The Web Gambit

Thoughts on Web Development

Are you an Overpaid Payable?

I spoke with a friend the other day who came to the startling realization that they had become overpaid.  Most people would define being overpaid as receiving a salary above the current market standard for your responsibilities and skill set.  Taking a moniker from a company which shares an office in my building, I have decided to call such an individual an Overpaid Payable.

An Overpaid Payable is a resource whose cost to an organization exceeds the value that the resource provides back to the organization.  In the current market for software developers, the danger of becoming an Overpaid Payable has become greater than ever.

There are many signs that you are being overpaid.  Here are some:

  • You have been in the same company with no increased responsibility for 3 years or more despite receiving regular salary increases.
  • Your job very often requires long, inefficient and wasteful hours but you are paid handsomely to compensate for the poor planning that keeps you at work late nights and weekends.
  • You see high turnover in your company and often see across-the-board increases handed out soon after a few indispensable resources decide to leave the company.

So what’s wrong with being an Overpaid Payable?  Being overpaid leaves you vulnerable.  It can give you a false sense of security as you build up your lifestyle around your current salary.  If you can’t guarantee this same salary in another, very similar job, then you will have difficulty planning for the future.  Nothing is certain, and if your company is bought out or goes through cost cutting layoffs, it is the overpaid employees who are usually the first to go.  Additionally if you ever really dislike your job, your choices are more limited.

If you’re reading this and thinking that you are overpaid and are now stuck, all is not lost.  There are many ways to fix this situation.  The most obvious one is to just leave your current job to take whatever you can get on the open market.  However, this may not be realistic depending on your financial responsibilities, so I would advise finding a way to increase your value while staying in your current organization.  Here are a few ways that I have seen work.

Learn more about the industry you support to gain new responsibilities.  If you write financial software, take the existing financial knowledge you’ve acquired and improve upon it.  You may find yourself managing a team of new hires with lots of technical knowledge but no industry knowledge.

Build and market your expertise around a product or technology through peer groups.  Being recognized as an expert in your field bestows many benefits, including competitive and repeatable salaries.

Use your existing knowledge to add value to other functions of your business including sales, services, and support.  Your existing knowledge can provide a lot to these other areas in many surprising ways.

In summary, the best way to avoid becoming an Overpaid Payable is to constantly grow your responsibilities and skills to match your salary.  Always monitor your yearly salary increases to see if they come with increased responsibilities and skills.  Undoubtedly, you will have slower years and faster years, but if you monitor your career diligently, you’ll never need to worry about becoming overpaid.

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7 responses to “Are you an Overpaid Payable?

  1. Jim Martin August 5, 2007 at 10:24 am

    Nice post! I know someone in this exact situation. He HATES his job, but he cannot leave because they pay him to well and he can't get the same money if he goes somewhere else.

  2. tellitroll August 6, 2007 at 10:15 am

    Great post–something everyone should consider in today's job market.

  3. Karthik Hariharan August 6, 2007 at 8:44 pm

    Thanks for the kind comments!
    Another key point that I neglected to mention in my post was that it can be helpful to have a "ceiling" salary figure for your current responsibilities.  This figure not only helps you frame your own career, but it also gives you a lot of insight about work environments.
    Any time you get a raise or job offer that goes past your ceiling figure for that position, you should assume that something smells fishy about the environment.  While this is not a reason to back away from a challenge, it does help you frame more realistic expectations for the new job/position.

  4. JeffG August 7, 2007 at 8:35 am

    Interesting analysis. I wonder how many people would actually admit they are overpaid. Most times you only hear folks complaining they are underpaid.

  5. Kalpesh August 7, 2007 at 2:59 pm

    Being overpaid is a bad situation to be in, for people who think, they aren't worth what they are getting.
    I would like to know, how to make sure you are paid appropriately (as per market & your skills) and ways to move ahead, specifically considering US market.
    How does HR/Management decide some amount that they would pay you, without having some sort of expectation set (return value) in concrete?
    e.g. when you invest in some instrument, you know – how much you would be investing & how much you would be getting at the end of the investment term?
    What does HR/management think of this?
    I understand – things cannot be laid out in hard numbers. But, isnt hiring an investment (in people)?
    Let me know your views. I will appreciate, if you write it to shahkalpesh at gmail d0tc0m.

  6. Kalpesh August 9, 2007 at 11:25 am

    Also, I had this discussion with my manager about rising salaries (when I was in India) & I feel that, we were paid good because of outsourcing. i.e. hourly rate difference that Indian OR any-other IT services firm offered as compared to rate asked for by local guys.
    If Indian companies were to rely on local IT business, salary wouldn't be that high.
    In US, IT people are paid well (even though they serve local businesses) because
    1) Things are driven by IT. Government, businesses, non-profit etc
    2) Some of the costs are reduced when things are online
    3) US businesses cater to the world (they are large MNCs)
    Just my views.
    I would love to hear your thoughts on this.
    Thanks for reading !!

  7. Karthik Hariharan August 9, 2007 at 9:13 pm

    Kalpesh,
    I definitely agree with point #1.  I think the other reason that IT is a successful profession in the US is the proliferation of computing our daily lives here.  
    Most household and businesses in the US have at least one computer and many are also connected with high speed internet access.  With that kind of market penetration, there is a vast need for goods and services that support computing in many ways.
    I have always said that for India to truly become less dependent on US markets for IT work, they need to invest in a stronger domestic market. I think this will definitely happen in due time.

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