Why the big pay gap between managers on the same grade?

Why the big pay gap between managers on the same grade

In my career in Compensation & Benefits, I have often heard this question or a variation upon it : I see managers getting twice the pay of other managers from the same group and same job grade… Why is this, and how can you explain it ?

This is a fair question on the differences in salaries for people in the same grade and salary range.

First, if your company has created salary ranges (ie banding jobs together, doing the market research and designing a range of salaries considered acceptable for each band), and if these 2 managers both sit within the salary range, then you don’t have a fundamental flaw with respect to your official company policy. What may be the problem is a salary range which is too wide because it can range from simple to double.

Usually at the manager level, the salary range will be wider than at junior staff level. Why ? Because after years of work, your individual profile matters more than when you are a young graduate or in your first years of working. Your experience, the kind of industries you worked in, the projects you participated in, your managerial capability, even your personality and soft skills, will make a big difference in how much you are valued by your organisation at the time of hire.

Also, your tenure in the company and proven past performance (resulting in larger salary increases and bonuses if you are a consistent high performer) will have a cumulative influence on your salary and I sure hope that, all other things being equal, a great performer should receive a higher pay than an average performer.

It could also be that one of the 2 managers is in the wrong band. Maybe the one with the lower salary should be in a lower band. Or maybe the one with the higher salay is ready to move on to bigger responsaibilities and be promoted to the next grade up.

In any case, without knowing the specifics of each case, and without a proper internal and external equity analysis performed by your C&B manager, you can’t know for sure if this salary difference can be explained by logical factors.

And, let’s be honest. In all countries and all companies, you will also see some examples of some people being underpaid or others being overpaid for no apparent or logical reason…  Not always will you be able to explain differences of salaries based on experience, profile, past performance, tenure and readiness for promotion.


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  1. Nellaiappan Pillai says

    Thank you sandrine. Enjoyed reading your article.
    One of the reason could be one manager been recruited during high demand time where negotiation power to the employer is at lower level… and another manager during low demand time where employer could negotiate the salary to best competitive level … This is common and this is one of the reason, HR keep the salary as confidential, may be?

  2. Thank you Sandrine.

    Salary differences also may arise due to 2 managers holding the title of managers(due to business reasons), but, their job worth may be of 2 different grades.

  3. Philip Mathew says

    This is true.
    And reiterates the fact that managerial employees engage in “self-development’ and hence their respective value to the organization is scalable.
    Valid point.

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