Workers Say They're Underpaid -- But Are They Right?

Many employees fall victim to the "Grass is Greener" Syndrome

According to Salary.com's 2006/2007 Employee Job Satisfaction and Retention Survey, 62 percent of employees plan on looking for a new job in the next three months. Dissatisfied employees have cited a variety of reasons for their desire to leave their company, including lack of opportunity for advancement, no recognition for achievements, insufficient benefits and even boredom.

Trumping all reasons for why employees want to leave their current job is that they think they are underpaid. Nearly 50 percent of employees cited inadequate compensation as the primary reason they want to walk out the door. To determine if the employee claims were valid, Salary.com's team of Certified Compensation Professionals (CCP®) conducted extensive analysis by comparing the job title, industry, geography and company size reported by each respondent to the Salary.com database of human resource (HR) reported salary data.

The results indicated that only 22 percent of the survey respondents were actually underpaid, while 15 percent may actually be overpaid (paid well above their fair market value) and 33 percent were paid reasonably close to their fair market value.

Reality of Employee Pay

Source: Salary.com 2006/07 Employee Job Satisfaction & Retention Survey

Additionally, Salary.com found that 30 percent of respondents were likely over-titled. That is, they were being paid far below their market range (less than 70 percent of their job's market value). This is often a symptom of ambiguous job titles, which can either over-represent the level of a job, or misrepresent the duties of the role, either of which can lead to an inadequate job match and artificially high salary expectations.

Well-intentioned employers occasionally will offer inflated job titles as recognition in lieu of salary increases. These inflated titles often reflect what the employee would like to be doing rather than their actual job responsibilities.

What We Learned

Employees must focus on matching their job responsibilities to a generic job description - not just job title - and base their pay expectations on that job. After all, it's what you do - not what you're called.

So, Am I Underpaid?

There are three important steps in determining if you are underpaid, steps you should consider before walking into your bosses office and demanding a higher salary.

Step One: Matching Your Job Description

The most important step in determining if you are underpaid is correctly matching your job to an appropriate benchmark job. A benchmark job is a market job (or external job) to which an actual employee's job (or internal job) is matched for pay comparison. Your job should have similar content, as characterized in the job description, of the benchmark job. Matching your job at least 70 percent to the benchmark job is a good rule of thumb when trying to pick a match. A benchmark job is what your Human Resource department uses to price your actual job. Benchmark jobs can be found on Salary.com in the Salary Wizard.

Remember, when matching your job to a generic benchmark job, the key is to focus on job description, not job title, as jobs will differ in title across different companies. If you are over-titled, like 30 percent of the employees in our survey who were looking to leave, you will see that your job duties probably do not match the duties of a benchmark job that has your actual job title.

For instance, if your job title is Director of Marketing, but your job duties are a better match to a Marketing Manager, you cannot expect to be paid the benchmark salary associated with a Director of Marketing. This example illustrates why it is important to ensure you properly match your job responsibilities accurately to a benchmark job description.

Step Two: Matching Your Employer Factors

Once you feel as if you have matched your actual job with a generic benchmark job with the help of the Salary Wizard, you are ready to move on to the next step of the process, which is matching your employer factors to the employer factors of your peers.

The main goal in this step is to match your job to a benchmark job that is in your industry, at a similarly sized company, and within your geographical area. The fact is that larger companies generally pay more and the industry and geography in which you work will also influence your pay. For example, employees are paid significantly higher in places like New York, NY than they are paid in places like Des Moines, IA.

Tools such as The Personal Salary Report will help you find out what your peers who work for employers like yours make for a salary. On Salary.com, this data comes from actual Human Resource reported survey sources in the specific industry, geography, and company size.

Step Three: Matching Your Personal Factors

The Personal Salary Report can also help you with the last step in determining if you are underpaid, which is complementing your industry-, company size-, and geography-matched job with distinct personal factors. The most important personal factors include experience, education, and performance. The more factors you include when building your job, the more accurate your market value will be.

Upon completion of these steps, you will have effectively matched your job to the job of the common employee:

- with your job description

- in your industry

- in your company size

- in your geography

- with a similar educational background

- with a similar experience level

- with a similar performance rating

You now have a market salary range for the job that you built.

Salary.com Survey Methodology

Salary.com invited a cross-section of individual employees and business representatives from across America to participate in its 2006/2007 Employee Satisfaction and Retention Survey. Prospective participants received an email containing the survey questionnaire. Participants completed as many sections of the survey as they desired, and then submitted their results to Salary.com electronically. Salary.com also conducted a number of phone interviews to validate certain survey results.

Salary.com compensation professionals reviewed the data for consistency and accuracy, and excluded data that appeared to be invalid. A total of 11,852 individuals and 311 human resource or other company representatives responded to the survey. Among the individual employee respondents, 10,972 were employed and provided valid responses to the survey questions—the remaining 880 were excluded from all analysis.

About Salary.com, Inc.

Salary.com is a leading provider of on-demand compensation management solutions helping businesses and individuals manage pay and performance. Salary.com provides companies of all sizes comprehensive on-demand software applications that are tightly integrated with its own proprietary compensation data sets, thereby automating the essential elements of the compensation management process and significantly improving the effectiveness of its client's compensation spend. For more information, visit www.salary.com.