Discovering that a new colleague earns more than you can be disheartening, often leaving long-term employees feeling confused and undervalued. This situation, however, is an opportunity to reassess your professional standing and advocate for yourself. Navigating this challenge strategically requires a clear understanding of business practices and a well-prepared plan to demonstrate your worth.
Understand Why Pay Discrepancies Happen
Pay gaps between new and existing employees often stem from business and market dynamics, not a reflection of your value. This is often due to salary compression, where companies must offer higher salaries to attract new talent based on current market rates. These rates can outpace the budget for annual raises for existing staff.
The new employee may also possess a specific, high-demand skill or level of experience the company needed to secure. Their background might include expertise in a niche area that was a specific requirement for the role. These qualifications can command a premium during the recruitment process.
Negotiation is another factor, as the new hire may have negotiated their starting salary more effectively. Companies often have more aggressive budgets for attracting new talent compared to retaining current staff. This focus on recruitment can create disparities within teams.
Assess Your Own Value and Market Rate
To build a case for your own worth, create a detailed inventory of your accomplishments and contributions since your last performance review. Go beyond listing daily responsibilities and quantify your achievements with specific metrics. For example, note projects you managed or processes you improved that led to increased efficiency or cost savings.
Next, research the current market rate for your position using online salary tools. These platforms provide reliable benchmarks based on your role, experience, and geographic location. This data helps you understand what other companies are paying for similar talent.
Expand your research by analyzing current job postings for comparable roles. These listings often provide salary ranges and detail the skills companies are seeking. This information offers a real-time view of your market value and strengthens your position for a compensation discussion.
Prepare to Discuss Your Compensation
The correct person to approach for a formal discussion is almost always your direct manager. They are responsible for your performance reviews and have the most influence over your compensation. Avoid discussing the issue with colleagues or going directly to Human Resources.
Request a dedicated meeting with your manager to discuss your career progression and compensation. Frame the request professionally, suggesting a topic like “a discussion about my role, performance, and future growth.” This signals you want a serious, forward-looking conversation.
Before the meeting, develop a script centered on your accomplishments, market value, and future potential. Rehearsing your main points will help you deliver them confidently and professionally, keeping the focus on your own merit.
Navigate the Conversation with Your Manager
When you meet with your manager, your approach should be collaborative and centered on your value. Begin by reiterating your commitment to the company and summarizing your recent accomplishments. Use specific, data-backed examples to illustrate your contributions to company goals.
After establishing your performance record, transition to compensation. You could say, “Based on the value I’ve delivered in my role, I’ve researched current market rates for my position. My analysis indicates a compensation level in the range of [salary range] would be more aligned with my skills and the market.” This phrasing keeps the conversation focused on merit.
Avoid mentioning the new hire or their salary. Phrasing your request around fairness or what another person earns makes the conversation about comparison and can put your manager on the defensive. Such statements are confrontational and shift the focus away from your professional worth.
Maintain a calm and professional demeanor throughout the discussion. The goal is a constructive dialogue about your future, not a confrontation. Be prepared to listen to your manager’s perspective, as there may be internal budget cycles or other factors influencing their decision.
Evaluate the Outcome and Plan Your Next Steps
If your manager agrees to a raise, get the details of the new salary and the effective date in writing. This formal confirmation ensures clarity and prevents future misunderstandings.
If the answer is “no” or “not right now,” the conversation is not over. Ask for specific, measurable goals you can work toward to be considered for a raise. Request a clear timeline for a follow-up review, such as in the next quarter or six months.
If the response is unsatisfactory, with no clear path forward or a refusal to meet your market value, the company may be unable to compensate you competitively. In this case, it may be time to confidentially search for a new position where your contributions will be rewarded.