your Team

If you notice a trend of underpaying long-term employees, don't be afraid to take it up the chain. Sometimes, you've got to be the one to start the conversation.

🎁 Focus on the Whole Package

Remember, compensation isn't just about salary. Look at the entire package, including benefits, work-life balance, and growth opportunities. Sometimes, these can be just as valuable as a bigger paycheck.

What Should Employees Do?

If you're in a situation like Alex, where you're making less than the new folks on the team, here are some steps you can take:

🔍 Get the Full Picture

First up, try to understand how your company manages compensation. What's their philosophy? Who decides on the numbers? This knowledge is your first step in figuring out how to approach the issue.

💬 Talk About It

It might feel awkward, but talking to your manager about your pay is okay. Good managers expect these conversations. Frame it as a discussion about your contributions and how they align with the market rate, rather than just asking for more money.

📈 Know Your Worth

Do some homework on what the market rate is for your role. Websites like Glassdoor or LinkedIn can give you a sense of what others in your position are earning.

📝 Build Your Case

When you're ready to talk about your salary, come prepared. Highlight your achievements, your growth, and how you've contributed to the team's success.

🌟 Aim for Progress, Not Just Pay

Sometimes, the path to better compensation is through professional growth. Look for opportunities to take on more responsibility or learn new skills that can justify a higher salary.

🤝 Negotiate Smartly

If you're given an offer, don't be afraid to negotiate. But remember, it's not just about the salary. Consider other benefits like flexible hours, more vacation time, or professional development opportunities.

🌐 Consider Your Options

If all else fails and you're not getting the compensation you deserve, it might be time to look around. Today's job market is dynamic, and your skills are valuable.

In this issue, we've tackled the tricky subject of why new hires might be getting paid more than the seasoned pros. We've looked at the reasons behind this trend and explored how engineering leaders can play a vital role in creating a fairer and more balanced workplace. We also provided some practical tips for individuals to empower themselves in these situations.

As we've seen, the reasons for pay disparities are complex, ranging from market dynamics to internal policies. But the good news is, both leaders and individuals have the power to make positive changes. For leaders, it's about advocating for fairness and transparency, and for individuals, it's about understanding your worth and speaking up.

Remember, a fair and equitable workplace isn't just good for morale; it's good for business. It fosters a culture of loyalty, productivity, and mutual respect. So, whether you're leading a team or part of one, know that your actions and decisions contribute to shaping a more equitable work environment.

Let's bridge the gap and work towards a future where pay reflects value, contribution, and fairness.