Question: While the economy is in the pits, my company is having a record year and is sitting on a mountain of cash. Yet, we employees are not getting a share of their fortune. Shouldn't we be rewarded for our exceptional effort in a tough market?
Answer: Yes. In a perfect world, your employer would share its wealth and hand out bigger checks to everyone, but the American business scene isn't utopia. Employers almost always put employees behind stockholders and CEOs when it comes to dividing the spoils. If you want more compensation, and your company isn't giving it to you of its own volition, you'll have to ask for it, especially in this job market.
Striding up to your boss and demanding a raise isn't something most people relish. It's risky and fraught with the potential for rejection. Yet, you can make it a much more comfortable and successful process, if you follow the guidelines below.
Develop a Strategy
Negotiating comes naturally to only a lucky few. Even if you negotiate regularly on behalf of your company, the stakes seem much higher when your ego and income are on the line. Preparing yourself ahead of time will give you more confidence and an infinitely better game plan than one contrived during a spontaneous request.
Begin your preparation by figuring out why you deserve a raise. Shareholder and officer compensation is stratospheric and your firm is sitting on a pile of cash. Given these two circumstances, it's much harder to deny a good employee a reasonable increase when the company has a money tree growing in its backyard.
If your organization lost you to another firm willing to pay more, chances are you would be hard to replace. Human resources and management would spend a lot of time and money finding your substitute. Even if your replacement were equally talented, he or she would still require some time to settle in, which carries an opportunity cost more wisely spent on giving you a raise and reinforcing your loyalty.
There may also be some recent achievement that stacks the deck in your favor. Have you...?
- Recently captured a major new piece of business
- Saved the company a significant amount of money
- Increased your department's productivity beyond expectations
- Accepted a lot more responsibility/authority
- Raised the visibility of your firm
- Received an outstanding performance review
- Initiated the development of a new product or service
- Improved quality and customer satisfaction to world-class levels?
All of these activities put you in a good position to ask for and get what you want. In fact, they are your best ammunition, because they showcase your specific contribution to the company.***AS A SIDE BENEFIT, THESE ARE THE SAME EXPERIENCES YOU WOULD WANT TO HIGHLIGHT IF YOU NEEDED TO POLISH YOUR RESUME...
There is one other critical issue in developing reasons for what you want: your request's advantage to your manager and company. People are much more likely to help you if their enlightened self-interest is involved. If you can't answer how your request benefits your department and what your company will gain by paying you more, you are going to have a very tough sell.
Once you're satisfied you have good reasons for asking your organization for more money, decide specifically what the amount should be. As with identifying your reasons for deserving a raise, the amount you request will hinge upon both what you are worth in the global market, as well as your value to your company. Job market compensation information may come from trusted colleagues in your career field or industry, professional association surveys or the internet, headhunters or college placement offices. Unfortunately, market competition probably isn't in your favor right now, unless your industry or career is doing much better than the economy as a whole.
Also, try to find out your position's compensation range within your company. Usually, if you have been performing well, asking for an increase within this range is more likely to get a favorable response than going above it.
If you think the internal range doesn't reflect today's depressed job market, you may opt to develop other criteria for pegging your increase. For instance, suppose you just saved your company $200,000 in accounting costs by outsourcing the department. You could make a reasonable case for your being entitled to a 5-10% of it, especially if this achievement was truly outstanding. Or, maybe, in the last year, you have grown your division by 30% from 10 to 13 million dollars, while increasing its profit by 65% to $950,000. An extra $30,000 in salary or bonus still leaves plenty for the stockholders and other deserving participants.
When you don't have specific guidelines to follow such as a viable compensation range, you'll have to devise your own rationale for what a logical increase might be. If you can justify it in your own mind and possess a formula for how you calculated it, you are much more likely to find your management agreeing with you.
A word of warning: It is very risky to base your request upon what your internal corporate colleagues are making. Comparing your compensation unfavorably to your peers' sounds like whining. Because most firms don't like their employees discussing individual salaries, your having this information may label you as a snooping malcontent who's liable to broadcast her sweetened deal to all the troops and cause a massive moral problem.
For maximum impact, choose your timing carefully. Make a practice of asking for what you want when:
- You've done something outstanding for the greater good (the bottom line). Do this with just the right touch of humility, and you will be hard to refuse.
- You are in high demand.
- Company profits are up and the stock is rising.
- The budget has not yet been poured in concrete, because it’s much harder to negotiate for a larger than planned raise once it the budget is set. Give yourself and your manager a break and make your increase a part of "the big package." Congress does this all the time.
- Your manager is more likely to be in a good mood. If your manager is a morning person, approach him or her then, when the probability they are in a good mood is higher.
On the other hand, think twice about asking for more if:
- Your work is frankly mediocre. Rising waters don't necessarily raise all boats. Individual merit is becoming increasingly important in determining compensation.
- Your company is downsizing. Asking for more money in this situation is both futile and ill-advised. Ditto for a company in the red.
- New management has just arrived on the scene. They don't know you. In their eyes, you have no track record. They already have a likely tendency to replace you with someone they trust from their inner circle. Make sure you are on firm ground before you commence climbing.
After you've determined your reason for asking for the raise, its specific amount, and the proper timing, consider the objections your manager might have to giving you what you want. Does she have the authority to say "yes"? People in sales know only the person who signs the check can close the deal. If your manager doesn't have the power to grant your request, you'll not only convince them, but also the person who can.
Other questions you should ask yourself are:
- Is your timing or performance a problem for her?
- Is your request out of line with the current compensation structure?
- Have you neglected to develop a reason why satisfying you is also in her and your company's best interest?
These are just a few of the many situations and attitudes that can doom your request to failure. Thinking about objections in advance and devising ways to counter them, in combination with the other techniques discussed here, will take you a long way down the road to a bigger paycheck.