Should you switch firms to increase your salary?

One academic discusses whether to negotiate with your current employer or change jobs to get that pay rise

Should you switch firms to increase your salary?
While staying on with a firm may help build experience and skill, sometimes it can mean losing out financially as compensation levels fall behind the market.
Jayanth Narayanan, associate professor at the National University of Singapore (NUS) Business School, spoke to HRD about how senior HR practitioners can recalibrate their pay.
The bad news is it can be difficult to negotiate a salary increase at the annual performance review, he said. While a pay rise might be on the table, it will typically be determined by a specific formula without much scope for flexibility.
“Maybe you could get something like holiday leave, employee stock options, loan assistance or something like that,” he said. “Rarely will you get an actual pay hike because you’ve negotiated within the firm.”
The exception to this is any senior leader perceived to be a star employee who may also be a flight risk for the company.
“If there is word in the market that you are being sought after because you’ve had a stellar quarter or you’ve gained attention in the media, you may have a bit more leverage,” he said.
However, he cautioned against using this leverage too aggressively.
“We are all egocentric in the way we read signals. You want to make sure you’re not overzealous and do and say things that may harm your reputation with the firm.”
Another option for senior HR leaders to realign current compensation levels is to move across into a new organisation, Narayanan said.
“External markets move faster than internal markets. If you want to get recalibrated, you might either have to move or get some kind of outside offer.”
Although different industries have different norms, he recommended waiting around five to seven years before switching over.
“I think if people move in that kind of timeframe, they will recalibrate to market.”
HR leaders could also consider moving after certain major events such as obtaining an MBA, at the end of a stellar year, or if there is visibility in the market.
However, he cautioned about jumping across too soon without taking time to consider what you can gain and lose.
“It’s not always about money. You’re also trying to maximise your wellbeing, you are attached to companies, you are attached to firms – those sorts of things cannot be put down in monetary terms.”
Related stories:
The science behind salary negotiations
The number one reason employees move on
Three executive salary negotiation techniques

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