It really bugs me to have to waste the time to change providers for everything every ~2 years, but I'd feel like an idiot if I left thousands of dollars per year on the table. It's a stupid game, and companies are not immune.
It's a bit iffy since if everyone did this all the time the incentive to advertise low rates gets removed. As an individual bonus, though, it means you don't need to do all the paperwork it takes to change providers.
There's no way for me to get the same plan at that price if I was a new customer.
Knowing that I'm continuing to upgrade while doing nothing increases my satisfaction and I haven't even shopped around since I switched to them.
Hofer is better known as Aldi, they're a big discount supermarket chain owned by a German family. https://en.wikipedia.org/wiki/Aldi
As a side note the same family (two brothers) also own Trader Joe's although it's a legally separate business.
I did find it strange that I went to an energy rate comparison site and my current provider offered met 150 euros to stay for another year. Guess I should also call them every now and then.
A telco wants new customers. The way to do it is price, but lose if they cut everyone's price by 20% to gain 10% more customers. So price selectively.
Companies want to hire the most when the market is best (that's why the market is good). That might require 20% higher salaries, but they don't want the whole salary bill to increase. So, they selectively "price" new hires (and usually also people who get competitive offers).
In both cases, this also increases tension. Employees/consumers realize that they can get more if they switch. But switching is effort, and not everyone will make the effort. Not everyone will get completing offers either, so from the company's perspective it will always be more expensive to price match the best offer and offer it to everyone.
Btw, it also works the other way, in bad markets. In bad labour markets, the salary you have is probably better than the salary you can get, and new hires earn less.
Here, the company management hears about low wages their competitors pay and fume that it's impossibly hard to lower salaries across the board.
Overall, I don't think it's that bad a thing. It seems stupid when you're caught in it. Why do I need to change jobs/bank/plans just to get "market rate?" Systemically though, it helps create dynamism.
You aren't supposed to in a job or Telco plan for life.
Here, the company management hears about low wages their competitors pay and fume that it's impossibly hard to lower salaries across the board."
ohhh, you're a young one, no? Companies do that all the time, by closing entire divisions, calling it "restructuring" and making your above the market salary disappear over night by re-branding the positions. That's how they do it legally. Fire you because your position doesn't exists anymore and hire you again if you want at a lower salary doing the same job with same tools and even same PC/chair.
Take groceries as an example. My sister in law wants convenience. She rolls into Whole Foods on the way home from work and drops $50 on stuff for dinner. My wife is price sensitive... she does coupons and shops aggressively. Last year those savings yields almost $15k.
Also, relying on the opinion of other companies to determine the value of your own employees is completely backwards. Nobody had better data to determine the value of your employees than you do. Other employers basically have to make a stab in the dark at what someone's worth, and maybe not extend the contract if the new hire turns out to disappoint. As the current employer, you should know how good your people are.
Set up a fair, proactive, and objective way to obtain more money, and never deviate.
And there may not be enough of a tech scene in a city or region to bootstrap such a database easily.(assuming we're concerned specifically with tech/software salaries)
It doesn't get you "Hey! That bozo now earns £20K more than me"
If one company tries to poach me, should I simply keep it to myself that there is someone who is willing to pay me much more?
You clearly need to be someone your manager is willing to fight HR in order for this to work. But it’s been effective for me.
The people that want it both ways are stuck, generally. You can't like the job you are at and also demand more money if you aren't willing to leave. BATNA and so forth.
While I liked some people at some companies, I never liked company cultures. So I based decision there on the kind of work I had to do and the payment.
The question is if it works, that is if people indeed prefer stability and status quo so much that they are ready to earn less or pay more for a service. Probably this is not that easy to verify, as, for instance, employee might indeed stay and get lower compensation, but would also be less productive (if they fire me, I'll just find something else, probably better paid) and less creative (they pay me less, I have no incentive to improve "their" company).
In IT I seriously doubt it since it's so easy to take a leap forward. And it's a huge question who are those people who choose to stay even when they feel unrewarded? If they do it for a fear of change or just being too lazy or unmotivated to bother with it, it can become a huge problem for a company. As those employees hang around and climb the hierarchy such bureaucratic mindset can seriously hurt company's agility and water down everything.
There are, of course, exceptions; it's just a general rule.
Reactive counter offer raises typically don't work because the employee's mind has been made up to leave. Compensation is usually only part of why someone decided to leave.
There is no career path neither towards management nor towards principal engineer/architect
The commute is 2 hours each way and there is a strict work from the office policy.
HR is known to not provide generic references but to ask your line manager to provide references
How much money would it take for you to work in such environment?
The point is that money is only part of what makes people happy, motivated and loyal.
Truth is, counter offers happen and work out. When it's about compensation, not toxic workplace/coworker, or relocating elsewhere to live with your wife/children.
It strikes me as a reasonable attitude, and one that I've adopted too. I don't have time to be constantly checking the market; if I get a better offer, either you can't afford a counter-offer, or if you can, well, screw you anyway.
Thanks for that nugget of wisdom.
Personal "fun" fact. I now get about 28% more then when I startet 4 years ago. That is quite a hefty increase and something to be very happy about.
But on the other hand, due to a change in my role I now have insight into how much others in my company doing the same work make. Often with way less senior roles. And I can see, that they got hired at a lower level for about what I make after 4+ years in a more senior position.
So now I feel insulted, because I know - even after having risen in money, that I am still being not payed adequately.
For comparison: I am talking about 1/3 less then others in my seniority level. That equals about what intermediate colleagues two levels down the ladder make.
So I went from feeling being treated good to being treated unfairly with more insights into what everybody around me gets. I love other countries (think Norway) for making this information public, as it gives a clear lever for everybody to demand fair pay.
Your taxes paid were public until 2007. Tax paid on the same income can vary up to 2x depending on your personal situation so really it was very approximate.
Since 2008 you can still request personal tax data on anyone, but not anonymously.
While technically true "taxable income" or something was public as well.
For most people in ordinary positions that would give you a reasonable idea. (It would however include everything reported in one lump sum so if you had multiple jobs and/or other taxable income that would show up as well.)
This wasn't an exact science, but you could get an idea if you were underpaid compared to your colleagues.
On the flip side, when I was younger and tried to refuse to say my current salary the recruiter would point out they would find it anyways, so it wasn't always and advantage.
I mean yeah, it's a business. If they paid him exactly what he was worth then he would make them a net profit of $0.
Companies shouldn't blame employees having no loyality then.
Having survived a few rounds of layoffs and saw colleagues let go, I said to myself "On a scale of 0 to 10, I will love this company as much it loves me -- 0".
The industry is playing a silly game.
The smart move is to accept the counter, then keep looking for something better with the negotiating position that you're paid $salary x 2. Better yet, push for a title to go with the salary that'll help you land an even better job.
This is assuming all else is equal. If you're moving on for better future propsects, because the company culture is stressing you out, or because of a lack of trust, it might be better moving on anyways.
But there's no guarantee the new lot is going to treat you any better either, and companies do what's best for them, so there's nothing wrong with playing the same games yourself.
Highly debatable, because in the real world you need to do multivariate optimization and most people can't (don't have the skills and/or desire) to be constantly optimizing their salary. Thus, choosing a company that is actively trying to fairly compensate existing employees tends to pay off in the long, on multiple fronts, not just immediate salary.
But I learned that they don't care about that, didn't I? Would it not be stupid to ignore this information? I have a chance higher than 0 at the new co...
So that's how much I was worth to you,
but you waited for me to leave before
adjusting my pay?
I mean, the business benefits that pay my salary only exist from the combination of my efforts with the company's existing business. A marginal improvement in X only makes money when combined with an X business, so of course the owner of the business and the owner of the improvement have conflicting interests about how to share the value.
As a talented professional, you are constantly in the market.
What sets the market price? Market.
Your compensation is not about how much revenue you make to your employer, but what is the market price for the resource (you) and is the employer ready to pay the market price.
When you get an offer that is way above your current rate, your explicit market price suddenly increases. Before you get the concrete offer your market price is likely lower.
Big companies have salary policies that are not necessarily about what your boss would like to pay you. When you get an offer to leave your boss gets more leverage as well to offer you more comp.
"I know what our salary policy is, but this individual contributor would be really hard to replace and his cost just doubled. It's really expensive to replace him. Can I make a counteroffer that makes him/her stay?"
That's a good indicator of sub-par company that you're better served if you avoid it, in the long run.
When someone suddenly offers you the double rate, you should not feel insulted, but you should realize that need to work on rate negotiation skills. Then, if both offers are equally fine with respect to non-compensation aspects, simply take the higher offer.
Suppose you are willing to pay $4 for a coffee, and the café around the corner sells it for $2. Would you voluntarily pay $4?
My post was about viewing the employer-employee relationship as a business relationship _when you are the employee_.
You also present now a distorted view about business relationships - they're about trust far more often than they are about squeezing the best price. That's it really - once I learn that I can't trust my employer to compensate me fairly, that business relationship is broken, and short-term money can't fix it.
Indeed, all business relationships are about trust. But they also are about business. I know of no other business relationship where the supplier expects that the consumer will pay him fairly. So what is so special about an employment contract, compared to all other businesses?
Oh, this is really easy to answer. For example, the fact that purchaser dictates the price, not supplier - to such an extent, that purchaser voluntarily and periodically decides to start paying more, without explicit intervention from supplier. Oh, and also decides to reward supplier with bonus payments when receiving good-quality merchandise.
But it's not about that - if you think about it, it's probably related to the expectation of exclusivity. Is there any business that is expected to exclusively supply to only one customer? If so, I'd suspect they'd be very concerned about that consumer paying them fairly.
1. I got bored
2. I ended up under a bad manager after a reorg
And once it was a combination of the two.
Bullshit. When you have a family to feed and loans to pay compensation absolutely is a critical part of why someone might decide to leave.
Any employer who tries to shame employees into accepting lower compensation than what the market offers by appealing into loyalty or misplaced honor are absolutely just trying to screw the employee over.
Best employers are nice and human, but also totally understand how the market works and are ready to play in it using fair negotiation tactics that involve only financial figures and no confidence tricks.
If you are doing interesting work, are treated well and keep getting regular raises then it's going to be a lot harder to want to leave even if you might be underpaid according to market rates.
Granted this will only work if you are within a certain small percentage of market rate, ~10% and your financial circumstances allow it.
Switching companies is a pain, and I just don’t want to keep doing it every 2 years just to keep my career on track.
Or, if he has regular raises, he'll be less likely to get in the "why am I not paid my worth" mentality.
Typically I've seen companies paying high salaries for newly hired senior developers because the market was favorable, but not giving raises to developers hired in a less favorable time or acquired seniority internally. Those are typically people who left because of money (and rightly so).
It's funny, it feels like this is the kind of thinking that pushes managers to make the wrong decision and refuse a raise to a deserving employee.
Or how long they got that guy's labour at a discount before he wise up & got a better paid position elsewhere. It may have been years of savings by then.
Actual real terms raises that mean you can buy more are quite rare, especially outside of tech. Usually the only way to get a real raise is by changing job, either through promotion or by moving to a different company.
While it's certainly true that jumping around between companies is an easy way to increase your pay, companies routinely do give significant raises to employees.
(It may not happen often but even 100% increments do occur)
I'm in NYC and our trouble with the subway have highlighted that MTA workers get a standard 6% raise each year as cost of living. But, it's way more than that, and it's actually a salary doubling every 11 years or so, which is not at all in line with overall wage growth - it's huge.
Sure, in tech you can jump jobs every 3 years for 20% jumps (until you're 40), but that also isn't reflective of normality and definitely front-loads early career experiences.
In the USA the middle class and white collar (middle upper class) now too -- are getting poorer by the year.
Don't believe me? See why Trump won.
That's because inflation is not the same as purchasing power.
Putting that aside, https://en.wikipedia.org/wiki/2017_New_York_City_transit_cri... points out that worker salaries are only one of many costs for the MTA, and not the predominate problem:
> On November 18, 2017, The New York Times published its investigation into the crisis, with over 1,000 readers having submitted stories about the effects of the past year's subway delays. It found that politicians from both the Democratic and Republican parties, at the mayoral and gubernatorial levels, had gradually removed $1.5 billion of MTA funding. ...
> The New York Times described MTA funds as a "piggy bank" for the state, with the issuance of MTA bonds benefiting the state at the MTA's expense.[16] By 2017, a sixth of the MTA's budget was allocated to paying off debt, a threefold increase from the proportion in 1997. The city's $250 million annual contribution to the MTA budget in 2017 was a quarter of the contribution in 1990.
> This lack of funds was not only due to the gradual reduction of funding. Other actions by city and state politicians, according to the Times, included overspending; overpaying unions and interest groups; advertising superficial improvement projects while ignoring more important infrastructure; and agreeing to high-interest loans that would have been unnecessary without these politicians' other interventions.
While what you said is interesting to read, none of it speaks to that point.
1) This article from 2017 at https://www.metro.us/new-york/nyc-transit-workers-aim-for-sa... says:
> The contract for thousands of New York City transit workers expires in a few days, and union officials negotiating a new deal with the MTA are seeking salaries on par with other divisions the agency operates.
> The 44,000 transit workers affected by the collective bargaining agreement that expires Jan. 15 are hoping to receive more than the existing 2 percent pay increase,
2) This article from 2014 at https://nypost.com/2014/04/17/mta-workers-get-raises-under-n... says:
> A deal reached between the MTA and the Transport Workers Union will give unionized subway and bus employees 8 percent raises over five years — while sparing riders fare hikes.
> “We have a fair wage settlement but most importantly, no impact on fares,” said MTA boss Thomas Prendergast.
> Transit workers will get retroactive pay hikes of 1 percent for 2012 and 2013, followed by 2 percent increases in 2014, 2015 and 2016.
3) This article from 2010 at http://www.transitblogger.com/mta-finances/transit-workers-p... says:
> Despite recent fare hikes and the punishing recession, transit union officials argued that they deserve a 12% hike over three years, partly because city employees have received similar increases.
What is your source for a 6% raise per year? Is it for one year, or over a period of multiple years? Does it include a retrospective raise for a year where there was no salary increase? Does it include an increase in employee contributions to, for example, retirement or health care?
In any case, if it is 6% increase per year then it sounds like the union did a great job in negotiating, compared to previous years where they only managed to get 2-4% increases.
Wouldn't you want to have union representation which is that effective for your job? I would.
If you've been hired as a junior dev, then the work that you're doing in year 5 is (or should be) worth much, much more that what you were doing in year 1.
What people are expecting isn't a "I'm a bit more effective at my position and have some institutional knowledge, so I'd deserve a bit of a raise", but rather "I was hired at position X. Now I'm de facto doing position Y, so I deserve a salary appropriate to that position", and the appropriate salary to that new position may be 30%, 50% or 100% larger than the initial one. If your company doesn't provide these internal promotions (and the salary jumps appropriate for each tier), then your best people will take "lateral promotions" to other companies whenever they're ready to promote.
You won't hire a senior dev by offering 20% more than a junior dev; so as a junior dev in your company becomes (over the years, and of course not all of them do) a senior developer, if their real (inflation adjusted) salary increased only by 20% over these years, that's not reasonable.
I mean, it should be reasonable for a young person coming to your company at an entry level job to ask about the career path available. In tech (unlike, for example, fast food) they can start with an assertion that as they gain experience, in ten years they would like to earn double of what they'll be earning now as an entry level developer. It's not a given that they'll succeed, but it's likely, and a realistic plan to achieve if they put in the work. And your company (assuming it's large enough) should have an answer about what's the career path and criteria for them to double their (inflation-adjusted) salary in that time, and raises that are 2-5% (so, a bit above inflation) don't provide such an answer.
This is UK based from an off the record briefing from a ONS staff member.
I've been contacting for 8 years now, have nearly doubled my rate over that time mostly with the same client and never been told they won't pay the rate rise (number of employee devs who been there longer is zero - they haven't had pay rises). I've probably nearly found the limit without calling myself something other than a developer, or giving up being remote.
Someone told me at the start of my career that dev jobs don't tend to give pay rises and to just suck it up and move every couple of years if you want the rewards. I think they were about right, short of contracting which changes that relationship. It sucks but companies are wired to take advantage.
Then the mechanism for rewarding high performers is to give them a better position (e.g. Engineer -> Senior Engineer -> Chief Engineer) instead of just raising their salary with the same title.
Because you'll tell your buddies about it, and they will try to get it too, having you as a proof it is feasible. New hires don't pose this threat to company coffins.
A threat to coffins is presumably https://youtu.be/KZ_7br_3y54?t=57
This is a huge assumption that often times, probably more often than not, isn't true.
Your analysis would be correct if they lost a bad engineer to a company giving him a 30k raise.
Or... they think they do. "Current company" is too amorphous. Direct manager and team mates may know value, but it's harder to make that judgement (or to believe someone making the case for it) when you're not in the trenches with that team.
May also be a situation where the new company is actually able to extract more value from the person than the previous company.
There's a lot of assumptions going on in some of the replies here. Old company is going down the pan - regardless of how much value an individual can bring, if the company is incapable of translating that in to market value, you'll never get the raise (and may not have a job soon). New company - taking the same person with the same skills - may be able to extract much more market value from that same person.
When word gets out that the guy got a raise or he shows up in a new car, you’ll have a line of people with hat in hand.
Comfort is valuable to people. About 30% of my people are making significantly less than their market value. Myself included. But, non-cash benefits are powerful as well.
It is worth calling out that compensation is more than just salary however. But if strong performers are consistently leaving your company due to compensation, then you're doing something wrong.
The former head of talent at Netflix wrote a great article on hiring and compensation that touches on these points: https://hbr.org/2018/01/how-to-hire
The bigger point in that article is that you need to look at people holistically.
This has likely affected how much he was willing to go up in salary neg.