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I wanted to pass along some education into the world of compensation and benefits. The following is a real salary chart from my company for a specific title with the following 2 levels (Title3 and Title4). I feel as though many people do not understand how salary determination works, and thought I would shed some light for those interested. Note: This is a multi-national company so a regional or small company will most likely not have ranges for different regions as you will see below.
Base MRP: MRP is also know as the mid-range salary or the 'market rate.' If you know the salary range for a position the MRP is the point most employers want to pay unless it is entry level, or they have a group of qualified candidates asking for a rate below the MRP, which could push the offer to you lower or out of the mix.
Area: Multi-national companies break the pay grades by location tiers. As you see below the ranges are broken by region. For example, Area 0 is NY, LA. Area 1 Boston, Atlanta, etc. Area 2 would be Charlotte, Denver, etc. Area 3 is Roanoke, Harrisburg, etc. and area 4 are the small towns and cities outside of a large metropolitan area where the cost of living is cheaper.
As far as salary negotiation I suggest that you always understand the MRP of the position. If you do not have access to salary ranges I suggest during your phone screen that you ask the recruiter what the MRP rate is. First, that will let them know you know what you are talking about. If they don't know what MRP is then ask what the mid-range salary is. You now have information to answer their salary question. It puts you in the driver seat to ask for a salary above the MRP (but never ask high end). You cannot ask for the high end because you need salary room to grow in the role, and they won't pay it unless you have a special skill, or they have a legitimate need.
As far as internal promotions. I hear people who are disappointed they did not get a big raise when promoted. Take a look at the Title4 range for area 4. Lets say you have a salary of 80K today in Title3. When promoted to Title4 it has an MRP of 82.4K. With that being said, you'll most likely only see a 2.4K bump. Some companies will get you though. You could be at 70K and they might say we are giving you a 5% raise which sounds great but is still well below the MRP. That is great for them but not so great for you. Even if you are to get a 10% bump you are still under MRP; in case you ever wondered why it makes sense to start a new job if under-paid.
Most corporations manage to mid-point. Increases are higher% below the mid-point, lower % above the mid-point, to avoid 'salary compression' at the top. Mid-point also represents a very good performer who is fully qualified.
Note the differences in geographical locations and consider how pay impacts the amount you can contribute to your 401K. More pay = greater contribution opportunity. This assumes that the employee can manage their finances in higher cost areas so they have excess cash to contribute to the 401K. Often other benefits are a % of pay, for example life insurance.
If you are hired in Area 4 look for opportunities in Area 3 or 2 even if initially you don't receive an increase in pay (although most will bring you to the minimum of the range). Your next increase will be much more than if you stayed in Area 4.
Compensation Managers are the big bucks folks in Human Resources. They need to be good analysts, great politicians, and they know what everyone else makes. Sweet, but nerve wracking as managers try to game the system.
As far as salary negotiation I suggest that you always understand the MRP of the position. If you do not have access to salary ranges I suggest during your phone screen that you ask the recruiter what the MRP rate is. First, that will let them know you know what you are talking about. If they don't know what MRP is then ask what the mid-range salary is. You now have information to answer their salary question.
This seems overly technical. In simpler words: "If they ask you what you want for your salary, ask them what they pay people in that position. Repeat their answer back to them."
Used to work for a F1000 company that based base salary (I was in sales) on the size of the metropolitan area. So any city in the top 20 MSA paid the same base. I lived in Phoenix and got the same base salary of the people who lived in NYC or LA. It was to your benefit to work for this company and try to get transferred to cities like Phoenix, Nashvilee, Houston or Dallas. Make decent money but live in a low COL area.
I live in Chicago, so that would be in area 0, correct?
What kind of jobs/titles are these? The paid is relatively high.
Technical Analyst. There is pre-defined criteria you must meet to get these positions. To include a certain # of years experience, B.S. Degree in Engineering or CS, Certification, and Related Experience.
Yes, Chicago would be at level 0 with NY, LA, Chicago, and Houston.
NavySeal's information was illustrative. The principal applies without regard to position.
Frankly the rates shown are typical for professional jobs but frankly low for the Silicon Valley where the demand and cost of housing is unreal. There an employer must pay a premium over and above 0 level. Frankly Chicago could be a 1.
Last edited by Nell Plotts; 10-26-2014 at 10:25 AM..
NavySeal's information was illustrative. The principal applies without regard to position.
Frankly the rates shown are typical for professional jobs but frankly low for the Silicon Valley where the demand and cost of housing is unreal. There an employer must pay a premium over and above 0 level. Frankly Chicago could be a 1.
I didn't share level 5 and 6 of the positions for this role but we have them at the Senior and Principle level each requiring their own respective higher education and experience requirements. I did not mention that each position has an attached yearly bonus. Leve3 and higher is 10% or higher of yearly salary.
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They are real
