Can we talk about tech salaries…

Last week I put an open invitation to anyone in tech to DM me for advice, mentoring or career questions. I had an overwhelmingly large response, which I’m just getting around to answering to everyone.

The topic that came up quite a bit was about money. Everyone gets super uncomfortable with this topic, which is part of the issue. I know a lot of people in tech that really enjoy their field, they take it very seriously and a passion for technology drives them.

However, this can lead to some situations where companies can take advantage of you, because you’re happy to be paid less than you’re worth in the market.

Am I getting mugged off?

So, how do you know if you’re being paid at the right level? First, remember something is only worth as much as someone is willing to pay for it.

Let’s say you work in a rural country town, in a Java development house, the only one in town. Now if you look online and see that the average salary for a Java developer in the US is $150,000 (making that up), but you get paid $100,000. Is it a fair comparison? No. Because market rates are driven by demand. If you quit the company because you were being underpaid, you’d be out of work. So now you’re being paid $0.

That was an extreme example, but it’s important to know the “market” around you. My biggest worry about anyone reading this article is you leave a job and end up unemployed or compromising.

A few questions to ask:

• Do you know the other companies in your area that specialise in the skills that you have?
• Are they hiring?
• Are they performing well?
• Are they the sorts of places you’d want to work?

Let’s say you work in a large city, you work for a medium size company (300–1000 people), the company is doing well (making a profit, or growing) and you get paid $100,000 as a mid-level Javascript developer.

You look online and see that the average is $130,000 in your area. Are you getting mugged off? Probably.

So, what do you do about it? Quit and go somewhere else? What if you love where you work?

You really need to answer this question:

Why should the business pay you more money to do the same thing?

If you get good at answering that question (and you can convince them of your answer) then you’ll keep that skill your whole career.

First, sort out the performance perceptions

Does your manager think you’re doing an awesome job? In your last performance review (assuming you have them) were you rated highly?

It’s really common that someone thinks they are doing a fantastic job but their manager doesn’t agree. This makes it really, really hard to negotiate salary. Your manager will become your advocate to convince whomever to pay you more money to do the same job.

If your manager thinks you’re a peanut, you probably need to find a new manager or understand why and work on that.

If your peers think you’re fantastic, people outside your team agree and your manager still thinks you’re doing a bad job, you have a bad manager.

I heard that company X is paying [20%] more

This is the event that sparks off the whole insecurity about people’s salaries. They get a phone call from a recruiter saying “company X is hiring [your skillset] and the role will pay $$$”.

This makes people sit up and say, hey wait a minute! But, there’s some things to take into account before you storm into your bosses office and demand a 50% raise-

• Companies who are growing normally pay above market rate
• Large companies typically pay more than smaller ones
• Financial institutions (e.g. banks, insurance) typically pay well above market average
• Recruiters exaggerate the package, you still have to negotiate when you accept an offer and people often end up with a lot less than they expected

It’s worth inquiring if there’s a big gap (more than 20%), but don’t burn any bridges with your current employer until you know more. If you setup a discussion with your manager and say “Company X offered me 20% more, therefore I’m being underpaid”, the most likely response will be “have you had an interview, have you gotten a written offer?”.

If no, you’ll probably look a bit daft. So you’ve just broken some level of trust with the person that needs to advocate your salary.

The table flip

This probably sounds obvious, but the easiest way to get an increase is to speak to that recruiter, get the offer letter and take it to your boss. If you’re performing well, the company values you, then they’ll likely match the offer. You just got a raise and didn’t have to switch jobs, great!

However, before everyone goes rushing off to do this, a couple of problems:

1. They might call your bluff, accept your resignation, and you liked working there, so now you’ve just lost your job. You start at the new place and it’s horrible, so you’ve just left a place you liked, in a job you enjoyed for a wage you were kinda managing on anyway, for a dump. Ooops.
2. You’ve just broken some level of trust with your manager, this is a risky move.

Also, you can only play this card once or twice before a company will just see you as disloyal and likely sideline you in projects and promotions.

So, is there another way that’s less drastic? Yes, just ask for a raise!

The rules of the raise

I’ve split this up into 3 sections depending on the size of the company you work for.

For all of these there’s a formula that I find works, you need to present all 4 of these as a justification for why the company should pay you more.

1. Situation. Your personal situation requires more money. eg. cost of living in your area has gone up, you’ve just had kids, you want to buy a house. Whatever that is, be prepared to answer that question.
2. Market. Tell them that you’re worth more somewhere else. Don’t assume that your manager knows you’re being underpaid. Especially new managers. Do your research, know the names and places of companies that are hiring and how much they’re willing to pay, or use sites like glassdoor.com to get a $ figure.
3. Performance. your performance has been good/great, so you should be paid well accordingly. Remind them of your great performance, things you have done and times they have awarded, congratulated you.
4. Value. The value you’re providing to the company is more than what’s on your job description. For example, you’re mentoring junior developers, which is training them up, doing the company a huge favour. You’ve stepped up and taken on more responsibilities.

Worried that you won’t remember all this? Write it down. You might be really nervous pitching this whole thing and forget some of your key points.

There’s this absurd misconception that this is about being brash and bold. The main reason most people don’t get a pay-rise when they ask for one is that they don’t make a good enough justification for it.

Good luck!