Why you're probably being paid less than you should be and what to do about it
Over the last few articles I’ve written about the talent review, the manager relationship, and building visibility with senior leaders. All of it has been about one central truth: the decisions that shape your career happen in rooms you’re not in, made by people working from imperfect information.
Pay decisions work exactly the same way.
Most people assume their salary is determined by their performance, their experience, and what the market pays for their role. Those things matter. But they’re not the whole story. And understanding what the rest of the story actually is might be the most practically valuable thing I can share with you.
How companies actually decide what to pay you
Most medium to large companies organise roles into grades or levels. Each grade has a salary band with a minimum, a midpoint, and a maximum. The band is usually wider than people assume, often spanning thirty to fifty percent between the bottom and the top.
Where you sit within that band is determined initially by what you negotiated when you joined. And then by your annual pay review.
Here’s the part nobody tells you. Two people doing identical jobs, at identical performance levels, can be paid twenty to thirty percent differently simply because one of them negotiated better when they started. The company is not obligated to correct that gap. And in most cases, they won’t unless you make them.
Annual pay reviews work like talent reviews. Managers are given a budget, usually expressed as a percentage of their total payroll, and asked to allocate it across their team. The budget is almost never enough to give everyone a meaningful increase. So managers have to make choices.
Those choices are influenced by the same factors we’ve been talking about for the last three weeks. Who is performing well. Who is a retention risk. Who has made their contribution visible. And frankly, who their manager believes in enough to fight for in the budget meeting.
The people who get the largest increases are not always the best performers. They are the people whose managers fight hardest for them. And managers fight hardest for the people they trust, value, and don’t want to lose.
This is why Rooms Two and Three from the previous articles matter for your salary as much as they matter for your promotion prospects. Your relationship with your manager is the single most important lever in your pay review. Not your performance rating.
Why most people are underpaid and don’t realise it
There are three reasons most people earn less than they could. None of them are about their capability.
The first is the starting salary trap. Your starting salary anchors every pay conversation you will ever have at that company. Annual increases are typically expressed as percentages of your current salary. Which means a poor starting negotiation compounds negatively over your entire tenure. Someone who accepts £45,000 when the role could have paid £52,000 is not just losing £7,000 in year one. If they get three percent increases each year, they are still behind by a compounding amount five years later. The time to fix a low starting salary is not three years in. It is before you accept the offer.
The second is confusing loyalty with strategy. The single most reliable way to increase your salary significantly is to change jobs. The average pay increase from moving externally is between ten and twenty percent. The average annual pay rise for staying put is two to four percent. Most people stay because they feel loyal, comfortable, or because job searching feels hard. All of those are legitimate reasons. But they should be conscious choices, not defaults. You are not disloyal for knowing your market value and expecting your employer to meet it.
The third is finding the conversation too uncomfortable to have. This is the most common reason and the most fixable. Most people find salary conversations deeply uncomfortable. They worry about seeming greedy, damaging their relationship with their manager, or being told no and not knowing what to do next. So they avoid it entirely. The discomfort is real. But the cost of avoiding it is also real. It just shows up quietly, as a slow accumulation of lost earnings over years, rather than a single obvious moment.
Where the flexibility actually is
There is almost always more room in salary than companies let on.
Within your current band, most managers have discretion to move people without needing additional sign-off. If you are below the midpoint of your band, there is often room to move you without triggering a formal regrading process. Most people don’t know where they sit in their band. Some companies will tell you if you ask directly.
At promotion moments, the cleanest opportunity for a significant jump exists. Both the budget and the justification are in motion simultaneously. Most people underuse this moment by accepting the first number offered rather than negotiating properly.
In retention situations, budgets appear that did not previously exist. The same manager who told you there was no budget for a pay rise will often find budget when you hand in your notice. This is not a cynical observation. It is a reliable pattern of corporate life. The time to use it strategically is before you get to the point of handing in your notice.
What to actually say
The salary conversation does not have to be a confrontation. The most effective version of it is not aggressive. It is prepared, specific, and positioned as a professional discussion rather than a demand.
Before you open the conversation, do the research. Know what your role is paying elsewhere. Job postings, salary sites, conversations with recruiters in your field. You want a specific number with market evidence to support it, not a vague sense that you should be earning more.
When you’re ready, ask for a specific meeting rather than raising it at the end of a one to one. Something like this works.
“I’d like to have a conversation about my salary when you have time. Can we schedule something in the next couple of weeks?”
That signals seriousness without creating an ambush.
In the meeting, lead with your contribution. Specific outcomes, not tasks. Then present your market research as context rather than a threat. Then state your ask clearly and specifically. Vague asks give managers an easy way out.
When they say there’s no budget, which is often the first response regardless of whether it’s true, this is worth knowing. “No budget” frequently means “not in this cycle” or “not without sign-off from above” or “not unless you push back.” The response that keeps the conversation open is something like this.
“I understand there are budget constraints. Can you help me understand what would need to be true for this to be possible, and can we agree what that looks like for the next review cycle?”
That doesn’t accept no as a final answer. It moves the conversation forward and puts your manager in a position where they either give you a clear roadmap or acknowledge that one doesn’t exist. Both are useful.
One thing worth sitting with
Most introverts find the salary conversation harder than most people. The combination of self-promotion, potential conflict, and uncertainty about the response is genuinely uncomfortable for people who prefer directness and dislike ambiguity.
But here’s what I’ve observed after two decades in recruitment. The discomfort of having the conversation lasts about twenty minutes. The cost of not having it lasts years.
You do not need to become someone who enjoys negotiating. You just need to have the conversation once, properly prepared, with a specific ask and the evidence to back it up. That’s not a personality change. It’s a skill you use occasionally, in a specific situation, for a significant return.
The people who earn what they’re worth are not necessarily more talented or more confident than the people who don’t. They just had the conversation.
Next time I’m going to write about getting promoted without playing politics. Specifically, what actually gets assessed when promotion decisions are made, and how to position yourself for the next level in a way that feels authentic rather than performative.