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Compensation

Find out whether your pay is fair, and what you can do if it isn't.

What to understand about how pay works

Pay tends to be decided by a system more than by a person. Most companies set a range for each role and level, fix a budget for raises once a year, and hand each manager a small pool to divide. So by the time you sit down for your review, the money has usually been spoken for. Your manager is often an advocate working inside a budget, not the one who decides. That can feel impersonal, and in a way it's a relief: the number is the company managing its costs, not a verdict on you.

The room to move sits in a few places. One is the offer, when a company wants you and hasn't yet fitted you into its ranges. Another is a change of level, since a promotion moves you into a new range where a good year only moves you within one. The third is timing: an ask made months before the budget is set gives your manager something to argue for. And salary is one line among several. Time off, flexibility, a bonus or a title can sometimes move when base pay can't.

The hard part is that a good case, made well, can still get a no, and sometimes the fair price for your work is only on offer somewhere else. It also runs the other way. You may look into it and find you're paid about right, and that's a fine result; leaving it alone is a real choice. Pay is the easiest part of a job to count, so it often stands in for feeling valued. It's worth checking which of the two is actually bothering you.

What people often get wrong about pay

  • You might think“What I'm paid is what the company thinks I'm worth.”
    More oftenIt's closer to a record of circumstances: when you joined, what the going rate was that year, which level you were placed in, and how much there was to share out since. Two people doing equally good work are often paid differently for reasons that have little to do with either of them. Seeing how your own number was arrived at tends to take some of the sting out, and shows you which part of it could move.One thing to try: Understand how pay is decided where you work →
  • You might think“If my work is good enough, the raise will come without my having to ask.”
    More oftenGood work matters, but it rarely speaks up for itself. Plenty of managers would be surprised to learn that someone on their team wants more, because nobody told them. Saying it once, calmly, is often what gets you onto the list.One thing to try: Ask what a raise would take →
  • You might think“If I push back on an offer, I'll look greedy and they might take it away.”
    More oftenRecruiters generally expect a counter and tend to read a polite one as a sign you take the job seriously. A single clear ask with a reason behind it rarely costs anyone an offer. Some companies do make firm offers, and they'll usually tell you so.One thing to try: Counter an offer without drama →

Things to do when you're wondering if you're paid fairly

“I have a feeling I'm behind, but I couldn't tell you by how much.”

A nagging feeling is hard to act on. These swap it for a few facts: what the work pays elsewhere, what you already get beyond salary, and how your own company arrives at the number.

Things to do before you ask for a raise

“I want to ask. I just don't know when, or what I'd say.”

The ask itself is the short part. What comes before it does most of the work: learning what your company likes to reward, hearing what a yes would need, and gathering the evidence while it's still fresh.

  1. Step 1: Ask what would make them glad to pay you moreLearn what your company rewards long before you ask for anything15 minutes
  2. Step 2: Ask what a raise would takeOne question that turns someday into something you can work towardAbout 15 minutes
  3. Step 3: Keep a running wins listFive minutes a week, so review season isn't a dig through old email5 minutes a week
  4. Step 4: Build your raise case from your receiptsTurn a year of scattered wins into the page your manager needsAbout 45 minutes
  5. Step 5: Ask for a raise with your case in handThe right moment, a clear case, one number, then let it landAbout 20 minutes

Dealing with something else at work?

Things to do after you've heard no

“They said there's no budget right now. So is that it?”

A no usually has a reason behind it, and the reason tells you whether to wait, ask for something different, or start looking around. These help you get to the reason and decide what it means for you.

Things to do when you have an offer in hand

“I got the offer. I'm thrilled, and I really don't want to fumble the next part.”

Between the offer and your answer there's a short stretch when you have more say than you will again for a while. These slow it down just enough to use it well, and to stay on good terms with the people you're about to work with.

  1. Step 1: Take a day before you answer an offerSay you're thrilled, then ask for the details in writing and a day5 minutes
  2. Step 2: Compare the whole offerYou don't live in a salary. Line up everything else tooAbout 40 minutes
  3. Step 3: Know your walk-away pointDecide your line before the call, not during it15 minutes
  4. Step 4: Counter an offer without dramaOne clear ask, one good reason, and no hard feelings after15 minutes

Things to do when part of your pay is equity

“Everyone says the shares could be worth a lot. Could be.”

Equity is the part of pay that's easiest to overvalue and hardest to check. Start with the questions to ask your own company, then read whichever explainer matches the thing you didn't follow.

What your pay depends on

  • Company size

    Larger companies tend to have written levels, ranges and a yearly cycle, which makes pay more predictable and harder to bend. At a small one it may come down to one person's judgment, so there's more flexibility and less to check your number against.

  • Company stage

    Young companies often pay partly in hope, with lower salaries and a share of a future that may or may not arrive. Established ones lean toward cash, bonuses and benefits you can count today.

  • How the company makes money

    Pay tends to follow closeness to revenue. The same skills are often worth more where your work is what the company sells than where it's a cost the company is trying to keep down.

  • Where you live

    Many employers set ranges by location, and remote roles may or may not follow you if you move. In some places the law now requires a pay range on job postings, which makes fair-pay questions much easier to answer.

  • How long you've been there

    Yearly raises for people who stay often trail what the company offers to bring someone new in. The longer you've been in one role, the more worth it to check whether your pay has kept up with the going rate.

How compensation changes through your career

  1. Starting out

    Your first salary matters more than it looks, because later raises are often worked out as a share of it. You have less to bargain with, but asking politely about the range costs little. It's also the cheapest time to learn how pay gets decided where you work.

  2. A few years in

    This is often when pay drifts. You've grown faster than yearly raises tend to, and newer hires may be coming in near you or above. Looking at the outside market, and asking whether your level still fits your job, both become more useful than they were.

  3. Senior

    More of your pay may arrive as bonus or equity, which makes it larger and less certain at once. Ranges get wider and less written down, so what you negotiate counts for more. So does having someone senior who will argue for you when you're not in the room.

  4. Later on

    You may be near the top of the range for your role, where raises slow however good the work is. The question often shifts from how much to what for: time, flexibility, security, work you'd choose. Some people trade pay for those on purpose and are glad they did.

Compensation terms worth knowing

Total compensation
Everything you're paid added together: salary, bonus, equity and the value of benefits. It's the fairer number for comparing two jobs, though some parts of it are far more certain than others.
Pay band
The lowest and highest salary a company will pay for a given role and level. Where you sit inside it often explains why a raise is easy or hard to get.
Merit increase
The yearly raise tied to your performance, drawn from a fixed pool your manager shares out across the team.
Market adjustment
A raise given because the going rate for your role has moved, not because of your review. It often comes from a different pot of money, so it can be worth asking about separately.
Stock options
The right to buy company shares later at a price fixed today. They're only worth something if the shares end up worth more than that price, and buying them costs you real money.
Strike price
The fixed price you'd pay per share to turn your options into stock.
RSUs
Shares the company gives you outright over time, with nothing to buy. More common at larger and public companies, and usually taxed as income when they become yours.
Vesting
The schedule on which equity, or an employer's retirement match, becomes yours to keep. A cliff is a waiting period at the start before any of it does.

When you have more time

Questions people ask about pay and raises

I found out a colleague in the same job earns more than I do. What now?

It stings, and it's also useful to know, because it tells you the range goes higher than where you are. Gaps like this often come from when someone was hired or what they negotiated on the way in. Asking where you sit in the range for your level, and what would move you up, tends to go better than bringing their number into the room.

Understand how pay is decided where you work →

A recruiter asked what I earn now, or what I'm expecting. Do I have to answer?

Generally not, and in some places employers aren't allowed to ask about your current pay at all. A friendly way through is to ask what range they have in mind for the role, since they nearly always have one. If you do name a figure, it helps to have looked up the going rate first, so it reflects the job and not your history.

Ten rules for negotiating a job offer →

I resigned and my employer offered more money to stay. Should I take it?

It depends on why you started looking. If pay was the whole reason, the counteroffer may simply be the answer, and it's fine to say yes. If it was the work, the manager or the lack of anywhere to grow, more money tends to make that easier to live with for a while and no longer.

Weigh a counteroffer against why you looked →

I manage people. How do I get someone on my team a raise they've earned?

Start earlier than feels necessary, because the budget is often shaped well before review season. Whoever approves it will want to see what this person's work changed and how their pay compares, in a form they can pass up the line. And tell your report honestly what you can and can't promise while you try.

Build the case for your report's raise →

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