You are probably underpaid

“Say that again, how much are you making?”

The table erupts with laughter. I feel like I am the butt of a terrible joke that everyone is in on, except me. This was supposed to be a great night but it didn’t end that way. The laughter is coming from my peers, mostly veterans who joined the company from competitors and all were making considerably more money.

I had just received an award for “Top Salesman” by our company’s Vice President, in only my third year with the company out of college. I was doing everything in my power to grow business for the company and had just been recognized for all of that effort.

It wasn’t always this way. When I started in sales out of college, I sucked. I was handed a directory and a list of zip codes for my territory. “Go get some sales” was about the extent of the coaching I received.

Cold calling from sun up to sun down, I soon become accustomed to 100–150 people telling me no every day. I didn’t mind these conversations because at least someone was picking up the phone. There is something incredibly lonely about calling numbers for an hour without person picking up. Then someone picks up and hangs up before you can get to the point of the call.

Every Friday, I joined a call with twenty of my peers and listened in while they talked about all of the business they were drumming up. The time would come for me to speak and I would limply add “Nothing new to report in Chicago” before putting my phone back on mute.

I got off every call with my tail between my legs, determined to make even more cold calls until I had something to add on that call. Playing the numbers game, I got my first sale and parlayed that into several more by asking my first customer for referrals.

Slowly but steadily, I got busier and busier and learned that success often drives more success. While my peers were making the same tired milk runs, I was prospecting every day habitually. In three years, I went from zero sales to a Top 10 account in the company which led to that award at our annual meeting.

At the time, I thought I was paid OK, largely because I was basing progress off of annual percentages.

Out of college, I made a salary of $45,000 and received a $5,000 raise to $50,000 after my first year. I was told that this double digit percentage increase was the best in my class of 20 new hires. For that, I was proud and even bragged to my mom.

The next year, I was awarded a $10,000 increase to $60,000 and another $10,000 the year after that. In my mind, I was getting a 20% raise followed by more than 15% which felt generous.

It felt even more generous when I won that award. I straightened my tie and walked through the crowd with my chest puffed out. The youngest guy in the room was getting the hardware. As I accepted the award, our VP announced that I would be going on a paid trip to Bermuda with other tops sales reps from around the company.

Damn. This company is taking care of me! I was engaged at the time and couldn’t wait to surprise my fiance with news of the trip. I headed back to my table with a big grin on my face, high-fiving everyone along the way. I was on top of the world.

It went downhill quickly from there.

“That is incredible Ian. Awesome job, you earned it.”

“You’ve got this company wrapped around your finger. I bet they’re paying you a ton.”

“Uh, yeah sure.”

“They are paying you a ton aren’t they?”

“I mean, I just got a $10,000 raise so, yeah.”

“What are they paying you?”

“70,000.”

[uncontrollable laughter]

“Say that again, I think you left off $100,000 accidentally.”

“So, that trip probably cost them $5,000 but they’re saving $50,000 annually by getting your results at a discount!”

“Our top sales guy is also our lowest paid. No wonder the stock keeps going up!!”

“You have to pay the taxes for that trip, so not exactly $5,000 in value, but I’m sure it will be really nice.”

They were merciless but they were coming from a good place. They had worked for other companies and knew what I should be paid.

My boys let me know what they had hired in at. Many were making twice my income from the day they started and some were working half my hours. These were friends of mine and the ribbing was deserved. I didn’t let them know that I cared but my blood pressure was rising.

They laughed because they knew what I didn’t. The kid who just won a big award was being taken advantage of for his loyalty. They went on to tell me how much our main competitors would pay to have someone like me. They reminded me that the relationships I had with key accounts would be enough to go fetch double my income.

I fumed.

After sleeping on it and approaching the situation with an objective frame of my mind, I decided how to approach my manager. He was a great guy and someone I had grown to like immensely. I learned from him and he came to rely on me for results. I was not going to approach this with scorched Earth.

I approached him privately and told him how expensive I found living in Chicago. I also reminded him that I was planning to get married and all of the added expenses I foresaw.

I told him that I loved the company and especially working for him but I needed to look out for my best interests. I asked him for a raise to $100,000 and told him that I understood this to be the median salary for our sales team and the low end of what a competitor would offer me.

He was patient, listened and related to the expenses of living in an expensive market. He went on to tell me how extraordinary my past raises had been in relationship to other employees, at least on a percentage basis. He told me he might be able to help some but a nearly 50% hike was out of the question.

I calmly told him how disappointing it was that I might need to leave the company to earn my market value. I could conceivably leave for a $50,000 raise, work for a year and get hired back even higher than that. It was almost as if the company was daring me to try that approach if I wanted to be paid market.

I wasn’t confrontational but made it clear that I was disappointed. I was also non-committal when he asked if I was considering leaving. I just told him that while I was with the company, he would continue to get my best efforts.

I left his office and went out and closed a few nice deals in the next couple of weeks, almost to prove the whole “best efforts” comment.

He called me in several weeks later and told me that the company would be promoting me to a management position. I had previously expressed interest in leadership and he pulled some strings to make it happen sooner than later. I was fortunate to have a boss with guts to go fight for me.

Ultimately, I got to the income I was asking for in my previous role along with the opportunity to learn the new skill of leading people. I had a team and an opportunity to build the skill set of managing people.

A few years later, I was back in the same position. My experience and market value had quickly outpaced what the company was allowed to give on an annual basis. No longer a rookie manager, I had learned to build a great team and lead them to exceptional results.

Rather than just pay me more, I was given more responsibility again. This felt great at the time but feels like a work-around looking back. They couldn’t get a large percentage approved through accounting or HR but could promote me into a new “range” the company had created.

Large to medium sized companies often get stuck in their own way when it comes to pay. Compensation ranges are decided by executives who institute rules that make it extraordinarily difficult to make a mid-year, sizable pay adjustment.

If you believe you are underpaid versus your market worth, do your homework. Investigate what your top competitors are paying for someone with your talent and skill set.

Ask for a meeting and objectively walk through your rationale. In many cases, you don’t even need to ask for a raise if you just tell your boss that you are struggling to keep up with expenses. Tell her that you want to stay with the company but can’t ignore what you would be worth to a competitor. It is especially effective to have this conversation after one or more people have recently left for a competitor. This is when your manager is most consciously aware of where you stand versus a competitor’s pay scale and is also aware that you are picking up extra work created by the absence of those who left.

All of this comes with one caveat. You need to be good at your job. Don’t try this if you are middle of the pack or worse. You need to be someone whose production would be very hard to replace. Make yourself so valuable that your boss can’t stomach the thought of losing you.

If you are a median performer and work for me, I am not interested in giving you a great raise before those that I would rank ahead of you. You would need to show me data that our entire team was underpaid versus market (highly unlikely for a manager who pays attention).

In my case, how would it look to the rest of the organization if the employee who just received the “Top Sales” honor left shortly after the award trip for more compensation? By giving me that award, they inadvertently gave me leverage. I was too young to understand leverage at the time but looking back, they needed to respond.

As a manager, I always responded well to a top performer who calmly asked if I could look into their compensation. Rather than get frustrated, I appreciated the fact that they trusted me enough to ask. Their alternative approach could have been simply interviewing with other companies and letting me know they were leaving. When I could help, I always did and this was good for the employee and the company.

If your manager listens and tells you that his hands are tied, he is probably telling the truth. In many cases, you outgrow your own company’s pay range and need to look to competitors to find your true market compensation. Beware of blind loyalty that only benefits your organization.

Last, don’t be like me and work so hard with your head down that you lose track of what your market value is. Over those three years, I went from a terrible sales rep to an outstanding performer. I failed to peek my head up long enough to understand what that personal growth might be worth, much to the delight of my buddies at that awards meeting and the bottom line of my company.

Good luck out there. Go get your money!