Can the U.S.
government give my prospective employer a salary cap?
Q.
I am being seriously considered for a position with a large
Washington, DC-area IT consulting company. They have told me I will get the job,
but are waiting to open a location closer to my home. We briefly discussed
salary and I was told they would only be able to offer me 10 percent over my
current salary. I confirmed that this was not due to their budget, but to their
contracts with the U.S. government. The recruiter told me the government limited
them to offering no more than 10 percent over someone's existing salary
regardless of their previous salary. I have never heard of this and have reason
to doubt it, as I have talked to some employees who said they received raises
significantly larger than 10 percent. I am looking for an increase in pay in the
range of 20 percent as this job would be taking advantage of the master's degree
I recently completed and has significantly more responsibility than my current
job.
A. Several things may be going on here: salary compression (or
avoidance of it); frequency or infrequency of market pricing; impact of your
degree; and the prospective employer's relationship with the government. Let's
look at each in turn.
Some companies have
policies prohibiting salary compression, that is, paying new employees
salaries higher than what current employees make. This practice is typically put
in place to avoid underpaying current employees who have experience, skills, and
responsibilities similar to those of new hires. The practice also helps
employers retain talent by ensuring that current employees are not penalized
financially for staying with the company.
But if the company
typically looks internally, rather than externally, the market may be moving
faster than the company. I recommend that you find out how frequently your
future employer conducts market analysis on its jobs - that is, how often it
compares its jobs against the market to ensure its salaries are competitive. You
should also ask the company what the average percentage market adjustment is
when it does market analysis. If the company has to adjust its salaries by large
amounts, the salaries in the organization probably are not competitive or won't
remain competitive very long.
Third, you asked
about the impact of your degree. A master's degree would only guarantee you an
additional increase in pay if the company requires it as part of your job, or if
the degree gives you additional skills that are required for the job.
Finally, the fact
that this employer wants to pay you 10 percent above your current base pay could
mean the company already thinks your salary is competitive with the external
market and its internal pay structure. I would advise you to research your pay
using the Salary Wizard. Then, negotiate
your salary based on the expectations of the job and where your current salary
falls within the range.
Your employer may
also have obligations to the federal government because it does work for and is
paid by the government. However, your market value is based on what the private
sector will pay for your skills, so don't get caught up in your prospective
employer's relationship with the government. Most companies have government
contracts. But they determine salaries according to what goes on in the external
marketplace - not in the public sector.
Good luck.
- Erisa Ojimba, Certified
Compensation Consultant
