You are expected to leave the company. Raises are kept far, far below the rate at which employees actually accrue value in order to ensure that employees do not stay at a company for longer than 4 or 5 years. After 4 or 5 years, the gap between what you would make anywhere else and what you can make where you already are is enormous.
There is a quote from hundreds of years ago which applies. "Make game of that which makes as much of thee." They fully intend to game you and exploit your desire for stability and predictability in your life. Play them back.
It sounds like you've had some terrible experiences with employers gaming your salary, for which I'm sorry.
As a manager, I value my long-tenured employees _very_ highly and work hard to ensure they get significant raises year after year. I learned to do that by working as an engineer at several other companies that did the same.
So, if your employer doesn't work to make their best, most experienced engineers feel valued and well-compensated, by all means look for another job. But don't assume that all companies will try to force you out as soon as your salary is higher than a new grad's.
Because high salaries are expensiver. Or at least they look that way on paper. Companies don't like paying an experienced employee 2-3x in salary what they would have to pay a new hire to do the same tasks. The training cost and quality dropoff are less visible and more externalizeable costs, but you see the salary savings the very next pay cycle.
I believe this to be true. However, in some cases you can get a competing offer and have your current employer match it. My experience is that suggesting you are underpaid without a competing offer doesn't get you very far. Most employers will pay you as little as possible given the market and in the tech market you can jump ship.
I strongly disagree with this. It may be true at many companies, but not anywhere I would ever work (esp. as a manager).
Requiring people to have a competitive offer in-hand basically says, "if you want a raise, go interview somewhere else." That's toxic and only effective for the people who game the system.
Responsible employers owe their employees a fair (according to market, their peers, and their contributions) wage, not the minimum they can possibly get away with paying. It might save you a few bucks in the near term to play stupid games with people's comp, but the attrition will kill you in the long run.
"Requiring people to have a competitive offer in-hand basically says, "if you want a raise, go interview somewhere else." That's toxic and only effective for the people who game the system."
I agree with you on this. However, that's just how it works at all of the places I have worked for. Except for one. The startup I was at before we were acquired by a large tech company. However, being a startup we were already strapped for cash and were not being paid market rates but had some equity. That turned out to be decent when we cashed in but not enough for most of us to cover the salary difference.
I fully agree that employers should be proactive to ensure that good employees are happy and want to stay with the company. It should be mutually beneficial but I have yet to find a place like that. In the mega corps this just can't happen because of red tape. If you don't ask you will just get the standard 2% or whatever it is each year. Many times if you do ask the manager can't do anything about it anyway. I've brought it up that my hourly rate is 1/8 the rate I bill out at and am told that's just how it works.
If you are looking for a counter offer, you're pretty much burning your bridge. Nothing but resentment can come from that. Additionally it makes you look weak if you take the offer.
In any negotiation it doesn't hurt to have some leverage. Especially when the company already has most of the leverage in employment situations. In my experience not burning bridges is entirely overrated. I also fail to see how asking for a counter offer is "burning a bridge" but I don't ask for counters. I turn in my two weeks and tell them why I am leaving. If the company offers me a better offer (money, benefits, vacation, flexibility, etc) I may take it but I go in with the full understanding that I am leaving. There are a lot of cases where the money itself won't matter if your current employer matches because there are other things you just don't like about the situation.
I've used this tactic twice with the same employer. It's just business and any professional manager will not foster resentment. If it does cause resentment then you can solve it by simply leaving. I have no concerns over "looking weak". I'm only in this for me. It's bad enough that I trade my precious time for money. I'm going to take as much as the market will offer me. It probably sounds selfish but that's how it is. I work only to provide a decent life for my family. If I had 5 million today I would not continue to do what I do. I would find something to occupy that time but it wouldn't be trading hours for dollars.
What do you expect people to do? Work for the same company for 30 years and be happy to get maybe a 2% raise year over year?
There are compensation consultants that many companies use to benchmark salaries. The same thing happened at my company, salaries went up quickly so they adjusted everyone. Before that new hires were getting higher salaries than people with more experience who had been there many years.
The rate required to stop experienced developers from leaving. That's quite easy to measure. Enough of the people will leave will tell you what offer they got, and you adjust up until the rate of turnover is acceptably low.
From my experience, there's always a company willing to pay you more. If they see some company paying you X, they think your skills are worth at least X.
So your explanation doesn't really answer the question.
Raise an issue with them that you feel you're being underpaid. I've done this in 1-on-1 meetings with managers in the past. If they think you're worth keeping, they will do what they can to give you a raise when the time comes. But keep in mind that other people on their team maybe be underpaid more than you, so they might try to correct those people's salaries first.
At least from what I've seen, managers at some level (your direct manager, or their manager) are given some numbers of dollars to increase the salary of the employees. They have to choose how to distribute that between their people.
Depending on the company, it may take you moving to a different company to get what you're worth. Most companies know that transitioning jobs is difficult and a lot of people won't go through the effort. Because of this they will underpay people that they don't think are going to leave. If you want to try, apply around, interview, and get a job offer at another company. Present it to your manager and see what they say. Some companies will counter-offer, while others have policies where they will not counter-offer.
Story: a friend was offered a contracting position with the same company he already worked for (from the contracting firm, the company didn't know yet), that would be paying far more than he was making. He didn't take it and his manager didn't do anything to correct his salary. But it was pretty funny to see.
Worth noting that what you proposed with regards to presenting a competing offer to your current employer is typically a card you only play once. More than that and you tend to be viewed as a mercenary who causes problems. Plus, the people you are presenting this to will quite likely feel like they've had a gun put to their heads in a situation they may have very little direct control over, and nobody likes being put in that spot multiple times.
Not saying that is right or wrong, just know that doing this multiple times at the same company is often frowned upon.
Also, don't do it without being ready to make the switch--you never know when your company will call your bluff and say "ok, enjoy your new job, your last day is today."
I'd also like to present the flip side, which is what it is like to be on the receiving end of such a request. I had an employee I managed in a past job come to me with a reasonable raise/promotion request. Myself and my boss did everything we could to give it to him as he definitely deserved it in spades. We were blocked by the finance and HR departments. They did not want to do things "out of cycle" which isn't exactly fair to the employee if they started significantly outside the beginning of that cycle.
Ultimately I lost them to a competitor, and felt absolutely awful about it (even though this was in an industry where turnover is incredibly high and 1 year stints are very common). The worst part was that it was totally out of my control and I did everything I could to make it happen and failed.
When I had a similar situation in the future with someone else I managed, I flat out told them I would do my absolute best to fight for them (and they knew I meant it), but said that if the company wouldn't give them what they deserved, I would not hold it against them in the least for switching since they need to do what's best for them regardless of the headaches it would cause the team. They ultimately left for more money and the company lost another valuable employee because they couldn't part with a couple grand per year which was a pittance compared to the value this person added.
Long story short, it sucks just as bad to be on the receiving end of this, but a lot of times the direct manager may not actually be empowered to make the budget decision necessary to offer a raise. In those cases, please do your best not to hold it against them if they can't win that fight.
Very good advice, thanks for adding it, as I totally agree with all of it.
If you are friendly with any managers, it's good to find out the company's policy on competing offers. (I had a friend who was a manager in a different department, so I could find out company and HR policy on this kind of thing). Competing -offers is definitely something you only want to do if you are seriously about switching companies.
Different side story:
My last job I was working out of a satellite office that was closed down as the company slimmed down to be bought out. We have around 50 people in the office. There was a 2nd and 3rd line manager that were cut when it all went down, so we were able to talk a bit more openly with them about it after the fact.
These managers were newer to the company and stunned at how low the salaries were for most of the individual contributors. They were doing the best they could to get salaries up-to-snuff, but when they were only given 3% (of the salaries of all their employees) to use to give raises, it was really hard to get people properly compensated.
Most lower-tier managers really do care for their employees, they just tend to be limited by corporate direction and what HR tells them they can and can't do.
Also, don't do it without being ready to make the switch--you never know when your company will call your bluff and say "ok, enjoy your new job, your last day is today."
That heavily depends on your region. In places like the EU you cannot be fired on the spot for something like that.
Generally if you threaten to quit you should be prepared to quit. In the US most employment is considered "at will" unless a contract specifies otherwise (and a few states have different laws). Meaning employer or employee can terminate the agreement at any time for any reason or no reason. The exception to that is if you were fired for prejudicial reasons and you are a protected class (sexism, racism, etc). That means I can quit today with no notice required. It also means my employer can hand me my last paycheck today and tell me to take a hike.
An example of this. My wife's employer recently found out she had applied for a job at another company. They fired her that day. She didn't get the other position and the previous employer is blocking unemployment compensation.
Yes, I agree that if you threaten to quit, you should be willing/able to follow through. And yes in the USA, the could call your bluff and sack you, but in the EU, they cannot do that. So the equation has changed.
The first thing is to be brave. Understand that the market is currently in your favor. If you leave then you will make new friends and form new relationships. And if you leave then management will likely be very nice to you for two reasons: 1) to build their own network and 2) it kills morale if others see you being treated poorly.
If they treat you poorly then no one from your network will ever work for them. And if you take the story to the Internets then it gets even worse. Trust me, the company has more to lose than you do if the relationship sours.
Even though you have most of the leverage, approach your manager with respect and graciousness. Thank them and talk about how much you enjoy working here. Then tell them your pay is compressed and ask for a raise. You can google this part. Some approaches suggest being straightforward and others say build a list of your accomplishments.
Most companies even have your comp-a ratio on file, they already know you are underpaid.
If they say yes then congratulations.
If they say no (I can't make this decision. I need the VP's approval. We don't have the budget. blah blah) then work on finding a new job. Which sounds daunting but really isn't that bad.
Anyway good luck!
EDIT: Shitty story time. I have had managers say "What we can do to change your mind?" I love that...but the last time I asked for a raise my boss gave me a lecture on how there are more important things in life. People who make over 250k a year are not allowed to tell me money is not important. What a jackass.
At the meeting, bring up how well the company is doing and how well you are doing. Ask for a raise.
You don't need to say where you got your number, or complain that you were underpaid before. Go in knowing your market salary -- which they probably know anyway.
EDIT This isn't a surefire plan; as the sibling comment says, sometimes you have to leave to get paid your market.
I loved the line a manager at my previous employer gave us circa 2011 about our terrible raises:
"Well, the company is doing well, but since the economy sucks and unemployment is at 8% the company feels like we should be fortunate to have jobs and thus doesn't feel like they will lose anyone over salary."
It should be noted that, from 2006 until I finally got out in 2012 I saw two people leave for outside opportunities, out of a program that had over 300 people. More people retired than quit. Maybe management just had them that well pegged.
That's when you should get another offer. Either you put yourself in a great negotiating position, or you realize that they were right and feel fortunate to have your current job.
Hey I'm at work right now. Later tonight I will try to give you some success and failure stories.
But basically they are more worried about poisoning relationships with you than the other way around. If you leave for a higher paying job and your peers find out...that's much worse for the company.
There is a quote from hundreds of years ago which applies. "Make game of that which makes as much of thee." They fully intend to game you and exploit your desire for stability and predictability in your life. Play them back.