How to Negotiate a Pay Raise
 
 

How to Negotiate a Pay Raise   

Many employees do more work or perform higher skills than what their salary covers. But they feel that negotiating for a raise is one of those awkward conversations they'd rather avoid.

Though it's very common, that kind of thinking can hold back a person's entire career. Personal finance coach and bestselling author Ramit Sethi has a saying:

"Success in life is directly proportional to the number of awkward conversations you're willing to have."   

This is true whether you're a chief financial officer, a sales clerk, a fast food worker or a diplomat. You need to know what your skills, energy and expertise are worth to your organization.

Being able to list and discuss those contributions with your boss is a way of letting them know that you value your contributions, and expect others to value them also.

The alternative-never speaking up on your own behalf-is a way of telling your company that you're not essential to their operations, and can be easily replaced. As marketer/entrepreneur Seth Godin would say, "Safe is risky."

Let's say you have decided to negotiate a salary increase. The question then is, when do you ask, and how?

Negotiating a Raise: Is Now the Right Time?

Your annual performance review is not the only time to negotiate for a raise. You can ask any time you're able to clearly demonstrate that you're giving your company more value than you're being paid for.

 

That added value might include:

 

  •          Meeting tighter deadlines

     

     

  •          Offering new ideas that bring in added revenue or lower operating costs

     

     

  •          Taking on added work duties, such as a co-worker's duties after they are laid off

     

     

  •          Taking on a new or higher level of responsibility, such as training, supervising or managing others

     

     

  •          Completing new training, qualifications or a college degree that gave you new job skills or expertise

     


    Has your job grown beyond your current job description? Make a list of all the new duties that you've taken on and new roles you're filling.

     

    Dealing with Doubts: "Do I Deserve a Raise?"

     

    Don't your inner fears sabotage your plans to earn more. Deal with negative thoughts such as:

     

    1.    "I'm not sure I'm worthy of receiving more money."

     

    Make a list of the added value you're offering your organization. You might have lowered costs, increased sales, streamlined a work process so it's more efficient, or showed leadership on several big projects. Realize the value of that.

     

    2.    "This is a bad time-the economy is in trouble."

     

    If you're indispensable to your employer and can demonstrate this clearly on paper, then the economy is completely irrelevant.

     

    3.    "It's not polite to talk about money, let alone ask for more!"

     

    In fact, it's completely appropriate to negotiate a salary increase, in the right time and way. Your boss or manager is trained to have this conversation. It's part of their job.

     

    4.    "I'll feel like I'm being too forward or self-centered-not a team player."

     

    During your negotiation, you'll be demonstrating how your skills and efforts make life in your department a lot easier. You're delivering on a higher level now-for the good of everyone.

     

    Salary Negotiation Tips and Tactics: What Not to Do

     

    In addition to being fully prepared before negotiating a raise, be careful to avoid these common pitfalls:

     

    "I do more work than anyone else on my team." If you're pulling more weight than anyone else in your department, list those duties on paper-but don't complain about or even mention your co-workers.

     

    "If I don't get this increase, I'm quitting!" Even if you've decided to leave if you don't get a raise, don't say this during negotiations, and don't leave in a huff if they say "No." Stay calm and professional.

     

    "I'm handling bigger expenses now." Never mention your personal finances. It's irrelevant. Concentrate purely on the work solutions and other added value you're providing.

     

    "It's probably a bad time to ask, but I'm hoping you'll say 'Yes' anyway." Say the opposite: "It's OK if you say No, but I need to ask anyway." This will help your boss relax and listen more carefully. It also tells them you'll be calm and professional, no matter what.

     

    "I really can't work at my current salary/job title any longer." Don't make your employer the bad guy. Equate your work with the problem-solving and expertise that make you indispensable-and worth keeping at a higher rate.

     

    "I don't want to feel like I'm being taken advantage of." Feeling needy, defensive or judgmental? Let it go. Stay centered on the facts and stay neutral about both discussion and outcome.

     

    "Do you think I deserve a raise?"

     

    Don't ask yes or no questions. Concentrate on where the organization is and where it's going. Ask your manager, What developments do you see happening for our department in the next year or two? And how do you see my role in that?

     

    Their answers to those questions will show you exactly what their priorities and concerns are, so you'll know exactly what's needed from you.

     

    Throughout the negotiation, stay focused on helping your employer see that giving you a raise or better title will help their interests, not yours. The conversation is about what your organization needs-and how you can help.

     

    Negotiation Tips and Tactics: How to Prepare

     

    Before sitting down with your boss, get fully prepared. You'll need to do some research, and schedule a quick initial meeting before the actual negotiation.

     

    First, find out the average salary for your job, in your town. Do a search on LinkedIn Jobs for jobs similar to yours . Look at salary research websites or Google "salary guides" or "salary information" with your job title. What are other companies offering for your job, in your location?

     

    This will give you your basic salary range, but the best way to find out what your optimal value is, is to interview with other companies. An offer from a competitor is also a strong bargaining chip: Another company has confirmed your worth and is ready to hire you at a higher rate.

     

    Next, schedule your initial discussion with your boss. This is a quick "expectations" conversation, to let your boss know you're thinking of a raise, and to give you more information and time to prepare. Ask if they would be open to discussing a raise, but don't go into detail yet, draw out the conversation, or accuse anyone. Keep it quick, light and positive in tone.

     

    Schedule your negotiation at the right time. Don't wait for your annual review. Schedule a meeting with your boss when you've been at the organization for at least six months (or a year if you're new to the field), and can show proof that your performance goes beyond what your current salary or hourly rate.

     

    Salary Negotiation Tips and Tactics: What to Do

     

    Once you're fully prepared, you'll be able to negotiate your salary increase with confidence and a calm, professional attitude.

     

    Take with you:

     

  •          A bulleted list of your accomplishments over the past year

     

     

  •          An acceptable salary range in mind

     

     

  •          A few new job titles in mind

     

     

  •          Other possible compensation you'll accept, if you're not given the raise

     

     

  •          What it will cost your employer to replace you, including training time, losses in sales or productivity, recruitment costs

     


    If you've ever received emails that praise your work, Teena Rose, president of r sum -writing service R sum to Referral, suggests bringing those too. They might have come from clients or customers, managers, or co-workers, for example.

     

    Different negotiation methods work for different people. Here is one method that many have found helpful:

     

    Start by saying you're glad to have the chance to talk to your manager about your job performance. Share your list of duties and accomplishments, including the added value you regularly provide. Describe your role in terms of the actual job you do, with the job title that correctly describes that role.

    Explain that you've researched salaries for the job you've been doing, and that the average salary (or hourly rate) is $_______[your ideal amount]. The amount should be above their range for your job.

     

    Negotiation Tips: Dealing with a Counter Offer

    If your manager tells you that your preferred amount is impossible for them to match, ask them, "Can we do anything to get closer to that amount?"

     

    Let them come up with a counter offer. Then stay silent for a moment, with no expression. Your boss might rush to fill the silence with a better offer.

     

    Explain that you would be willing to come down to $__________, an amount higher than their counter offer. Continue to counter until they offer a number you can accept.

     

    Be willing to compromise. If your request for a raise is denied, career coach Marty Nemko suggests being ready to offer alternatives, such as:

     

     

  •          A higher-ranking title

     

     

  •          More vacation days

     

     

  •          Flextime

     

     

  •          Tuition reimbursement

     

     

  •          Telecommuting

     

     

  •          Stock options

     

     

  •          New training

     

     

  •          A better bonus plan, such as cash and/or shares in the company

     

     

    If a change in title is offered, ask if that would mean your job being raised to a higher grade. That should mean a higher salary range and improved benefits later on.

     

    If the Boss Says No: Negotiation Tactics

     

    If you come up against the common reply of "No one is getting a raise right now," don't panic. This is only Round One.

     

    These tactics can help you steer around the most common "No" answers:

     

    1.    "A raise would put you above your job category maximum."

     

    Point out your industry's pay scale, which is higher than your company's pay scale. Be ready with average salaries for your position at competing organizations in your area.

     

    2.    "I'm already paying you more than anyone else in your department/on your level."

     

    Respond with, "I'm sure that's true. But I'm constantly improving work processes / solving problems / handling extra work. Shouldn't I be paid more, considering that I do more?"

     

    3.    "We've had a really bad year."

     

    Ask your manager when things are expected to get better, and if they do improve, whether salaries will be affected. If you keep hitting a stone wall, Marty Nemko suggests, switch tactics.

     

    "What else is possible?" More vacation time? Telecommuting? A new title?

     

    4.    "I'd like to pay you more, and I'll put in the request. But I doubt they'll approve it."

     

    Ask what you specifically need to do to get a raise-and the next possible time you could discuss it with them. Then be ready to take those actions.

     

    If your boss still says "No" after your flexible negotiating, respond calmly with "I understand your position." Thank them, and leave their office. That will leave them wondering if you're planning on quitting.

     

    Ross MacPherson, founder of job coaching company Career Quest, advises, "If they consistently say no, and you are consistently performing well, it may be time for you to start looking for a company that is willing to pay you what you deserve."

     

    At the very least, you've presented your worth in clear terms to your boss. They now see how valuable you are, which you can build on in future.

     

    Successful Pay Raise Negotiations: Real-Life Example #1

    One of Ramit Sethi's readers recently used Sethi's Briefcase Technique to negotiate a $16,000 raise. Here's how:

     

    Will was hired right out of college as an interaction designer for a San Francisco nonprofit. He quickly rose from doing entry-level work to giving presentations to key clients. He was taking on growing amounts of responsibility, and managing his own projects. He'd become increasingly valuable to his organization, and had outgrown his current salary.

     

    Will first wrote down all his inner fears about negotiations, his real worth, and what his boss would think, and answered each of them.

    He then went to Salary.com and Payscale.com to research the salary range for his job in his city. But to find out his real worth-his particular skills, experience, work attitude, and expertise-he applied to local job openings to find out what other organizations were willing to pay him.

     

    The interviews gave Will excellent salary negotiation practice, while giving him a whole higher salary range, customized to his skills and expertise.

     

    Before interviewing with a company, Will researched the specific problems they were facing, and thought of solutions he could provide.

     

    He answered the questions during the preliminary phone interviews in general terms. But when he went in to speak with them in-person, he knew he had to take control.

     

    Will prepared to use Sethi's Briefcase Technique. Because he's a designer, he spent about five hours evaluating the company's website. He made a list of 30 things they could do right now to improve their website.

     

    He waited for the right time to present his case for the value he could offer-his interview with the vice president of technology, who was high-level enough to appreciate the value of good design.

     

    At the right time, Will explained that though he was trained to do engineering and could do that well, the best value he could offer them was improving user experience on their website.

     

    He then pulled out his "briefcase"-a big white binder with content and images, showing the changes he'd make.

     

    The interviewer was very impressed, and called in their product manager. They hadn't even been considering user experience. This was a high level of value they hadn't been expecting.

     

    Not surprisingly, Will was offered the job, but the salary was lower than he'd hoped for, because the company was a startup. But like any top performer, he rolled with that punch.

     

    He realized that his current employer were more likely to simply be uneasy that a rival was trying to take him away. Will now felt ready to negotiate his raise.

     

    He decided not to speak to his direct manager, but with the manager who would feel it most if he left his job.

     

    He met with his technical manager, and discussed his concerns not in terms of salary, but in terms of all the added value he'd been giving the organization freely over the past year.

    He told her he wasn't sure the value he provided was being properly reflected back to him.

     

    Without accusing anyone, Will made the important point that the organization "just wasn't properly structured to take full advantage of his skills."

     

    The technical lead asked if he had already decided to leave. Will said that he would rather work something out with them and stay, but described the rival company as being "more agile."

     

    This meant that his problem with the current employer was their organizational structure, not poor treatment of him as an individual.

     

    In the new job, he'd be able to give his input at an earlier stage and focus more on the user experience. His asked his technical manager, "What can you do to match that and keep me here?"

     

    This shifted the burden of finding a solution onto his employer, because it was their structure that was lacking. The project lead also realized that she was the one with the power to keep Will's value within their company. She knew that both she and the organization would be the poorer for losing him. So she took Will's case to a higher level.

     

    She was the one who mentioned salary first. She didn't know what his current salary was, but commented, "I wouldn't be surprised if it wasn't enough." She also suggested a change in title.

     

    That manager scheduled Will to meet with the lab director the next day. She'd explained Will's value to the organization, saying they needed to do whatever they could to retain him.

     

    The lab director asked to know Will's preferred salary. Now Will was able to use the rival company's offer, as well as his newly strengthened negotiating skills.

     

    He first explained how much he'd done and could do for them. He said his current responsibilities were more like those of a senior user experience designer. He then named an amount that seemed fairly high, but the director answered, "I'll see what I can do."

     

    Even though raises generally only came at the end of the year, Will got his the next day-an amazing increase of $16,000.

     

    It had felt awkward to him to let his managers know that he'd been interviewing elsewhere. But those with decision-making power had respected him for that.

     

    Most of Will's salary negotiation occurred before any actual meetings: his decision to negotiate, the research on value he could offer both organizations, and competitors' salary offers.

     

    Successful Pay Raise Negotiations: Real-Life Example #2

    Jane is a corporate recruiter for a life insurance company. With planning, she negotiated a $18,000 raise, with an option for an additional $10,000 after 18 months.

    Jane was getting her MBA degree and aiming to work in human resources. She'd heard that recruiting was a great preparation. So she got a job as a corporate recruiter with a life insurance company.

    Her annual starting pay of $33,000 was lower than what she was currently making as a retail manager, but commissions would be added.

     

    After she'd been with the company for six months, their most successful and experienced recruiter left for a competitor company that paid a starting salary of $73,000 a year, plus commission. Then another recruiter quit, leaving only Jane and one other recruiter.

     

    Management realized they'd lost their best recruiter due to their lower salary range. A few weeks later, the CFO dropped by Jane's office and said she'd soon be getting a raise.

     

    Because Jane had become good friends with the CFO, she was able to find out some crucial information. She asked if he knew how much the increase would be. He thought possibly an additional $5,000 to $10,000. Jane soon received an invite from the CEO to discuss the increase.

     

    Jane then sought the help of a career coach, asking to know the market rate for someone with her skill set, and for a negotiation strategy.

     

    The coach had Jane write out all the details about her career, education, salary and benefit history, so he could see her exact experience and expertise.

     

    He sent her a summary of the key points of salary negotiation: preparation, mindset and tactics, then walked her through that process. He also researched salary websites to find the market rate for her skill set. He found that the average salary for corporate recruiters in her city ranged from the mid $50,000s to the low $60,000s.

     

    He and Jane created a document outlining her skills and contributions, to present to the CEO. Whatever the CEO offered, she would counter-offer with $61,000 a year, and would demonstrate how her contributions equaled that amount.

     

    If his counter offers were too low, she'd try for other forms of compensation: more time off, tuition reimbursement, pay-for-performance plan, or another salary review in six months.


    Jane based her strategy on the idea that the one who is best prepared and has the most information is usually the one who wins.

     

    She met with the CEO, who offered her an additional $13,000. She said she appreciated the offer, but explained that her research had shown that a base salary for her position was anywhere from $55,000 to $63,000. And that because her performance was consistently strong, $61,000 would be a fair amount.

     

    The CEO acknowledged this, but said $61,000 was impossible right now. At most, they could go to $47,000, but that he would talk to his senior leadership team about it.

     

    Jane asked what his concerns were, that kept him from offering the $61,000.

     

    He explained that he thought that amount would de-motivate recruiters-they wouldn't work as hard at earning commissions.

     

    Jane suggested a trial period. If she reached certain targets within the next six months, the company would increase her base salary to $62,000. The CEO counter-offered: If certain targets were hit within the next six months, he would raise her to $51,000. Then after 18 months, they'd go to $61,000.

     

    They discussed the targets and agreed on which ones should be reached. Jane left the meeting feeling she'd accomplished her mission, even though it had taken a few unexpected turns.

     

    She immediately summarized the targets and the salary increases they'd agreed on in an email, and sent it to the CEO, printing out a copy for her own records.

     

    That last point was as crucial as the rest of Jane's actions. Whatever salary increase is negotiated, it's vital to get it in writing. Too often managers will forget or even deny having made a spoken agreement with an employee.

    It's important to be paid what you're worth, and anyone can learn how to negotiate a raise. Do your research, prepare fully, stay flexible-and get it in writing.

     

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