How to Ask for a Pay Raise

Objectively Evaluating Your Value to Your Organization

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Are you getting paid what you're worth? How do you know what you're worth? And Is your idea of worth tied to the job you do or your analysis of your personal worth?

These are the types of questions you need to explore before you contemplate asking for and negotiating a raise in pay. For many people, their compensation level is tied to their sense of self-worth. The more money the make, the more successful they are, the better at their job they are, the better person they are, or so they believe.

In reality, these salary-based value judgments can be unhelpful, and believing in them can be a major roadblock in successfully negotiating a pay raise.

When looking at your compensation you have to remember the employer's position is that your pay is based on the relative value you bring to the organization and the market rate for the job you're doing. It is not based on the qualifications you have, what you made at the last company you worked for, the financial obligations you have, or what Fred in accounting makes. What matters is what you contribute to the company. If you approach pay negotiation from any other position, your argument lacks the objectivity you need to make a solid case for yourself.

Tip:

Another major consideration when asking for a pay rise is your company's policy regarding such requests. Many companies have a prescribed system for pay increases, for example, only giving them once a year as part of a formal salary review. Deviations are rare, if not impossible, and attempts to circumvent the process can even be frowned on.

If your company does have a strict system, there can be little point in trying to negotiate outside of it. Wait until your evaluation is due and then be prepared with your objective arguments and your negotiation technique, which we discuss in detail below.

Compensation Research

To determine the value of your position you need to do your research. You also need to spend time planning and preparing for your negotiation. The more confidence you have that what you are asking for is reasonable and defensible, the less likely your arguments will be refuted or ignored. Some research to consider includes:

  • What is the industry average for your position? There are salary surveys on the Internet that you can consult, and you can often learn a lot from online or magazine job listings.
  • What compensation do local competitors offer?
  • What are the upper and lower limits of the pay scale for your position? Negotiating beyond the upper limit can be fruitless in many organizations.
  • What do other people with the same level of responsibility at your organization make?
  • What is the rate of inflation? And what has the average pay raise in your industry been in the past year? Has your compensation been adjusted for this?
  • Does your geographical location have a higher or lower cost of living compared to the average?
  • If you are charged out to clients, has your charge out rate changed while your compensation has remained the same?

Tip:

Try to evaluate total compensation not just salary. Look at the value of the overall benefit package offered by your organization and how it compares with the industry average and major, local competitors.

Skill Evaluation

Once you know what, in general, the job you do is worth, then determine where your personal skills, abilities and experience fit into the equation. This will give you a good idea of the value you bring to the job you are doing. Look for compelling arguments that are tangible and that help differentiate you from others in the company. Gather the following types of information:

  • Copies of your previous performance evaluations
  • Documentation of goals/objectives set and met
  • Personal letters of commendation
  • Statistics and detailed information related to your performance:
    • Sales generated/revenue earned
    • Money saved
    • Customer satisfaction reports
    • Creative solutions implemented
    • Problems solved
    • Improvements you've contributed to
    • Initiative taken
    • Demonstrated commitment, dedication, loyalty
  • What do you do over and above your job description?

The purpose here is to prove your value to the organization and make it clear that you are not easily replaceable. Sure, there might be other people who could fill the job requirements, but how do you bring added value to the position? Even if you are not looking for a pay rise right now, gathering together a list of your accomplishments and specific ways you add to value to the organization prepares you for these conversations in the future.

Tip:

If you need a raise but, after objectively evaluating the situation, it is unlikely you will get one, there are two approaches to consider:

Ask for more responsibility. By expanding your job requirements you increase your value and thus justify more pay.

Ask for a performance-based bonus or pay raise. By setting the bar higher you, again, increase your objective value to the company. Being compensated for doing so is a reasonable result.

Timing

The next step in planning for salary negotiation is timing. Asking for a raise in the middle of an economic downturn may not be met with positive results. Neither is asking for a raise when your company is under financial pressure. You need to be aware of your organization's financial state and make your move accordingly. Some questions to consider include:

  • How well is your company performing financially?
  • What is the stock price trend?
  • Do you know what has been budgeted for salary increases?
  • Is there a company-wide salary review coming up? Or has one just been done?

Tip:

If the timing is not right to ask for more money, you might consider negotiating other perks such as vacation time, flex time, stock options or professional development opportunities.

With the planning and preparation behind you, now you face the actual negotiation. Negotiating is a process that many people find intimidating and uncomfortable but, remember, it is not pleasant for your manager either. By keeping that in mind you can manage your own fear and nervousness accordingly. Here are some negotiation basics to keep in mind.

Negotiating Successfully

Successful negotiation is not about winning, losing or compromising. It is about collaborating. This is why you have spent a significant amount of time preparing your position. You know what you want and deserve. Now you have to present your position to your employer and work together so that both parties' needs are met and each leaves the negotiation feeling satisfied.

The best way to do this is to prepare for possible obstacles to your position. Put yourself in your employer's shoes and try to address as many of their concerns as possible. Ask yourself, 'How will my boss explain and justify my pay raise to his or her boss?'

  • Am I easily replaceable?
  • How long would it take to get another person trained to my level of performance?
  • What would happen to the company in the short term if I were to leave?
  • Would the company be able to replace me at the salary level I am currently being paid?

Next, consider...

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