Today I had a question that went like this – how are people paid? The intent of the question is not to understand how someone is actually paid (i.e., salary, hourly), but to understand how salaries are determined in the first place. I stumbled upon this article titled, How does a salary range work? and it has been somewhat helpful. At minimal it gives you a good understanding of how salary ranges are determined, but does not speak exactly to the details of determining someone’s value to a company.
First of all, I am not a HR expert nor do I claim to be. I come to the table with a unique perspective that was developed over years from personal experiences. In the past six years, I’ve spent the majority of my time working in a corporate environment with 30-50% of my time traveling to offices and manufacturing facilities throughout Canada and the United States. I have dealt with a vase range of people from various levels in their organization. I have had the pleasure to work with so many great people and a few not so great people. Many of the folks I’ve worked with do add incredible value to their organization. Some folks do not add much value if any at all (my opinion).
If I think about salaries and what someone should be paid, it can get very complicated quick. I am not with these people all day long, so I cannot judge whether or not they should get paid what hey are getting paid. What I can say is, your education, experience, and reputation do help determine your salary. Education and experience are two obvious factors, but you may be skeptical of how reputation determines your salary. Once I explain my view, I hope you also see it the same way I do.
As per google.com, reputation is defined as the beliefs or opinions that are generally held about someone or something. Your education and experience do overlap into this realm of reputation, but there are also other things too. If you are already working for a company and there is an opportunity that opens up that you feel fits you well, you may apply. If you are a good worker and have a good reputation, then there is more of a chance that you are called in for an interview. If you are perceived as not a good worker, then the chance of you being called for an interview is not good. That is pretty basic!
Each day at work, you are building your reputation through decisions and interactions with co-workers. Even if you think nobody is watching, most likely someone is watching. You are providing a service to your company each day by showing up and doing your job. The moment you stop, you are no longer providing value to your company. At that moment, your value significantly decreases. Each year, your reputation plays into how much salary increase you get. If you are going into a new company, it is possible HR will ask around to see what your reputation looks like somewhere else. This can determine your pay at the new company. Reputation is huge and we should never underestimate it.
With all this said, each day we build experience, knowledge, and reputation. These things will surely play into how much you are paid. If you are not getting paid enough at your current employer, start looking outside and understand what you can make somewhere else. I’ve never seen anyone harmed by interviewing for another position inside/outside. If you want to keep growing, increasing your salary, and so forth, then you need to be able to provide more value to your employer. These are my thoughts. What are your thoughts?