Compensation Corner: Compensation for Millennials – 10 Things Younger Workers Need to Know
As a valued strategic partner, we think it’s important for you to know this: The realities of compensation for millennials can be surprising, simply because this group is newer to the workforce. Lacking years of deep “real world” experience, millennials might be surprised by many aspects of current compensation practices and standards in today’s workplace. With that in mind, here is a list of 10 truths and tips – a reality check, if you will – to help make the “black box” of compensation for millennials easier to understand and deal with:
- Your annual merit raise is not going to be much more than 3%! Since the most recent economic recession, most employers have kept base pay increases low. They’ve also introduced variable/incentive pay for employees to earn additional income. If you are an outstanding performer, you might get a little more than 3%, but do not expect to receive large annual increases.
- You may be getting some of your compensation via an incentive/variable pay program. This type of pay program requires you to earn this extra compensation each measurement period by meeting key metric deliverables. Be sure you understand how to make additional compensation through whatever incentive/variable pay plans are available to you. If there is not a variable pay plan in place for your position, ask your supervisor if one could be established.
- You may not get large promotional increases. Again, employers have dialed down large increases, even when the worker is promoted to a higher-level position. You will likely receive an increase for a true promotion which is typically defined as a significant change in responsibilities or significant increase in responsibilities. You should not, however, anticipate an increase every time you pick up one small additional responsibility or an increase in responsibilities just because volume increases.
- Do not rely on salary data you find on the internet as a realistic source of data. Many employers only use third-party salary survey sources where the data is provided by employers to determine the fair market value of a position. Third-party salary survey providers ensure jobs are matched appropriately and the data is scrubbed and verified. Internet sources typically rely on employee reporting, and that is not always accurate. What’s more, employee-reported data may not include accurate job descriptions or a true indication of the experience level required for the job. Such information is key to fair market value data.
- Do not expect to be paid at the mid-point of fair market value. The mid-point of fair market value is typically reserved for employees who can perform all core responsibilities and are fully competent in the functions of their job. Naturally, it is expected that most employees may take several years to reach fair market value for their position.
- Your employer may or may not share the pay range for your position with you. Each organization determines if it wants to share the pay range for an individual’s job with them or not. While some fully disclose pay grade and pay range information company-wide, many do not. If your employer does share this information with you, don’t expect to be paid at mid-point until you have several years of experience on the job.
- Take responsibility for your career development. Don’t expect your employer to plan your entire career development. Own and take action for it yourself! If you can’t get leadership development within your organization, then get on a board or committee for a not-for-profit organization and develop leadership skills you can share with your employer. This approach will help prepare you for future job opportunities that could include supervisory responsibilities with potential pay increases.
- Keep track of your accomplishments. While it can be frustrating to keep track of your accomplishments (as you may feel your manager should be doing this), you’ll want to be able to document and keep track of what you have accomplished. Be proactive and send an email or a one-page document to your manager each quarter; include what you have accomplished as well as your learning objectives or professional goals for the coming quarter. It keeps your manager apprised of what you are accomplishing; and it sends the clear message that you want to grow, develop and advance. It could also help make a difference in the amount of annual pay increases you receive if you have documented your accomplishments.
- Do not share your salary information. While it is common and tempting to share your salary information with your peers, this is never a good idea. Salary information is confidential and you should treat it as such. Don’t concern yourself or spend your energy on what others earn. Instead, concern yourself only with your salary and your earning potential.
- Do not leave your employer over pay without having a conversation about it first. If you perceive your pay is unfair, have a conversation with your supervisor. Consider your direct compensation as well as benefits and other things an employer is paying on your behalf. Changing employers simply for a small pay increase could wind up costing you more in additional benefit cost. Before you walk out that door, give your current employer the opportunity to review your pay and determine if your compensation is appropriate based on your experience in the job.
Compensation for millennials doesn’t have to be a mysterious “black box”. Using the information above, you can chart a smoother course for a successful career. Along the way, set realistic salary expectations and engage in open communications with your supervisor. Document and share your achievements. And take responsibility for your career development.
And if you are an employer with millennials in your workforce who have unrealistic expectations, we can help you establish and communicate fair total reward solutions! To learn more, contact us today at 317.589.8529.
Have a referral for us? Total Reward Solutions is your trusted partner for compensation and benefit services. As you recall, Total Reward Solutions offers a broad range of compensation, benefits, performance management, and reward/recognition consulting services to help your organization attract top talent, motivate employees and retain top performers. We can partner with you on a project basis, on retainer, or as your total outsourced solutions provider for compensation services.
Call us today at 317.589.8529 to discuss how we can help your organization develop and implement competitive and effective compensation and total reward programs.