There’s never been a better time to ask for a pay raise. The Great Resignation shows little sign of slowing down giving employees more leverage than ever to negotiate a pay raise. It’s an employee market with companies desperate to retain current staff or fill job openings amid record numbers of employees quitting their jobs.
While most employer salary budgets have been trending at an average of 3% each year, many employers froze pay or gave reduced raises during the pandemic. If you’re feeling underpaid but like your current job and don’t want to leave, now is a great time to ask for a raise.
Preparation Is Key
Most of us don’t feel comfortable outright asking for a raise. So, how to go about it? Don’t just book a meeting with your manager and expect to be handed a raise outright. In this issue of Money Moves we share tips on the best ways to ask for a pay raise.
First, Determine Your Reasons For Wanting A Raise
You may have lots of reasons for wanting a raise such as rising inflation, your partner lost a job, you just bought a new house, or the current employment market.
Thinking that your own needs give you the upper hand is a big mistake. Instead, your mission is to educate your employer on the value you bring to the organization.
As with any negotiation you will need to prove that you are worth it. Be prepared to explain valid reasons why you want a raise. Examples include you took on new responsibilities, got an excellent performance review, your pay has not kept pace with market rates or you learn that new or current co-workers earn more than you for doing the same job or a job at a similar level.
Know Your Worth!
It’s important to do your research before you ask for a raise or risk selling yourself short. The best way is to use a salary calculator such as salary.com Factors such as education, experience and geographic location all make a difference here too.
Ensure Your Job Performance Merits a Raise
In addition to knowing your worth, ensure your performance on the job warrants an increase. Focus on your contributions and provide examples of how you added value.
Did you outperform colleagues? Knockout your sales targets? Save the company money?
How To Ask For A Raise If …
…Your pay has not kept pace with market rates or new co-workers are getting hired at a higher rate than you
This is an all too common scenario especially during the Great Resignation as a result of millions of people jumping ship for pay increases of 10-20%, something that would otherwise take years to achieve if they stayed put.
Most companies are well aware of pay compression issues (i.e. when employees who have been in the job for some time make less than new hires in the same position) but few address it pro-actively choosing instead to ignore it to minimize the impact on budgets.
Salary ask: Do your research and share real examples. If you find you are being paid x% below the market rate request the % increase it would take to get there. Appeal to the fairness factor in the conversation.
…You took on new responsibilities
Make a list of your new responsibilities and your accomplishments. Don’t assume your manager recalls your achievements. Did you mentor a new team member? Find a new client? Take on new projects?
Salary ask: Create a persuasive case to support your request. Have a specific number or a range in mind (not a percentage) that reflects market rates for someone at your level.
…You got an excellent performance review
Aced your goals? Make a list of your accomplishments and how they added value. Ensure your manager knows you are a high performing employee aka someone they will fight to retain.
Salary ask: This is the time to ask for a specific % as most companies will have a budget based on total payroll costs e.g. 3-4%. High performers can expect increases anywhere from 5-10% based on role and market rates especially if they are being considered for higher level roles.
…You get another offer (especially from a competitor)
Don’t use the threat of leaving to make your point unless you really are prepared to leave. Employers don’t appreciate being held over a barrel and will likely sour relations which only harms your chances of getting that raise.
Salary ask: Be sure to share what you enjoy about working for your current employer and how you plan to continue to add value. If you’re happy with everything but the pay your manager may realize it’s only a matter of time before you move on to greener pastures.
Your manager may not be able to match your new offer so be prepared to state an amount that’s agreeable to you. Don’t issue an ultimatum.
Be prepared to compromise. If your manager can’t fully meet your salary ask, consider if would you be willing to accept additional paid time off, a higher bonus percentage or greater flexibility instead.
Do the job to get the reward!
There’s never been a time to ask for what you’re worth. Demonstrate that you have the skills, drive and results of someone working at that salary. This may require a mindset shift from “I deserve this” to what you are doing for your employer and the impact you have.
Be the person who shows you have your employer’s best interests in mind which also benefits you along the way.
You’ve Got This!
Whether or not your pitch is successful, be sure to thank your manager for their advocacy and actions on your behalf. If at first you don’t succeed, try, try again. Request to have another salary review in 3-6 months time. Take the time to consider the response and what is most important to you before making a decision to stay or move on.
Ultimately the decision to stay or leave is a personal decision based on your career vision, family responsibilities and many other factors. Will you be happy if you stay on? Will it affect your level of engagement or performance?
Looking for or starting a new position also comes with risks. Will you like it? Is the company financially secure? Is there room for growth?
This article is part of our Money Moves series; advice for all things career and money.
Arche helps people architect, navigate and advance their career path with expert advice and tools to support your job search, interview preparation, professional branding, salary negotiations, and career advancement.