Got 1.5% raise after a year at job. Now what?

I'm on job #3 since graduating from college 10 years ago. The average raise amount I've gotten each year staying at a job has been 3.7%. The average bump in pay I've gotten changing jobs has been 15%. This is despite receiving an excellent performance rating every year, for 10 years, at each of the jobs. The reality of the job market today, especially at big public companies, is that the framework in which they operate does not allow them to give large awards to good performing employees.

Usually the only way to increase your pay is to get another job or threaten to leave your job if you don't get a raise. Threatening to leave is generally a one-shot deal and will probably paint a permanent target on your back.

My sad advice to maximize earnings is to stay at a job for 2-4 years then move on for a 15-20% pay raise.

My experience has been almost identical to this and I too find it sad. Why does it have to be like this though?

Why do you feel sad about this advice?

For a couple of reasons:

1. You may find yourself doing work you enjoy and have a great boss but realize the pay is no longer competitive (and has no potential to ever become competitive). There's risk in leaving and landing in a place where the work sucks and you make a lot more money, but is it worth it? It's sad to leave work you enjoy knowing your boss desperately wants to reward high performers but is stuck playing a shell game with an arbitrarily fixed award pool.

2. I've come to realize that, even to engineering companies, doing good work is rarely the thing that leads to rewards (promotions, bonuses, raises, etc.). You'll do great work that is very valuable but watch some idiot politic his or her way into a position of influence and get rewarded for it. I used to think this was just an isolated incident but now that I'm on job #3 I understand this is just how the world turns. So when you go to look for a new job to get your 20% raise, unless you have a source to tell you how it really works on the inside, there's no way of knowing if doing good work is the thing that will be rewarded at this potential future job.

3. If you're good at getting things done and leading others you'll inevitably accumulate leadership tasks. So you'll be doing your work but also naturally end up leading the team around you. Many companies have specific slots or job titles allocated to "team leads" or similar. Unfortunately, these positions rarely go to anyone who is new (<5 years at the company). Of course everyone knows that it's rarely worth ($) staying at a job for more than 2-3 years, so who gets the leadership positions?

People who:

(1) Stay because they like their job and don't care to make more money (these people may or may not have any leadership ability)

(2) Want to leave to make more money but cannot find a job anywhere else

(3) Have some arbitrary characteristic, unrelated to actually doing any real work, the current leadership finds very important (Example: The VP of a large division wants more clout at conferences so they hire and promote PhDs into leadership positions. Why? Because within their award framework the only way to reward them is through promotions.)

This is sad because if you'd really like to stay in that "team-lead" position, or move into project management, every time you take a new job you have to start over. You get better at convincing your new boss/coworkers you're capable of this work but it's difficult to go from engineer at one company to team-lead at another. And realistically, if you never stay at a job for more than a few years is it worth promoting you into leadership positions? It's a catch-22.

Step 1. Start quietly looking for another job that pays 20% more than you currently make. You'll likely find something.

Step 2. Take the new job.

Rationale for not making a stink with your current employer or negotiating with them once you have an offer:

1. right now you likely feel some combination of under appreciated, used, taken advantage of, etc. and that feeling likely won't change as time goes on. You are likely not wrong for feeling that (even if you suck and are lucky to not be fired). The compensation system didn't meet your expectations and there is really no way to remedy that.

2. Current company will likely not match a 20% bump and if they do it will further the aforementioned feeling of being taken advantage of.

It's time to move on.

You get raises in this industry by changing companies. Nobody will ever give you more than a few percentage points as part of a standard end-of-year review.

It sounds like you might not have known this before, so at least now you do. It doesn't help to complain about it to your manager. They know what they are doing. And they'll know why you left when you do.

If you are better now than you were when you started, then it might be time to start interviewing. Take a new gig that pays more. Repeat every couple years until your market value is where it needs to be.

It's a sad state of affairs, but in absence of any way to change it, the best thing to do is act accordingly.

Somebody up the food chain had xyz budget for raises. They made a spreadsheet with 3 column last years salaries, 2% of that salary and new pay. hten they started tweaking it. Well, I can't lose jim and he's in the top 1/3 pay band he deserves 2.5 where's coming from? Peter going to fall below the 20% pay band range so I need to give him 3% so he doesn't fall out of the range. Shit, Tony's in the top band and he's doing pretty good so will give him 1.5% that'll offset bigger raises for jim and peter.

I've taken similar pay cuts in the past. It does suck. The answer almost always is to let your boss know (very gently) that you expected more. If they say no, start looking (casually) for a new job. If you can find one that pays more, either take it or show your boss the offer letter and ask for a better raise. If you can't find one that pays better, then yeah, you're getting the best you can. Either increase your skills and build your resume until you can find one that pays better, or just figure out if money is the ultimate goal or if there's something less tangible at the company that makes you happy.

I stayed with a company after they gave me a 0.25% raise in a year. I stayed because I loved the company. As soon as that was not true, I started looking for a place with a similar benefit package but a higher salary, and I found one. Talk to your boss very casually. Don't demand more money, but let them know you expected more and ask what you could do to earn a better raise in the future. If there is nothing you individually can do that will impact your future earnings potential at the company, that company is just a short-term step on your long-term career roadmap. Enjoy it while it lasts, and keep one ear to the ground for better opportunities in the future.

Find a new job. Biggest raises I ever got were when I quit and looked for a new job.

My second job after graduation actually meant almost 100% pay raise. After that it slowed down but I still usually get extra 10-20% every time I switch jobs.

Not sure if I understand your situation. You're both not happy with your salary and you won't be able to get a job in another company that pays better.

I would be pretty happy if I were in your situation.

A raise of 1.5% is basically a pay cut over last year. Sure he may be getting overpaid compared to competitive salaries, but they offered him a certain amount of money last year. This year they're basically paying him less than they did last year.

It's completely possible to be overpaid and also unhappy with your salary. Inflation exists, and nothing is immune from it. A pay cut is still a pay cut.

Inflation was 1.3% last year. I wouldn't call a 1.5% raise pay cut.

Hm, you're right. I hadn't realized inflation was so low last year.

I stand corrected, but I think the (corrected) statement holds true. Maybe not for this particular case, but if you get a raise that's less than inflation (or no raise at all), you're taking a pay cut and have every right to be upset.

I say this a bit tongue in cheek because a large Corp doesn't think like this, but did you add more value to the firm in the past year than the first six months? If not, why would you expect to get a raise above inflation? At smaller firms if I had the work record to back it up raises were actually negiotable. Bigger firms not so much. I once worked for a big bank. Before I started outsiders told me 2 "law's" that ended up true. 1) Get paid as much as you can up front because your pay will never change year to year by more than 4%. Starting salary is an anchor with very thick chain. 2) The severence package is awesome than so old timers won't leave voluntarily. Made for a really unhappy workforce. Good times.

Raises are basically useless to depend on these days as a way of increasing your income. In my 15 year career, I have seen an average of 2-3% raise and the highest I have seen is 10% when I got promoted. The fact that your salary is above average also plays against you, as most big companies have a formula for raises that is based on local market salary for a similar role. If you want to make more money, moving jobs, or getting promoted is the way to go, not raises. Another thing to consider, you have been in this role for only 1 year. Establishing trust takes time. If you are a rockstar developer, ask for more responsibility and get on the promotion track.

If you are paid above average, it will be harder and harder to get big raises...

So finding a new job that will pay 20% more is probably unlikely...

The question is do you like the people you work with, do you have fun at work?

If yes, try getting other benefits, like going often on paid training/conferences to improve yourself, maybe company paid MBA or my favorite: working from home - for me this and my team is what keeps me from early retirement...

If you don't like it anymore, find another job, but the grass is not always greener on the other side...

Universal law of employment: Unless you are a 10x developer, to get a decent raise, you've got to switch companies. They'll squeeze you for every ounce of work otherwise.

You have no BATNA, nobody is going to give you "what youre worth" (they literally do exactly that)

This is normal. Many employers never offer raises at all. Who cares? The real raise will come when you take the experience you've gained and move on to your next job. What's a few per cent here and there when your next job transition will likely increase your salary by 10-50%?

Know the Numbers!

it's hard to find an answer to question 1, as those who know the answer don't want to make it public, but my guess is it's "whatever they feel like" depending on many factors. Those factors can be out of your control or not (budget issues, crappy project where your skills didn't shine, or you preferred taking it more easy because of your life choices)

If you salary is above average and you won't find companies with better salaries, then you're probably one of the highest paid in town, you should feel good about this. But if you know other companies around who pays better, then one course of action is to apply to those in hope of a better salary. If you have friends in those companies, try gathering information about their past year raise and their salaries. Try gathering information about friends in your current company too, but not close co-workers, as they might feel uncomfortable discussing this. Instead, since you're in a big company, ask people in a team far away from you, you don't need the exact number, but at least an approximate that you can use in your talk with your manager. Try to find the policy at your company, if they say somewhere (could be in your offer letter) the yearly raise is between 0 and X%

Regarding question 2: yes you want to make it clear that you want a bigger raise, but you don't want to appear greedy. You can mention cost of living in your town, the raises that your friends in your company got, or it's even better to mention the raises your friends got at the other companies, this will give a cue to your manager that you know you could get a better deal somewhere else. Don't say "I want more money", but instead show that there's a sound reasoning about why you want more money : The cost of housing is going up significantly, you want to start putting money aside for a future down-payment, inflation rate is X%, etc. Since you did a good job you think the You today is a better asset to your company that You last year, because you now have expertise in X, Y, Z, and delivered A, B, C ... , so you'd expect a raise that reflect this, accounting for inflation of course. Assuming you know the policy about raise between 0 and X%, and let's say last year you only got X/3% , you could say that you've made a lot of progress this year, try to make your manager acknowledge your accomplishments, and once he does, say that as an above-average you expect at least X/2% given the annual raise policy is between 0 and X%. Since inflation was pretty strong this year, you'd expect even more to catch up.

Finally, you might find useful advice on how to approach these kind of situation, better written, in the book "Getting to Yes"

Find a new job!