The price of your loyalty

by Mark Freebairn

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09 Feb 2011

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Feeling stressed

HEADHUNTERS HAVE, in the past, been blamed for rising salaries – the argument being that people would not argue so hard on their own behalf and would accept much lower salaries. Now I don’t agree with this, but it does raise an interesting point – what happens to you if you stay with one business for a pretty long time?

Before I get accused of writing an article designed to make everyone move jobs every three years, can I say that I have always argued that there is nothing wrong with loyalty. As long as you feel like your career is progressing well within a business and you are getting exposed to a wide variety of experience and change, then it will take something exceptional to tempt you away. And that is exactly how it should be.

However, there are potential downsides which people should be aware of and watch out for that I thought I would explain, and one of these relates to salary.

When Chelsea decided to buy Fernando Torres, as well as offering Liverpool an enormous amount of money, they needed to tempt Fernando himself. So they obviously looked at what he was being paid and offered him more.

The same works the world over. If you want to employ someone that another company or person is employing currently, you are unlikely to persuade them to do it for less, or even the same. The normal is to look at offering around 10% more – this is likely to be enough to tempt someone and too much for the business they currently work for to match.

If you stay within a business for a long time then your salary rises each year, but only by the amount the business increases its wage bill by. And therein lies the problem.

Imagine twins, identical in terms of ability and personality. Both are on a salary of £50,000. One stays with a business for 12 years and the other works for 3 different companies in that time. Now of course it’s impossible to give an accurate assessment but my quick calculations say that one twin could comfortably be on £20,000 or £30,000 more than the other. And the problem with that is that if both are at the same level, and both are identical in terms of ability and personality then, crazy as it sounds, people will think the one who is being paid less is being paid less for a reason. And not a good one.

So when you are sitting down with your boss, and they are telling you how much they appreciate your loyalty, ensure that you are being paid a market-rate package for what you are doing.

Mark Freebairn is a partner at Odgers Berndtson

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