According to a survey of more than 900 mid-to large-size companies by compensation consultant Towers Watson last year, employers say they’ll dole out raises averaging 3% in 2014, virtually matching annual increases in 2013 and 2012. The study also found the best performers can hope for a 4.5% raises while even the worst employees could receive 1.3% raises.
The bad news – the inflation rate is currently 2.1% calculated based on the Consumer Price Index published by the Bureau of Labor Statistics. This means that your raise is actually peanuts and won’t make much difference. So what should you do as an employee? Should you wait in your current position, hoping for a promotion, or should you jump ship?
According to Forbes, employees who stay in the same job for more than two years will earn 50% less over their lifetime than people who change companies more frequently. And this figure is based on assumption that your career is only going to last for 10-years and this is a very conservative number, mind you.
The average raise an employee receives for leaving is between a 10% to 20% increase in salary. Of course, there are cases where employee gets more because their salary was already in the “underpay” category. This figures is also depends on industries – working in IT field would command more than a normal operational employee, for example.
This is outrageous – why are people who jump ship rewarded while loyal employees are punished for their dedication? There’re many answers to this. As a start, business owners always abuse “recession” to justify a freeze on pay raise and even decrease salaries of newly hired employees. Over the time, this supposedly “temporary freeze” is never lifted and employees continue to wait.
There’s also the perception among bosses that employees who stay longer than two years would normally continue to stay simply because they are not “ambitious” enough to jump ship, not smart, unproductive and whatnot, hence the company can continue to “freeze” on pay raise. Bosses also like to play the game of coming-promotion-if-you-stay and in the process creating a false hope which stops employee from joining another company.
Like it or not, the era of loyal employees working for ten or twenty years are gone, with the exception of those close-to-retire employees currently enjoying their half-retirement lives in their present companies – mostly in the banking sector. The young chaps nowadays will not think twice about jumping ship, not because of the lack of loyalty but primarily because they’ve become more materialistic employees.
The problem with staying at a company forever is this – you start with a base salary and usually annual raises are based on a percentage of your current salary. It’s not possible for a company policy to give a 20% to 50% pay raise annually, even for the best employee. On the other hand, if you jump ship, you start fresh and can usually command a higher base salary to hire you.
Of course, this is assuming you’ve the expertise or the talent your new company is looking for. Another problem with staying loyal to a company is the lack of promotions available. The queue for a particular position is usually super long, and most often you need to play office politics, rubbing the right shoulders and joining the right camp. If you wait and deeply entrenched, you would continue to be tricked by “hope”.
On the same note, people are worried that “changing jobs too often” will reflect negatively on employee resumes. But the problem with this argument is if everybody is jumping ship, does it really matter? Most often, you can measure the strength of job market by studying the number of vacancies advertised. When a batch of people start moving out, the gap needs replacement and that’s how the cycle moves.
Besides, why stays if you don’t see any career advancement? In short, you’re the best person to know whether the risk outweights the reward. It’s normally a good time to change employment during economic boom. Heck, can your company guarantees that you won’t be retrenched when bad time hits, if you continue to stay loyal?
Interestingly, most people who like to jump ships belong to the younger category. As age catches up, you would put more weightage to family and quality of life instead of monetary compensation, which normally requires more time spent on work. It’s all about the balance that you’re looking for at that particular moment.
In short, there’s nothing wrong to jump ship and negotiate better opportunities for higher dollars and cents. Do not be afraid to ask what you think should be paid for your talent. After all, employers will not think twice about replacing you. Just like you, they are always looking for a better employee and would not think twice about paying them 20% – 50% higher than what you’re being paid in the first place.
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June 23rd, 2014 by financetwitter
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