Why is the company refusing to pay me more than my manager?

manpreet Best Answer 2 years ago

This happened some time ago as I was working for a small company that was later acquired by a giant multinational company. The small company used to be run by a single owner who had no rules for salaries. It majorly depended on your relationship with him, so the more he favored you the more you got paid.

After the acquisition he left the company and the management changed. Most of the employees left the company since they were under paid, but I decided to stay for a promise of a salary review.

During that time I got an offer from another small company that was almost 3 times my current salary. When I brought this offer to the new management they agreed to increase my salary, but refused to match the offer I had. The HR response was that they can't pay me more than my direct manager as this will break the company's salary hierarchy.

For big companies is this a rule of some kind? I mean my direct manager is also underpaid, but he is happy with it.

My direct manager will have access to my salary, but the main negotiations was with the HR and the upper management (CEO, IT manager). I brought them several surveys of the market salaries, but they ignored them.

Was there a way to convince the upper management that they shouldn't compare me to my direct manager?

manpreet 2 years ago

In short, no, there was no way to convince them.

This is very 1970's thinking, especially in US companies. The idea was that you had to have all the skills of the people you manage in order to manage them effectively. Thus, the theory went, that everyone above you had more and more skill, thus more and more responsibility, and thus more pay was justified.

Obviously this is flawed thinking. Tech and professional sports completely blow that model out of the water, but if someone has it "in their head" that the world is supposed to work that way, then you can't break them out of that thinking.

These are the companies (meaning those that don't keep pace with market rates and "justify" it with anachronistic practices) that can't keep talented employees. Unless they have enormously deep pockets, they usually don't last long.