Employee Question: “Why don’t we get paid like engineers at Alphabet, Amazon, Apple, Meta, or Microsoft?”
If you’re an HR Leader at a startup or mid-sized tech company, chances are you’ve heard this question and felt the tension behind it.
It’s a fair question, especially in an era of pay transparency and readily available comp data. But it’s also an incomplete comparison.
Here’s how to respond thoughtfully and transparently:
Step 1 - Start with Education, Not Defensiveness
· Employees typically raise this because they’re trying to understand their value. Meet them with facts, not frustration. Help them understand how compensation is built around more than just job title or skills. It is also influenced by company size, business model, funding stage, revenue, and internal equity.
Step 2 - Comp Strategy Reflects Business Reality
· The big tech companies operate on a different economic scale. Their revenues, margins, and market caps support more aggressive compensation practices especially in long-term incentives. Comparing your pay directly to theirs is like comparing a seed-stage startup’s burn rate to Apple’s cash reserves. It is not apples to apples.
Step 3 - Total Rewards, Not Just Base Pay
· Smaller companies may not compete dollar-for-dollar on base salary, but they often offer broader upside. Think of things like faster career growth, more impactful work, early equity with high multiple potential, and a chance to shape company culture. That’s value that can’t always be quantified in a spreadsheet.
Step 4 - Market Positioning is a Strategic Choice
· Compensation philosophy matters. Some companies target the 75th percentile of the market, others the 50th. Smaller firms benchmark compensation against peer groups that align more closely with their stage and sector instead of trillion-dollar giants. Being transparent about why and how you benchmark pay builds credibility and trust.
Step 5 - Internal Equity Matters
· Pay isn’t just about matching the external market. It is also about fairness within your company. If one person’s comp is tethered to big tech firm pay rates and others aren’t, you risk internal misalignment, morale issues, and even legal exposure. Consistency = fairness.
Step 6 - Use the Conversation as a Trust-Building Moment
· You don’t have to win the comparison. You just need to be transparent, empathetic, and consistent. Help employees see the full picture of their compensation and why the decisions you make are aligned with their best interests and that of their employer.
Pay comparisons aren’t going away. But they are opportunities to educate employees about the appropriate comparisons you make as an employer.
If you're navigating these discussions in your org, I’d love to hear how you’ve approached it. What’s worked for you?
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