What a new manager learned about compensation

Deciding on compensation and raises isn't as simple as many employees think.

Follow @ITCatalysts Dear Bob ...

Awhile back you gave some advice about how to negotiate a better salary ("How to negotiate better pay," Advice Line, 10/3/2008). I thought it might be helpful to describe the same request for a raise from the manager's side of the table.

When I made the switch from grunt employee to managing employees, I had my first insight into how companies determine salary. I have the luxury of working at a company that does yearly reviews, with a salary adjustment at the end of the process. (I love how they use the term adjustment instead of raise or increase).

Anyway, my manager at the time sat down with me and we ranked the employees first based on who does the best work. There are all kinds of things to consider here. Two examples:

• Some employees stay late all the time, giving the impression they work hard. But they take longer to complete work.
  

• Some may leave early because they have family, but they work from home later. Some do good work, but not outstanding.

After the initial ranking, we adjusted the list based on other criteria, Bobby is already paid more than Peter, but by the previous rank, Peter does the better job. So we need to give Peter more. We considered which employees would really hurt us if they left, which ones we could replace easier. We even got down to Cindy just moved to an area closer to the city, where jobs are easier to find, and she's already high on the rank list. We need to give her more as incentive to stay here.

We also went over non-salary perks, like training classes/conferences, flex time, etc., to see if there were things we could do instead of giving more money.

Overall, the experience opened my eyes to a lot I never really thought about. It changed my opinion about how valuable I am, and where I would rank myself. I look at work as more of a competition. And I thought your readers might benefit from the same insight.

- Comp Newbie

Bob's Last Word: I thought so too - thanks for sharing this.