Why your starting salary matters so much and how to fix it

Here is something that I wish everyone in corporate America understood about how salaries and compensation are calculated once you are inside a company. One of the common misconceptions that people have, especially early on in their career, is that they think about salary in the terms of lump sum goals. They set a goal saying I wanna make $100,000 and today they're making $70,000. To move from $70,000 to $100,000, a $30,000 difference is essentially asking for a 40 to 50% increase in your current earnings. That type of increase is almost impossible to come by from within an organization. Organizations form their salary strategy. It is a strategy as part of the business. They form that strategy around quartile bands that are based on cost of labor. They move people through those quartiles based on a percentage of their existing salary today. So when you come into an organization, if you're making $70,000, you can expect that on an average corporate company, you will receive anywhere between 3% and 10% on an annual merit based increase. So that $30,000 jump becomes nearly impossible to attain at a $70,000 salary because even a 10% jump is only $7,000 that you are adding to your salary year over year. A standard merit based increase is going to look a lot more like a 3 to 5% range. For top performers you can expect to get closer to those double digits, but certainly nowhere near 40 to 50% like many people tend to expect early on in their career. And here's why this matters so much. Because if you start to extrapolate that math out, what you'll very quickly start to see is that the more you make, the same percentage amount is larger. 10% of a hundred thousand dollars is ten thousand dollars. 10% of seventy thousand dollars is 7 thousand dollars. That $30,000 gap just grew even bigger with that incremental increase. This is why it is so important to negotiate your salary when you enter into a company because it sets your trajectory for incremental annual growth at a higher rate than it would if you came in at a lower salary. If negotiating your salary feels like a really scary concept, then I want to share some of my best tips and resources that I have generated over the course of my career. And it's all in the link in my bio under the Salary Negotiation Guide. You can download that link. It has templates, it has tips, it has all the math that you need to figure out where you should, how to have this conversation with a recruiter or with your manager. Good luck.