Understanding Salary Progression

By: Together Abroad 01-02-2016 3:42 PM
Categories: * Salary,
Individuals can find it as hard to move from a low paying job to a sustainable and better paid job, as to move from welfare into work. For many, being stuck in a job with little prospect of progression can be very difficult to find ways to move on and move up. We agree that giving people the opportunity to use their potential in employment is important. However, this is often linked with greater duties and responsibilities for employees when looking for a new job that can secure a higher salary.

The issue is simple and clear; this can have a severe consequence on the progression of salary in a career. It is the conventional practice to hire most new people into their jobs at a level of salary below their market midpoint which is indicated by the average ranges of salaries for the given position. The company then moves their salary grade structures maybe half as much as the anticipated general market movement each year. This means that over time, employees tend to see a decrease in the growth of their salary if they stay with a company. This is made worse, as moving to a new job does not solve this issue in the long term. Instead, it encourages a system of hopping from job to job every two years or so, in order to 'reset' the growth of your salary.

All the while, payroll increases are budgeted relative to that market movement rate, to reflect merit or other competitive trend matches so that companies can keep pace with the appropriate peer-comparison market. As the external competitive market changes, the overall pay structure of the organisation is periodically revised and usually increased.

However, the net increases in personal pay after these structural changes rarely allow individual employees to progress to their target market rate within a reasonable time period. This is due to a number of reasons. Companies may place you under probationary increases of salary, and move you up slowly towards a peak salary if you perform your tasks well. They can also progress your salary step by step, where after each quarter they give you an increase. Merit based pay also tends to be seen, whereby performing well you are rewarded with an increase in salary. In some circumstances, this can be the only way to progress your salary to a point higher than the maximum salary other than promotion.

Knowing and understanding different methods of staggering pay will allow you to negotiate your salary better. It is not considered rude to enquire and question your employers about the nature of their salary progression, and what schemes they use. However, this is a point that can be difficult to argue against during interviews and when you're finalising the contract, as these are often intrinsic HR policies to how the company feels they should best progress their employees.
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