“Staying employed at the same company for over two years on average is going to make you earn less over your lifetime by about 50% or more.”
— Cameron Keng
You may be underpaid if you’ve stayed with your current employer for longer than two years. Consider the following chart. On average, people who change jobs see bigger increases in their income.
Haven’t you noticed this in your career? When you took a new job, you probably enjoyed a nice bump in title and compensation (you negotiated, right?). But, the longer you stayed with an employer, you noticed the annual raises weren’t nearly as impressive.
Luckily, I experienced this early in my career, and it influenced how I thought about changing jobs for the next ~15 years. I was working for a pretty amazing company that was, unfortunately, going through some hard times. So, even though I was told I was performing well, I received a tiny raise during the review cycle.
A couple of weeks later, I was approached by a startup, thanks to my network. I decided it never hurts to talk and interview to see what they had to say. They gave me a sweet offer that was more than a 50% bump to my compensation. I accepted and put my lifetime earning potential on a new trajectory. It was a valuable lesson that I never forgot, and now I share it with all of my clients.
Your biggest bumps in level and compensation will most likely happen when you start a new job.
I was a manager and leader inside some of the biggest tech companies in Silicon Valley. Many of my friends became leaders, as well. We talked about this issue. Once an employee is “inside the machine,” it’s hard to compensate them more than HR policies will allow. There’s only so much you can do, and exceptions are extremely hard to get approved. We often ended up in a terrible situation where we would make a job offer to a candidate with much better compensation than an equivalent internal employee was currently being paid.
It’s pretty messed up!
So, I know that intelligent job hopping can increase your lifetime earning potential. But let me be clear about something. You should not change jobs just to change jobs. By all means, if you’re in a good situation, stay!
If you’re receiving promotions every year or so, stay and climb the ladder as long as you can.
If you’re receiving big raises every year or so (way above the cost of living increases), stay.
If your compensation is much better than you’d receive from a prospective employer, stay. How do you find out about this? Always be interviewing!
If you love your job, boss, and coworkers and you don’t care about making more money or getting promoted, stay in your comfort zone. Some people prefer that.
However, a big problem with not making more money is inflation is still pretty high in the U.S. That means you’re essentially taking a pay cut if your compensation doesn’t stay ahead of inflation. Your dollar is weaker than it was before.
The current annual inflation rate for the 12 months ending this September is 3.7%. It’s lower than 2022, which is kind of surprising given how much the cost of goods has exploded. Have you been grocery shopping lately?
So, if your income isn’t increasing to keep pace with inflation and the growing cost of living, you’re falling behind. Today’s dollar is worth less than it was a year ago.
If you aren’t receiving a sizable raise that exceeds inflation, you’re actually making less money every year because the dollar isn’t as valuable. It’s as if your annual salary was reduced by thousands. And, due to the rising costs of almost everything, it is getting harder to make ends meet.
You should ask for a promotion or raise
Of course, you should always have a household budget and strive to reduce your expenses. You know I’m an advocate for living more simply and curbing extravagant spending. That’s one reason I left the Bay Area of California.
However, that doesn’t mean you shouldn’t maximize your earning potential at the same time. If you want to get ahead and live a better life, you must ask your employer for the compensation you deserve.
Some people are comfortable requesting raises and promotions every year (Note: You shouldn’t expect a promotion every single year). I had a few employees like that. But most folks don’t like to push or pitch themselves. Instead, they hope their hard work will speak for itself and their manager will do the right thing.
But I’m here to tell you that waiting and hoping is a risky strategy. Not every employer looks out for their employees. Not every boss is going to fight for you.
Many employers try to keep their expenses down, and, for most businesses, salaries are the most significant expense. If an employer has many employees, reducing raises by a few percentage points can translate to millions in savings.
I want you to get comfortable with having a conversation with your manager about your performance every year before the employee review process begins. For many companies, this happens in late Q4 and early Q1. If you wait until the decisions have been made, it is too late.
I also want you to feel good about asking for a promotion (and the associated raise) when you know you are performing at the next level and deserve it. I want you to feel confident asking for the raise you should receive every year to keep pace with inflation and cost of living increases.
Don’t feel shy.
Don’t be nervous.
Don’t feel “greedy.”
When you are providing value to your employer, you deserve commensurate compensation in return. And, if your employer doesn’t understand that, it’s time to find a new job with an employer who will pay you fairly.
The current job market isn’t that great. So, be respectful about this process, and don’t risk losing your job. You should always be looking for your next opportunity. It’s easier to push for a raise or promotion when you know you could easily land a new job quickly. But if you have doubts about that, tread carefully.
Prepare for the conversation
Here we are in Q4, and the Fall weather reminds us that winter is coming. It is also a reminder that something else will be happening soon.
Your annual performance review.
Now, not every company has its annual performance reviews at the end of the year or the beginning of the next one. However, I know many do.
I also know most people put off writing their personal performance reviews until the last minute. Then, they scramble to gather information, ask people for input, and remember everything they did during the year.
Don’t be that person.
Start capturing information and notes for your review now. Doing this gives you plenty of time to prepare by spending a few minutes on the task each day.
Go back through your calendar for the year. Review the meetings that you attended. Doing this will jog your memory for a few activities and accomplishments that you may have forgotten.
Similarly, review your email inbox and other messages. Quickly scroll through starting at the beginning of the year, or search for key phrases. Most of the messages won’t be that useful or will look familiar. However, a few will jump out at you and remind you of projects, achievements, and other work you did during the year.
As you start writing your review, gaps will appear and help you create a to-do list of information you need to gather and conversations with people you may need to have. That’s normal. It sure is better to start this process now vs. waiting until it is too late.
A performance review is your opportunity to ask for that raise or promotion. So, capture as much quantitative data as possible to support your case (e.g., that project you worked on increased sales by 23%).
Know your internal value (e.g., prepare several quantitative examples of how you’re helping the company succeed).
Know your market value (i.e., what your compensation could be with a new employer).
You also need to understand what the expectations are for the level above you. Please tell me that your department has a levels and expectations document (e.g., a senior individual contributor is expected to demonstrate ABC and do XYZ).
Hopefully, you’ve been focused on clearly performing at that level this year. It’s also essential to demonstrate proof that you are operating at that level.
It’s hard to justify a significant raise if no one is aware of what you are doing. Don’t expect your manager to take your word for it either. Have proof.
However, I stand by my belief that you still deserve a raise that keeps pace with inflation if your performance is meeting expectations. Don’t settle for less.
Of course, some of your accomplishments will have to be qualitative. That’s OK, too. It helps to gather feedback from your coworkers. A few positive quotes always improve your review (e.g., “Susan saved our project from disaster. We couldn’t have finished on time without her help!”).
As I’ve mentioned in the past, bosses often forget all of the details of what you have accomplished. They don’t remember all of the work you did during the year. Writing your detailed review may make all the difference between a small raise and a much more significant raise or promotion.
I often talk with my clients about maximizing their earning potential during their long-term careers. To successfully negotiate raises and promotions — and you should be prepared to negotiate — you have to demonstrate that your value to the organization is continuously increasing.
In other words, if you continue to do the work you’ve always done at the level of contribution expected for your current level, that is not enough. That is called “meeting expectations.” You may get a minimal raise as a cost-of-living increase (e.g., 2–3%), or you may receive nothing (which means your compensation is actually decreasing).
The business of your career
You can’t just put your head down and work hard within the walls of your company, hoping that a good boss will always recognize your contribution and value and commensurately reward you. You have to market yourself, just as a business markets its products.
The world needs to know that you exist!
I work with so many talented people who have virtually no presence online or at real-world events either. They are so busy working hard — and living their lives — that they haven’t bothered to put themselves out there. They haven’t spent much time networking, public speaking, or writing.
Like any business that wants to succeed, you need to market the “business of you.” Find ways to demonstrate your expertise and talent outside of the office. Show the world what you know and how you think.
This boosts your perceived value, generates inbound interest from potential employers (or clients), and shows your current employer that they have competition for your talent.
Being more visible is hard for many people, especially those of us who are a bit introverted. It requires that you find a way to share your knowledge and insights publicly.
Creating this content generates inbound interest in you. Being in demand is one way to always know your value and have negotiating power.
Some of my most talented employees, who were also good at marketing themselves, received unsolicited job offers every week. They didn’t have to hunt for work.
Jobs came to them, and they always knew their value. They weren’t shy about asking for raises and promotions because they knew they had options.
Note, I am not saying they used job offers as leverage to threaten me. I highly recommend that you never use that approach with your manager.
Instead, we would honestly discuss and evaluate job offers they had received. We’d talk about the pros and cons of taking the offer vs. staying. Sometimes, I had insight into that company and who their potential boss and colleagues would be.
If it genuinely seemed like a fantastic opportunity with no hidden gotchas, who was I to stand between them and a great chance to advance their career much more quickly than they could with me?
Be in demand
Asking for a raise or promotion is so much easier when you know that you are clearly delivering value above and beyond your current level.
You’re not asking for special treatment with a chance to prove yourself later. You have already proven that you are worth that investment.
When you are known and in demand, you are constantly receiving data that confirms your value. Putting yourself out there allows the right people to be aware of you and find you.
Sooner or later, someone will want to talk with you about an opportunity. There is nothing wrong with having conversations with people who are interested in hiring you.
It’s good practice to interview with the few that are of particular interest. If your current job, compensation, and career path all still seem great in comparison to something new, then, by all means, stick with your current job!
However, if your current manager and company don’t recognize and compensate you appropriately for your value — and a new company will — then it’s time to seriously consider an offer from that company. My most significant jumps in earning potential always happened when I took a new job.
But don’t be hasty
The grass isn’t always greener, so take the time to evaluate any new opportunity deeply. You don’t want to be hasty and jump ship only to regret it later. It’s also more challenging to find a new job in this market. The layoffs are continuing.
I have always used a spreadsheet to compare different opportunities on dozens of factors quantitatively (comment to let me know if you’re interested in this spreadsheet). It helps me remain a bit more objective, although emotion can’t help but play a role too. Sometimes, you are really excited about a new opportunity or really upset about something going on in your current job.
Regardless of whether you decide to stay in your current job or pursue something new, you should be compensated appropriately for the value you bring to an organization.
When you know that you are delivering above and beyond your current job level, have an honest conversation about your expectations and ambitions with your manager. If you never ask for something, you may never receive it!
My Invincible Career community can help
Members of my community have used our advice and support to find better jobs and receive promotions. For example, one person received a 10x return on his investment when he landed a new job with a much higher salary.
We all want to be compensated as much as possible for our time and effort. We all want to find work that we enjoy.
However, we sometimes get stuck and find ourselves blocked without a clear path ahead. When this happens, it’s easy to get tunnel vision and feel like there’s no way to escape a bad job or get paid what we are worth.
That’s why it helps to join a friendly and supportive community of people who have been there and done that. We can help you explore options, prepare for your job search, practice job interviews, and hold you accountable for making progress.
“After a year of receiving poor advice from recruiters and design professionals, it wasn't until I joined Larry's group where my career started to head in the right direction. The advice I received from Larry and other professionals in his community was instrumental in improving my resume, portfolio, increased my results in interviews, and even got me into writing. I have been very fortunate to have Larry as a mentor, and I can't recommend joining his Invincible Career community enough.”
— Christopher Schutt
The weekly check-ins and the accountability to the group have helped many people overcome obstacles. More importantly, it encourages you to invest in yourself and your happiness and fulfillment.
If you are feeling stuck and nothing is working, lean on us and let the community help you break free.
⬆️ Scroll to the top if you want to listen to my more detailed reading of this article🎧
I’m Larry Cornett, a success coach who can work with you to optimize your career, life, or business. My mission is to help you take complete control of your work and life so you can become a more “Invincible You.” I live in Northern California near Lake Tahoe with my wife and Great Dane.