How to Ask for a Pay Raise
Evaluating and Negotiating Your Value to the Business
Are you getting paid what you're worth? How do you know what you're worth? And how can you make sure your salary reflects this?
For many people, their compensation level is key to their sense of self-worth. The more money they make, the more successful they are, the better at their job they are, and the better person they are – ;or so they believe.
In reality, these value judgments can be unhelpful, and believing in them can be a major roadblock in successfully negotiating a pay raise.
Remember that your employer's position is likely that compensation is based on the 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 a co-worker makes.
What matters is your contribution to the company. So, if you approach pay negotiation from any other position, your argument will lack the objectivity that you'll need to make a solid case for yourself.
Do employers have to give you a pay rise?
Many companies have a prescribed system for pay increases, so be sure to check out your organization's policy.
For example, it might only consider raises once a year as part of a formal salary review, and attempts to get round the process could be frowned on, damaging your reputation.
In this article, we'll explore how to prepare powerful and objective arguments to back up your request, and look at the negotiation techniques that'll increase your chances of success.
Arguments for a Raise in Salary
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?
- 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 rate changed while your compensation has remained the same?
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.
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.
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. (Be sure not to hold yourself back by refusing extra responsibility while you wait for a raise that might never come!)
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.
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?
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 Your Pay Raise
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 your own position relative to the successful negotiation of a pay raise.
- Are there other attractive job opportunities elsewhere?
- How long would it take to secure another position?
- Would a higher salary at a different company make me happier than staying where I am at?
- Would other companies value my contribution more highly?
These questions are designed to get you thinking of your and your employer's BATNA (Best Alternative To a Negotiated Agreement). For example, if your BATNA is strong (you have lots of great opportunities at higher pay) and your employer's is weak (it would be hard for them to replace you), you can be bolder.
You can find out more about negotiation in our article, Essential Negotiation Skills.
Salary Increase Negotiation Strategies
Here are eight dos and don'ts to follow:
- Negotiate face to face. You may want to ask for a meeting by email but never ask for a raise that way.
- Pick a time of least pressure and distraction for you both to have your conversation.
- Take a "What's in it for them?" approach when you outline why you deserve a raise.
- Emphasize your value to the team, not what you need to make your life easier.
- Don't use ultimatums. Remember this is a collaboration. Ultimatums can damage your working relationship seriously.
- Allow your boss to put out a number first. Then counter with a request that is a few percentage points more than you expect, to give yourself room to move.
- Have a list of other items that are open for negotiation should salary increases not be available.
- Follow-up with your requests but remain dignified and professional at all times.
And if the answer is "no" this time, begin planning for your next round! Ask for suggestions as to how you could increase your chances further, and work with your boss to make these things happen.
Negotiating a pay raise is an emotionally charged situation. You feel you deserve higher compensation but the difficulty lies in proving it.
By planning and preparing using objective data, you put yourself in a much better position to defend your request.
Successful negotiation is a collaborative process so be sure to understand how your need for a pay raise fits with your employer's need to achieve objectives.
When you can demonstrate your value to the organization, you are in a great position to reap the financial awards you deserve, and achieving a win-win.