Negotiate Your Salary Like a Boss
According to a 2018 nationwide study, only 31 percent of job seekers negotiated for a higher salary at their current position. Unfortunately, this isn’t surprising, because people hate talking about money in general, let alone when it involves their boss.
What is surprising, is that 85 percent of job seekers that did ask for an increase receive it — HOORAY! — which may also make you wonder, “Why don’t I ask for more money, more often?”.
The good news is, you’re not alone. In contrast to the 31 percent of job seekers that did ask for an increase, 74 percent of women and 64 percent of men, did not. There are several reasons why this isn’t a shock. As humans, we are often our own worst enemy when it comes to asking for a pay bump. We easily come up with irrational fears, like our boss will be annoyed, or justify excuses, like the budget is tight. In reality, the cost of replacing a top-performing employee can be significantly higher than what most people would ask for. For example, for someone making between $30,000 and 50,000 per year, the average cost of replacement is 20 percent of that individual’s annual salary. For a highly skilled professional (think, Director or CEO), it’s a whopping 213 percent. Keep in mind that employer would have to cover the cost of HR advertisements, interviews and training, all before your replacement actually comes up to speed on the job.
“Out of the 85 percent of job seekers that asked for higher pay in 2018, 21 % received an 11-20 % increase.”
Even more note worthy than the cost of replacing you, is the fact that many employers want you to stay. Chances are that if you’re considering an increase, it’s because you’re already a top performer relative to your colleagues. This means that your employer actually wants you to ask for a raise, if it means keeping your work at a top-notch level. Most rather pay what’s necessary to keep you productive, than risk losing the value you bring to the organization — or worse yet, having you go to a competitor.
But knowing all this doesn’t make the process any easier, does it?
Luckily, there are a few strategies you can use to make asking for your next pay bump a bit less intimidating. Starting months in advance, here’s your plan of action:
Set the stage
If you’re asking for a raise at your existing job, start planning 3-6 months in advance by keeping track of all your major achievements, focusing in on whatever the “pain points” are of your supervisor. While your job description may be varied, you want to focus this list on your supervisor’s main concerns for the organization, which may differ from your day to day responsibilities. What do you do that makes his or her life easier? What have you done to improve the performance of the company?
Do your research
Salary benchmarks are useful in that they can be referenced as needed if there is push back to your request. You can find out what others in your company or industry make by talking to friends or colleagues, and visiting websites like Glassdoor.com, Payscale.com, or the U.S. Bureau of Labor Statistics. That said, keep in mind these number are averages. If based on your work you feel that you really need a higher number to be happy and productive, go for it.
Set and revisit your key performance indicator targets
If your firm doesn’t already have key performance indicator (KPI) targets, talk to your supervisor about setting specific, measurable goals for your role. These will serve as a reference point for meeting or exceeding your targets later in the year. If your firm already has KPIs, revisit them throughout the year to make sure they are reflective of your actual work. If they aren’t, change them. If you’re doing more, add them to the list.
Be your own devil’s advocate
People often are pretty skilled at getting in their own way, like coming up with reasons why you think your boss might say no, before you’ve even asked. Statements like, “It’s not in the budget”, or “I can’t pay you above this salary cap”, or “That’s not fair to your colleague who makes X”. Make a list of all these things in one column, and in the column next to it write or research a rebuttal. If it’s not in the budget, refer to value you’ve brought to the firm over the past year, or add pressure using the salary benchmarks you researched. If they can’t pay above a salary cap, what about a bonus? And while your colleague may make less than what you’re asking for, their salary is not reflective of your achievements or your work. Coming up and practicing these rebuttals in a way that is polite and professional will help prepare you for whatever your employer might come up with. Plus, you get to show off your critical thinking skills.
Practice in advance
Lastly, make sure practice your pitch and various responses with a colleague, friend or family member. Just like preparing for any presentation, you’ll be ready and confident to make your case the next time you sit down with your supervisor.
Using these methods, not only will you be more prepared to make your pitch and respond professionally to your employer’s comments, but you’ll also have the research on hand to support your request, improving your odds.
Finally, the day of your actually meeting, there are a few suggestions to follow:
Keep it brief and professional: Start off on a positive note, such as citing your commitment to the organization or excitement about a new role, before quickly asking for your raise or starting salary. This can be something as simple as, “I really enjoy working here and am excited to take on more responsibility. That said, given my performance over the past year and new role, I would like to request a $10,000 raise”. If you’ve touched base with your supervisor in the months leading up to your ask, you shouldn’t have to present the laundry list of your achievements. Skip the sob stories and stay focused on your impact.
Don’t use percentages: Most people digest a dollar figure more easily than a percentage increase. Often cited (but not necessarily accurate) stats like the idea that a “standard” raise is between 3 and 5 percent, makes it more likely for someone to be shocked by a 20 percent increase than a $10,000 raise on a $50,000 salary, for example.
Negotiating your salary is 1 money move.
Are you ready for more?
Stay away from ranges: name an exact salary or raise that is higher than where you’d like to be, or where you think your employer will end up. This way if they counter your offer, you’ll still be happy.
Come prepared: While you shouldn’t have to present all of your achievements to your supervisor the day of your meeting (because you’ve already one this work), they may need to get approval from their supervisor. Come prepared with a one pager or bulleted list to leave on their desk, so in the event they need to take it to their boss, they don’t have to wait for a followup email.
Lastly, if your supervisor or employer does ultimately shoot down your request, remember that it’s not the end of the world. Before the conversation is over, see if you can negotiate your benefits en lieu of a raise, like more paid time off, an increased retirement match, or professional development stipend. Keep in mind that some of those benefits may actually be of more value overtime, than your immediate request. If you’re employer won’t budge, or you’re restricted by a particular pay band, perhaps they might consider a six month or end-of-the-year bonus, based on you achieving revised KPI targets.
Using these methods, Beworth Finance hopes you’ll be more confident and prepared to go after your next big pay raise. Ultimately, it’s in your employer’s best interest to retain top talent, so don’t let your worst fears get in the way of your ask. Worse case scenario, using the guidelines above, you’ll learn that it doesn’t have to be as scary as you thought.
This article is based on a live presentation made to the staff of MPOWER Financing in Washington, DC in June 2019. If you or your organization may be interested in a similar presentation, please contact info@beworthfinance.com.
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