Hi,
My question is relevant to this post, "Dealbreakers for Programming job", which mentioned what are the kind of things you look while interviewing for job and there was one post of Employer paying less than market rate than one need to leave the job, now for Startups they do not pay market rate and so does it mean that we should not startup jobs or is paying less than market rate is major dealbreaker for Software Engineering Position ?
Thanks.
It is not uncommon to earn less than "market rate" if the job is an entry-level position, and the employee is paying his dues, getting experience. Where it gets dicey is companies that pay less than market rate for experienced, qualified people.
It is especially problematic when an employer habitually pays less than the prevailing market rate; it is indicative of a general attitude of neglect.
This is an employer's job market; employers can afford to pay less right now, if they can find qualified people. However, many of the qualified people are staying where they are; a lot of the (currently) unemployed are not qualified for many of the currently available professional positions.
So there are many factors that come into play, when determining what should be considered a fair and equitable rate of pay. Ultimately, you make your own decision as to whether or not the money is satisfactory.
Some startups may pay less than market rate but have a combination of other factors to try to make up for that:
Stock options - Back in the dot-com days it wasn't unusual to have part of your pay be in stock options that aren't likely the easiest to value at the time.
Perks - Flexible hours, more control over the environment, assisting in building the process used by the company, work from home options in some cases are just a few things that I'm not sure how easy it is to quantify the usefulness of these.
Last but not least, market rate can be somewhat misleading for a couple of reasons:
There aren't accurate statistics of what everyone within a certain band is getting paid as most companies keep salary information extremely confidential.
The market rate is only useful if some company is paying that and hiring. If no one that is hiring is paying the market rate, what do job hunters in that market do? Some will take the pay cut to have the job.
Just a few points that are worth adding into this discussion.
Just take into consideration, that this lower salary is going to impact your ability to earn more on your next job. Don't think so? Ever wonder why they ask you what your salary was? Still not convinced, when they ask, tell them, "It doesn't matter, so I won't answer." See if you get the job.
No, I don't think money is everything. You will probably be appreciated much more working for a startup software company (you generate revenue) than if you program for the accounting dept. at a large non IT company (you are a cost center).
Biggest factor is getting what you are worth. What else do they offer? Equity would be big. Flex time is nice. Meaningful work? That's up to you to decide.
Personally with startups I would be more concerned about the future of the job than the intial salary. If a start-up is well capitalized and has a solid business plan and a better future they are more likely to pay better and the job is more likely to last longer than 6 months. Seriously below market rate without some other compensation usually means the business plan isn't there or the funding.
If the start-up looks good and still doesn't offer what you want in pay then consider negotiating for a pay raise in a set amount of time, say three months.
One offsetting thing about start-ups is that usually you really get to stretch your skills as they can't afford specialists at first. This can be very much worth the increased risk and lower salary of the start-up. I certainly used this to get the skills I needed for my current specialty and then moved on.
I have serious doubts that you can ever really know what market rate is. Companies don't pay the same for the same job to different employees and they certainly don't accurately report what they pay to anyone. Nor do employees accurately report what they make in salary surveys either.
Be wise though, don't accept a start-up job thinking you are going to get rich like the original developers for Microsoft. It can happen, but it doesn't happen to the employees of the vast majority of start-ups.