Salary compression explained, and the one sentence that resets it

Back in 2022, when Lean In and McKinsey were calling it the "Great Breakup," for every woman director who got promoted, two others walked out the door of their companies. Consider that for a moment. The ratio was not two leaving for each hire, but two leaving for each person moved up.

The part that stands out is who was the one heading for the exit. These were not women whose careers had stalled. Directors are the people organizations insist they want to retain. They left anyway, and those who did had done the math first. The key variable in that calculation is one your employer rarely puts in front of you: the difference between what it pays you and what it pays the executive it just brought in to work beside you.

Where the figure originates, and the point at which it runs out

That statistic comes from the 2022 Women in the Workplace study, which tracks large North American employers every year. It describes a single year and a single level, and it cannot tell us why any individual woman resigned. A portion of them quit to work for a better boss. Others left for a larger title. Yet a good deal of the quiet force behind these exits is salary compression, which occurs when raises are calculated as percentages of a salary fixed years earlier, while new hires are priced at current market rates. The longer you stay and the more you accomplish, the further your pay slips behind, even though no one chose that outcome.

What it looks like from your desk, here in Richmond, is a question of perspective.

Imagine you signed on six years back at a respectable number for a senior manager role. You earned two promotions. Each time, the increase was a percentage of what you already earned, and each percentage was reasonable on its own. These days you run a whole function, and not long ago the business hired a director from the outside world. HR circulated the offer, and you saw the figure. That person's pay lands $18,000 higher than what you take home.

Nobody misled you, and that is worth remembering in Richmond too. Nobody in your management chain set that up on purpose. The organization runs two pricing systems, one for holding on to people and another for bringing people in, and only the second pays attention to the market. Since the day you started, the first system has been what sets your worth.

Here is what this means for you.

The salary you draw belongs to the person who walked through the door six years ago. The work you do today belongs to a more senior executive whose market value has grown, and your employer has had little reason to notice, because the earlier version of you keeps showing up and doing the later version's job.

This does not mean you negotiated poorly. It is the standard result of staying and succeeding, and it only resolves when someone requests a re-price instead of a raise. The two requests differ. Under a raise, a percentage is layered on top of the salary you currently earn. A re-price builds a fresh figure from scratch.

Your following move

Find three posted salary ranges for your current title in the Richmond metro and note their midpoint. In your next scheduled one-on-one, deliver this line and then let the silence sit: "I'd like my pay set against the market for the job I'm doing now, not adjusted up from the job I was hired for."

Should your manager tell you the budget cycle is shut, request the date it reopens along with the target number you're shooting for, and afterward send a brief two-line note confirming both. Should your manager claim no gap exists, ask to be shown the pay band. Whichever way it goes, you have moved the talk away from "how much more" and toward "what is this job worth," and only that second conversation can actually close the gap.

Think about the last time you looked up whom your pay is being benchmarked against.