Your days of working with little or no pay raise may soon be ending — finally. Consider:
- Starbucks’ U.S. employees and managers will soon get pay increases of at least 5 percent and J.P. Morgan Chase will boost its minimum hourly wage for 18,000 employees (mainly bank tellers) over the next three years to $12 to $16.50, up from $10.15.
- According to the June jobs report, average hourly wages rose 2.6 percent, the most since the recession in 2009.
- 70 percent of HR managers believe their companies will have to start paying workers higher wages to attract and retain top level talent, CareerBuilder’s Midyear Job Forecast just said.
- And 46 percent of U.S. employees expect a pay raise or cost-of-living increase this year, up 10 points from 2009, according to Glassdoor’s Q1 2016 US Employment Confidence Survey.
Of course, this doesn’t mean companies are going hog wild handing out cash. According to a 2015-2016 WorldatWork survey, pay raises are only expected to average 2 to 4 percent this year.
All in all, you just might be able to land a raise of as much as 4 percent this year — or even more — if you negotiate wisely. So it’s time to sharpen your pencil and get proactive.
Now I realize the thought of asking for a pay raise may be about as comfortable to you as getting a root canal. So to help ease the way, I turned to Pat Katepoo, founder of WorkOptions.com and the online Pay Raise Prep School for Women course ($299) and asked for her tips for success.
If you want to be in a strong negotiating position, you must know what you could be worth elsewhere. This is especially critical for seasoned employees.
— Pat Katepoo, founder of WorkOptions.com
5 Steps to Get a Good Pay Raise
Here are the five steps Katepoo suggests, followed by three of my own recommendations:
1. Research the current market value of your job. If you want to be in a strong negotiating position, you must know what you could be worth elsewhere. This is especially critical for seasoned employees who’ve been in the same job for 5+ years because their salary increases often don’t kept pace with industry standards.
Online salary sites such as Salary.com, Payscale.com, SalaryExpert.com and Glassdoor.com can help. If you haven’t looked at these sites in a few years, you’ll be pleasantly surprised by how far they’ve come. It’s now much easier to customize your salary information with them according to your skills, experience, education and geographic location.
Trade associations often have useful compensation data as well.
A cautionary note: Even with all these sophisticated tools, you’ll likely find that solid salary information for your precise position can be hard to nail down.
2. When making your pay raise pitch, back up your market value figures with measurable job achievements. Focus on the ones that best align with your manager’s priorities. Depending on your boss’ style, consider featuring your job achievements in a slide-deck presentation instead of a text-based document.
3. Define your pay raise target goal before you meet with your manager. Consider using this three-level framework: Open with your “anchor point.” That’s an ambitious dollar figure which pushes the limits of what you think is possible, yet is realistic enough for potential agreement by your manager. For example, you could ask for a salary that’s within market-value range, but at the upper end. Aim to get at least your “aspiration value,” a figure that’s also within market value range but closer to the 75th percentile. And decide on your “reservation value.” This is the salary figure so low that it would have you looking for another job.
4. Anticipate objections to your pay raise request and have alternate strategies ready. Say your salary lags behind the market value by 10 percent and your employer’s budget only allows for a 5 percent correction. Then, suggest a shorter workweek (e.g., you’d have off every other Friday) or ask for more paid vacation — without a cut in pay.
Maybe at this point in your life, what you’d really like is more time off for hobbies or hanging out with your grandkids. In that case, negotiate part of your raise as time off instead of additional money.
5. Role-play the pay raise meeting with a partner, coach or mentor ahead of time. Practice really does make perfect. This session will help you anticipate objections and manage the emotional aspects of the negotiation with your manager, so you won’t cave due to nervousness.
3 More Tips
Three additional tips I’d like to add:
1. Time your request carefully. If your employer is downsizing, financially pinched or embroiled in controversy — or if your manager is overwhelmed or stressed — you may want to hold off on asking for more cash at the moment.
2. Remember the early bird gets the worm. If your company has a regular performance review cycle, schedule a conversation about your compensation a couple months before that. This way, your boss will have time to advocate for money in the budgeting process. If you wait until the review meetings are underway, decisions about salaries and bonuses may have already been set in place.
3. Consult the PayScale.com 2016 Salary Negotiation Guide. This excellent compilation of resources has solid advice on how to research and land a higher salary.
Good luck with your negotiation!