Is Your Company Stealing Your Salary?

TalkLikeTheBoss_Salary_Thieves

Is your company robbing you of the salary you deserve? Possibly.

The one thing I painfully figured out early in my young career is — the method in which companies are able to cheat many of their employees out of the salary they rightfully deserve.

Are you wondering if you’re one of the many victims? Keep on reading because you probably are.

Aside from the most popular method of salary thievery, which is, the initial salary the worker receives upon being hired, the next method of thievery is executed through a series of internal promotions.

So how do they rob me of the salary I deserve?

Companies use the internal promotion, or the practice of hiring an internal candidate for an open role, to secretly whittle away at their employees’ salaries. I painfully uncovered this discreet practice from a personal experience with one of my first employers. And to ensure that I wasn’t being picked-on, I validated my suspicion of this practice by conducting interviews of over 50 professional colleagues from varying years of experience, organizational rank, industries and corporations (and about 50% of them were HR executives).

It works like this; with each internal promotion a worker receives, the company will strategically pay the worker below the market rate, which allows them to save money (an external candidate will more than likely get the market rate). Add up a few of those salary haircuts with each promotion and before you know it, your poor salary could be significantly lower than the going rate for that role (well in the double digits from a percentage stand-point).

But how can these companies do that and get away with it?

OK, so now that you understand how they go about executing their ruse, let me quickly outline how they’re able to get away with it again, and again. But in order to understand the “how,” you must take a peek into the psychology of the ruthless corporate jungle you work in.

The first thing that you need to realize is that companies love internal candidates as much as they love making profits. And that wasn’t just a catchy phrase – in actuality, employers love promoting internally because it creates an opportunity to increase profits by offering the promoted worker a modest salary increase usually below market for that role.

They get away with this for many of reasons but I’ll give you the two most important.

  • They got your number: You can’t expect to seriously negotiate salary when the employer knows exactly what you currently take home in pay (unless of course you have a competing offer from another employer in-hand). It’s almost a futile attempt. This, my friends, is where the proverbial dagger gets lodged into the spine of the internal candidate. You see, the company’s rationale is simple – they know that you can support your family on your current salary, so they figure that they’ll pay you a little more because if you can manage to get by with what you’re currently making, surely you can manage to live on this modest increase. And don’t get me wrong; it’s only modest compared to the salary an external would likely receive if they were to get the exact same role. To that end, many companies literally have a HR policy that puts a 10% salary increase cap on most internal promotions. Now that’s just wrong.

And if you are thinking about making a claim to HR for a higher salary, be prepared to hear a talk-off, which is a generic, predetermined response to common questions. The common HR talk-offs we observed went along the lines of: department budget restraints and the macro-economic forces that are currently placing a strain on the company’s financial resources (sounds like bull to me).

  • Pressure: Finally, companies get away with their scandal by benefiting from the internal pressures that workers face when presented with an opportunity of advancement. How difficult would it be to tell your boss that you don’t want to accept a promotion and would rather stay in your current role because the salary is not what you were expecting? Pretty darn hard I suppose. It’s almost sacrilegious to turn down a promotion that you were being groomed for, regardless of the reason. Not to mention the bridges you’ll undoubtedly burn as a result of your decision to not get screwed out of a fair salary. A worse scenario that commonly occurs is when the employer phases out your current role and replaces it with a more senior role (promotion). When that occurs, it is almost as if you have to take the promotion because you have no other role to go to if you pass it up (talk about pulling the rug out from under you). That once happened to me and many other professionals I interviewed.

So what should I do, avoid promotions all together?

Of course I’m not proposing that you turn down promotions—my goal is to make you aware of this practice so that you can better equip yourself. That being said, for the reasons I mentioned above, there might not be much you can do about this salary haircut ruse when you get promoted. But there’s hope for you and your malnourished salary. And that hope will likely come in the form of you leaving your current company (when the time is right) and going to another company who would be more than happy to pay you what you deserve, and then some. That’s exactly what I and countless others did.

Please don’t pay him any mind…

As I write this, I know there’s a legion of HR professionals that will claim that what I’m saying is completely false and that their “blameless” employer always compensates their workers in line with the market and within the salary range for all positions. And of course my snarky response to that is, “sure they do.” I have interviewed a countless number of workers shortly after they have been promoted and they specifically told me that they were getting paid significantly below (sometimes even double-digit %) the market rate and/or salary range for their new position (companies still have the arrogance to think their workers won’t find out the salary range).

Although I understand that not everyone is a victim of a corporation’s salary stealing methods, I can say that there are many organizations that employ these tactics at the expense of faithful, hardworking employees. I am of the belief that in the long run, companies that engage in these practices will eventually lose in at least two ways. First, their underhanded ways will force their once faithful, engaged worker to look elsewhere for fair compensation. Lastly, the victimized few that decide to stay will become jaded, actively disengaged workers who will literally destroy the company from the inside out (disengaged workers cost companies billions).

Down goes Goliath…

Corporations once had the advantage of having salary figures cloaked behind the veil of limited access to information. And then came the internet and now workers are no longer the underdog because salary data is readily available for anyone willing to put forth minimal effort to obtain it. When (not if) workers find out that their employer is paying them significantly less than their colleagues and/or the market, the company will inevitably feel the pain of a worker scorned. And speaking from my own experience with this matter, that pain does not easily go away if it ever does.

If you had your salary stolen by a greedy corporation, I’d love to hear your story. Likewise, if you disagree with the points made in this article, I’d love to understand your experience and perspective. Constructive dialogue helps everyone grow smarter.

-Steele

A Champion’s Cause:

“No one sat me down and taught me this stuff. I had to learn it all on my own by bumping my head and watching others do the same…so I freely give away all that I know to help others just like me.”

- Steele A. Champion

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33 comments on “Is Your Company Stealing Your Salary?

  1. MarySPHRPro says:

    Wow. Very brave article that will be sure to raise some eyebrows in the HR community. I commend you for having the guts to expose these practices because I’ve seen this done over and over again and employers get away with it. This is good information that needs to be more prevalent.

    • Steele A. Champion says:

      Mary, thank you for your feedback and for being brave enough to be the very first comment! I’m not afraid to tackle the issues that’ll truly help workers – that’s why we created TLTB. Keep checking back and thanks for joining the email list – you’ll be happy you did. – Steele

      P.S. – I knew this was a sensitive topic but it needs to be addressed…so let the haters come on out.

  2. SLucas says:

    Everyone knows that the salary you negotiate when you first get hired is the most crucial component of your current and future compensation projections. I always figured that businesses paid their wokrers less than what they should have paid for that promotion but I had no idea how often that occurred.
    Fortunately for me, my pay is fair because I know exactly how much I get paid per the market and my fellow co-workers because I have access to everyone’s pay. And yes, there are big gaps in what someone gets paid versus someone in the same role…some of it is education and experience but I have seen new people get paid a lot more than the folks that has been there years before them with more experience. I agree with Mary that this might make make some folks angry. Keep at it.

    • Steele A. Champion says:

      SLucas, glad to hear that you’re getting your fair share. And as you see everyday in your role, people are literally getting “short changed” (pun intended). I’m glad you enjoyed the article and we value your feedback. Keep checking with us. – Steele

      P.S. – I knew this was a sensitive topic but it needs to be addressed…so let the haters come on out.

  3. Brad says:

    When I first started my career, I accepted a salary that I would eventually regret. After research and talking to a few coworkers, I realized that I was being underpaid. That was a lesson that I vowed not to ever fall victim to again. Since then, I’ve learned how to negotiate. You can’t be a fool twice.

    Thanks for the post, it let’s me know I’m on the right track.

    • Steele A. Champion says:

      Brad, you’re dead on. Like me you should vow to be fooled only once. Thanks for your feedback and keep checking back for more helpful content like this. Thanks for subscribing…you won’t be let down!

  4. Ellen1129 says:

    I’m currently retired, but I must say that when I was in the workforce, the companies that I worked for had my best interest in mind as I climbed the ladder. People in my generation worked at companies a little longer and had more loyalty. So although I agree with some of your post, I don’t think it’s fair to bucket all companies into 1 category and accuse them of not paying within the salary range, when in fact some companies really care about their employees and offer competitive salaries.

    • Steele A. Champion says:

      Ellen,

      I certainly appreciate your feedback and encourage healthy discussions like you’ve created here. Yes I understand that some companies do the “right thing” for their workers however (and most unfortunate), in my experience and research that tends to be the exception. Most companies jump at the chance to hire an internal for many reasons one being to save some money on salary. Anyways, thanks and keep checking back for more juicy stuff like this. Have you considered subscribing for emails?

  5. doctormoe says:

    Another way is how costs are moved between cost centers to manipulate lower level budgets in order to reduce bonus payments based on profitability and other revenue or expenses

    • Steele A. Champion says:

      Doctormoe, that’s interesting. I’d love to hear more about this because it seems that you have some knowledge of the “behind the scenes” workings of large corporations. Please do share how you’ve seen this moving cost between cost centers work (if you dare). I’ll send you an email.

      Either way, I appreciate your feedback and keep checking back for more useful articles like this.

  6. Joe says:

    Holy hell…
    It took me seven years and four internal promotions to finally figure this out on my own. I was very happy at my current company. I was contacted by a recruiter and the damn broke after that. I came to the realization that I was being underpaid by almost $30K. We all knew that promoting from within was something that companies loved to toot their horns about, now we finally realize why.

    • Steele A. Champion says:

      Yep Joe, that’s how I felt when I went on an interview and was told the salary would be almost double what I was currently making. Although I didn’t get the job, I felt so empowered to know that someone else valued my skills and was willing to prove it with $$$. At the same time I became infuriated and disengaged with my current employer because they were clearly and knowingly screwing me.

      Glad you enjoyed the article and thank you for sharing your experience. It will undoubtedly help someone else. Keep checking back and subscribe to our emails if you haven’t already. – Steele

      • Joe says:

        Thanks for the reply Steve. I got on the email list and even added a few words to your list. Hope they make the cut!

  7. Joe says:

    Damn, sorry Steele…didn’t mean to botch your name.

    • Steele A. Champion says:

      No worries Joe, “Steve” is much better than some of the things I’ve been called (by accident and on purpose). BTW, we’re reviewing your buzzword submissions and will get back to you shortly. We appreciate the input.

  8. Kim says:

    This literally just happened to me. I was interviewed and selected as the internal candidate for a director position. I was offered a 10% increase. However, they made it effective on the first day of the new fiscal year, which also happens to be when I would have received the annual 2% cost of living raise. Therefore my raise is in all actuality only 8 % higher than my original salary. Pretty sly..

    • Steele A. Champion says:

      Kim,

      While I’m happy you received a promotion, I’m bothered (but not surprised) that the company shorted you of your well deserved increase. Nevertheless, congrats again and thanks for stopping by. Keep in touch and I’ll be launching a site dedicated to salary and compensation called http://www.salarymatters.com – check it out when it launches! SC

  9. CeCe says:

    Just like that, the last few scales have fallen from my eyes. I have been in a tailspin for the past week trying to understand why I was offered a promotion and being restricted to a 10% raise, when the posted position starts $6k higher. The director jokes “You’d probably be better off quitting and reapplying in 3 months.” I’m so disappointed in my naiveté. I thought I had found my dream job and company, but clearly I will never be paid based on my skills, portfolio, or the market here. I suppose it is fortunate I’m learning this early in my career. Thank you for the frank article (…and confirming my suspicions).

    • Steele A. Champion says:

      Cece,

      Yep, that’s exactly how I found out as well. I worked my tail off to get the promotion I thought would yield me a sizable increase when in fact, I literally got paid $30K less than a poor performing colleague of mine for the exact same position I was excelling at. It’s a dirty game but there is hope and you have the power–I say get out there (if you haven’t already) and get the pay you rightfully deserve.

      Keep in touch and I’ll be launching a site dedicated to salary and compensation called http://www.salarymatters.com – check it out when it launches!

      SC

  10. jamie says:

    Thank you for this, I am going through this right now and am being offered 9% when it should be closer to 30%! They actually said “Its better than nothing”. I initially declined the “promotion” only to have management try to bully me into taking their disappointing offer. I have not given them my final answer…yet.

    • Steele A. Champion says:

      Wow Jamie, I’m sorry to hear that they tried bully tactics to get you to take their crap. It’s a shame but kudos for standing up to them. Let me know how it went. And please keep in touch. I’ll be launching a site dedicated to salary and compensation called http://www.salarymatters.com – check it out when it launches!

  11. Lucy says:

    Hi, I can totally relate to this article..this is happening to me as we speak ..I manage 3 teams that are in two different areas of the business and get underpaid even though co-workers that have the same job title as me manage one team and have less responsibility and manage just one area.
    I progressed internally and get paid £10,000 plus less than the other managers.
    I’m at abit of a loss currently as I work extremely hard, stay late and supply support to other team managers..What can I do..leave? There is the 10% increase rule when promoting internally..well that’s at least what they want us to think…I’ve known other internal candidates get more so this so called rule makes no sense…
    If your brave enough to mention any of the above it puts a black mark against your name …I really do love my job and I would be sad to leave..I am most definitely a single point of failure

    • Steele A. Champion says:

      Hello Lucy,

      I hear you. And it’s workers like you that make me scratch my head as to why any organization would want to screw around with your pay when in the end, if they were to lose you, they’ll lose way more money than they would if they were to pay you what you deserve. I cannot, for the life of me, understand the logic around that. I’m sorry to hear about your disenfranchisement and would offer you a bit of advice: at the end of the day, you have to take care of yourself. And if it means that you have to leave in order to properly do that, then I would consider that option. That’s my two cents for what it’s worth.

      Keep in touch and I’ll be launching a site dedicated to salary and compensation called http://www.salarymatters.com – check it out when it launches!

      Steele

  12. Jacob says:

    just wanted to take the time to comment. i actually really appreciate that you are showing some of the reality of the situation. some articles on the internet really try to sugar coat it, and ‘keep people dumb / happy’. the reality is this article is talking about the type of stuff that goes on in the real world. We need more articles like this. it may stir the pot. So what. That is just proving your point even more, that this stuff is going on, and is really just an effect of you bringing light on it. just sitting there and stupidly justifying being taken advantage of is ridiculous. that is what they want you to do. if HR execs hate this, it’s because you are exposing their bullshit, and fuck them for doing it. the best way to have a thriving company is to follow the golden rule. your team will bust their ass because they believe in what they are doing and want it to succeed, instead of just doing bare minimum because they need a paycheck

    • Steele A. Champion says:

      Jacob, I’m literally screaming – hell yeah! I love your energy man and yes, I’m going to continue to expose there fraudulent ways because they’ve gotten away with it way too long and NO ONE is saying anything about it. Well I am! Seriously, thanks for the feedback and encouragement!

      Keep in touch and I’ll be launching a site dedicated to salary and compensation called http://www.salarymatters.com – check it out when it launches!

      Steele

  13. K says:

    I have found myself victim to this exact cause. $ grabbing obsession by greedy senior mgt. I have worked out that over the last 5 years, my role has expanded greatly, yet my salary remained the same. I knew I was undercut yet the cost of going elsewhere outweighed the cost of moving on. over time this gap increased dramatically due no pay rises and enterprise bargaining. Now I am underpaid in excess of 40% of my current salary.
    They have just hired someone externally to undertake a much lower level role and this person is receiving a salary $40000 more. I have taken my case (full business case and documentation and justification) to senior mgt and was ignored.
    Time to move on. I feel for the staff remaining as they are the ones who will get dumped on to pick up the pieces after my departure. It will have no effect on senior mgt in any way whatsoever. The really sad thing about this is I am a very highly skilled professional (in a field under high demand) and I know they will need to employ at least 4 people to replace what I do.

    • Steele A. Champion says:

      K, shame on them. Shame on them. Again, this further proves my point that it doesn’t make any sense to short change your workers–especially the most valuable ones. Some corporations should be smarter but they are not. Instead, they are greedy and careless. And then they turnaround and spend tens of thousands of dollars to figure out “why are my workers leaving.” I’m on a mission to change this. Thanks for stopping by and I wish you well in your future endeavors. Trust me, the pay you deserve is right around the corner!

      Keep in touch and I’ll be launching a site dedicated to salary and compensation called http://www.salarymatters.com – check it out when it launches!

      Steele

  14. jim says:

    Hi Steele,

    Had a crazy recent experience at the large firm that I work for.

    I was an overtime-eligible employee and made approx 5k above my base.
    I got promoted to AVP, got my base raised by 3k and no-longer overtime-eligible. So, yes you got it – in fact I am on less salary now AFTER my promotion than before. I am technically bonus eligible, but for next year -and also bonuses max out at 3% here, so I STILL will be making less. Totally sucks, totally unreasonable. I’m about 20-25% below market rate for my position.

    I got the usual BS about how good my work is, and how much they value me. But we all know, the only thing that matters when an employer rates you is – how much $$$ at the end of the day. Nothing else really matters in terms of overall opinion.

    I’m trying to get out of here ASAP, but what would you recommend in the meanwhile?

    • Steele A. Champion says:

      Hello Jim,

      I apologize for the delayed response. I totally understand your situation and I do not believe that your promotion “just so happened” to make you ineligible for overtime. I hate to say it but I agree that seems awfully convenient for the company to save a few bucks. That said, I would recommend, if you haven’t already, that you begin to apply for external roles that is either equivalent to your current job or technically a promotion (but only apply for a higher role if you feel like you’re qualified and ready). Because you said that you’re significantly underwater at your current firm for your role, an equivalent role at another firm should get you into the market rate just fine. But be careful about sharing your true salary history when they ask for it.

      In the meantime while you’re patiently waiting on your next opportunity to realize (you can be picky since you have a job), I’d highly recommend that you partner with a mentor at your current company—someone who is in a role that you’d like to have someday. Mentorship at the current gig is one of the most overlooked opportunities that workers fail to take advantage of. It’s so much harder to get that knowledge and experience outside of the context of the office.

      I wish you well in your endeavors and please stay connected. I’d like to hear how it turns out for you…I’m sure everything will work out. I’ve been working OT to launch a site dedicated to salary called: SalaryMatters.com – it will be launching soon. Please stay connected.

      SC

  15. Karen says:

    I’m in tears as I read your letter because this is my current situation EXACTLY in ever single way. No raise in 8 years despite asking for 18 months, received a “promotion” to an excellent yet very demanding role, and finally offered the raise for the “old” job and no compensation or retro pay for the new role that I was semi-forced into over a month ago. So currently doing a majority of three positions for the pay of one and no chance of a fair wage. Way to go corporate America!

    • Steele A. Champion says:

      Karen, sorry this article created such an emotional response for you. The leader(s) at that company should be ashamed of themselves for not doing what’s right. It’s companies like that don’t deserve loyal, hardworking, sacrificial employees such as yourself. My suggestion for you is, if you haven’t done so already, begin to find another company if it works for your situation. You deserve better and my recommendation is to go out and get the pay you rightfully deserve. If there’s anything I can do to assist you in anyway, feel free to reach out to me directly. I’ll send you an email with my contact information.

      Best,
      Steele

  16. green says:

    100% agree. These companies are bullying employee, not looking after their employee. Want a higher pa6, do not feel sorry to leave for another company. The tricky part is you will need current employer’s reference.

    • Steele A. Champion says:

      Hello Green, you’re right, this practice is a form of bullying when you think about it. In many instances, the employee does not have much of a choice when it comes to “forced promotions” where the company eliminates their current job and forces them to take a “promotion” without the pay increase or else they’ll have to find another place to work.

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