How do I avoid salary inversion?

Salary inversion happens when starting salaries increase at a more rapid pace than salaries at your institution. In other words, market salaries raise more quickly than your annual raises. Salary inversion is fairly common especially at public institutions because the demand for Ph.D.'s in accounting outstrips supply.

There are a couple of ways to avoid salary inversion and both involve building a resume that allows you to be competitive in the market. The first way is to move. If you are willing to move periodically and you have an attractive resume than your salary will always be close to market. Another way is to put pressure on your current institution to do what it takes to keep you from moving. If you have an attractive resume and market salaries keep escalating, then your department head will constantly be worried about the possibility of losing you to "greener pastures". Your department head will also recognize that it will require the current market salary to replace you. So, if your resume continues to improve, then your department head will likely find money each year to keep your salary within reason of market salaries. Some public schools don't have the budget to give raises to match market increases but there is often a mechanism at the university level that allows for salary "adjustments" to keep good faculty. So, your department head may need to make a case for you at the university level but if your department likes you enough, then your department head/dean will try to do whatever it takes to keep you because replacing a collegial, research-active accounting Ph.D. can be difficult and more costly than doing what it takes to keep you.

Another thing to keep in mind is that flexibility is also key to avoiding salary inversion. Good jobs open up all over the country and many of the high-paying jobs open up in the eastern time zone. A strong geographical preference that limits you to one state or one particular region of the country will hinder your ability to move. If there are only one or two universities that pay market salaries in your geographical preference and those universities are not hiring or are not hiring in areas that match your resume, then you do not have a credible threat to relocate. Thus, you cannot count on the market to discipline your current institution in terms of salary concessions.

Check here for information on market salaries for public universities.