On being paid less than your subordinate

From the mailbag:

Dear HR Guy –

I started work at a fortune 50 company just over 2 years ago, with a fresh MBA in hand, and 5 plus years work experience. My starting grade level was a 13, with a salary of $64k. After 18 months I was promoted within position to the next grade level (15), and my salary increased to $77k.

I’ve just taken a lateral move to my first managerial role, and my new pay is $84k. The position has the flexibility to be promoted to the next level (17), which would get me close to, or over, the $100k range.

I felt very happy with this until I learned that one of my direct reports who is a level 13 earns $85k per year. She was hired just 3 months ago, is my same age, has a similar background to when I was first hired, and is also a fresh MBA (from a lesser known school).

My manager has told me that her hands were tied when she offered the $84k salary due to pressure from HR (they felt an 8% raise was enough).

My manager is planning to retire or move within the next 9 to 12 months, and I have been told that I am the successor. My manager’s manager is thrilled to have me in our department, and has pretty much told me that I’m on the fast track. So, the question is….how much do I let this inequity bother me?

I have some great long term potential at this company, but isn’t this just a matter of principle?

Benjamins in Need

I have to admit, whenever I started reading I was firmly in the “the principle” camp but I sort of floundered when you talked about the future potential. Under most circumstances, the boss should make more. It didn’t sound like it was one of those exceptions where I could see it.

Still, there are certain situations where it is perfectly fine to have a subordinate make more than a manager. That includes:

1. More education or experience in a field that pushes their pay at the top end of the range while a manager with little management experience is stuck at a lower level of an upper pay range.
2. The employee is in a field where the pay rate is much higher. For example, a middle manager who also has responsibility over a programmer might be paid less depending on their skill level.
3. It is a particularly tight labor market. Either for that position, the region or just an overarching problem.

I don’t think your situation is addressed there so I will give you a couple different options.

One: You can approach a compensation specialist and figure it out. At a company your size, these things are pretty standardized. Going at your manager again probably isn’t the best approach and if you do decide to go that way again, you will be armed with more information.

Two: Suck it up and put in your time and it won’t matter in a year.

I think the route you take depends really on your level of comfort with your current salary (independent of comparisons, how happy are you at that level). If you are happy at that level and you can put away your principles, then you should be happy to be on such a great path. If not, then pursue it but don’t bang your head against the wall and try to figure out what basis your salary was computed as.