Ask a Fairygodboss: What should I do if I find out my direct reports are making more money than I am?
“My company just recently finished their annual review and awarded raises and bonuses. I’m a new manager and I’m directly supervising 2 employees. Through the review process, I found out that they BOTH are making more than me. I’m angry but I’m not sure what to do. Can I bring this up? I’m assuming it’s not normal to be paid less than your employees.” – Jenny F.
That is a frustrating situation, but it does happen a lot more than we think. There can be different reasons for the pay discrepancy, and the first thing you want to do is understand why this happened, so you can make a plan to move forward.
There are a couple of reasons that are usually responsible for this discrepancy occurring: (1) you manage technical employees (or employees who have a very specific skill that you do not have), or (2) the external market has increased faster than you company’s internal pay.
Let’s start with the first scenario. If your employee has skills that are extremely sought after by your company, technical or nontechnical, your company likely has paid a premium to hire them. If you don’t have those in-demand skills, it’s hard to compare your salary to that of your employee.
If you find yourself in this position, you’ll want to think about what additional value you could bring to the company, whether through learning a new skill or taking on larger projects. Since you are on the inside, you know what needs are currently not being met. Find a way to meet those needs, and you’ll be more valuable to your employer. Once you’ve identified where you want to increase your value, set up a meeting to discuss adding more value and the opportunity to increase your salary as a result.
In the second scenario, the external market value of your skills has increased faster than your company’s internal pay. This is a common situation because if your market value has changed since you’ve been hired, but your company is routinely doling out average annual increases, you’ll likely find yourself in a position of being paid under market. Any new hire that comes in and is paid market value will then make more than you.
If you think this might be the reason for your situation, you’ll want to start by doing some research on the market rate for work in your field and in your area. If you find evidence that you should be paid more, it’s time to start putting together a case for your pay adjustment based on both market research and the significant contributions you’ve made in your position. If you base your discussion on performance facts and the value you bring, asking for a raise will feel like a natural solution to the pay discrepancy you face.
Through her consulting company, The Worth Project, Erica helps women think strategically about their career, their brand, and their negotiation conversations so they can get recognized and rewarded in a career that they love. She has a weekly column for Forbes and has been featured in other sites such as The Everygirl and DailyWorth. Erica has her MBA from Duke University and her BA in economics from UCSB.