Q: My annual review is approaching. Because of the extra work I’ve been handling lately, I feel like I deserve a raise. What’s the best way to negotiate a raise higher than the 5 percent cost-of-living bump employers usually offer?
A: I’ve found salary negotiation more of an art than a science. Just because you’ve taken on extra work doesn’t mean your employer will think it justifies an additional salary increase over and above the usual cost-of-living adjustment. Many companies are challenged by the tighter economic times and there continues to be cost-cutting and layoffs galore. It seems everyone I speak to is being asked to do more for the same or less salary, so a common response might be, “You’re lucky to be employed.”
This being said, with some research and a well-thought-out plan, this is where the “art” of the negotiation comes in. From my experience of negotiating my own compensation packages, as well as witnessing colleagues who not only jumped ahead with higher salaries but a career “fast track,” is that they all followed a handful of common strategies.
If you feel your efforts warrant an additional pay increase, then take a look at the points I’ve outlined below.
Start early and don’t wait until your annual review.
Employers love good news, particularly when your good news makes them look great in front of their boss. Managing expectations upwards is an important and valuable skill to learn. Some of the most successful people I’ve met who are great at negotiating higher salaries and getting promoted are also very successful at managing the expectations of the management chain above them.
Send out an email when you’ve finished a successful project or a great client meeting. Spread the good news. And remember, by emailing your bosses boss, it not only helps to make your boss look good that she/he has a winning team working for them, but it can also be a way of letting the senior management know your achievements if your direct boss is prone to taking the credit. It’s also helpful to build relationships with other senior people in the firm, not just your direct boss. Not only is it great for mentoring, but the more people you know and who are aware of all the great things you do for the firm, the better. What if your boss leaves the company or gets transferred? Then who will promote you?
Don’t be shy on self-promotion. Be the expert.
This ties into my previous point of not waiting until your annual review. If you have some helpful feedback from a recent client meeting, opened an important client account or another useful update, don’t be shy about sending an email sharing this information. Be the expert, show your colleagues and management that you’re the go-to person — you’re not only helpful, but proactive and committed. Think about including your boss and your bosses boss (if appropriate) and other divisional managers as well as colleagues. Not only will this be helpful for your co-workers, but it helps to promote you as a team player and create a reputation that you’re also excellent at your job. This approach helps tremendously with your visibility in the firm. People are busy with short attention spans and if the company is large, it’s easy to get overlooked. They may not know what great things you’re up to, so appoint yourself CEO of your own PR campaign and promote it.
Get close to the revenue stream.
No matter what industry or role you work in, it’s always easier to negotiate a larger compensation package if you have a quantifiable number next to your name. Whether it’s billable hours, products sold or trading commissions, having these figures in hand quantifying the revenues you brought into the firm or your year-on-year percentage increase helps enormously. It’s hard to argue against hard numbers.
Understand your market.
Try to find out what people in your industry are being paid. Develop relationships with headhunters or recruitment agencies. Ask them what they’re seeing in the marketplace. Search newspapers (I remember indications of yearly compensation ranges for Wall Street were often mentioned in the newspapers). Talk to ex-colleagues who have perhaps left the business, because they may be more willing to share what they were being paid. Speak to some senior colleagues and get their thoughts; they may be able to guide you about compensation levels and also the ins and outs of negotiating at your company. Getting an idea of the compensation range is helpful. The more information you have, the easier it will be to confidently negotiate for more.
Get comfortable with your particular pay metrics.
Understand how you’re being paid. Is it meeting sales targets, commissions levels, hours worked, project completed? Find out what you’re being evaluated on and measured by, then discuss the ways in which you can increase your salary and get promoted if you reach these targets with your boss ahead of time.
If you feel you’ve done a great job and this warrants a pay increase, then go for it. Come prepared. Keep a checklist of all the wins you’ve had during the year and bring this to your annual review. Be confident, knowing that you deserve to be compensated.
Be prepared to resign.
I recommend this option as a last resort, but sometimes employers won’t commit to an increase until you’re walking into their office with a letter of resignation. If you know you’re doing a great job and you’ve been following through on all the points I’ve outlined above, but are still being overlooked for promotion and salary increases time and again, then it may be time to consider another job. If your employer really values you, they may be willing to match or increase the competitors offer so as not to lose you. At this point, it’s up to you to decide whether you wanted to stay or go elsewhere.
Finally, be creative.
The reality is many companies are facing tougher economic conditions. They may want to pay you more, but financially if may not be possible. Therefore, as compensation and acknowledgement for your hard work and long hours, you may be able to negotiate for more vacation days, or to work half-days on Fridays during the summer. It’s helpful to also think of non-monetary benefits that can be given in lieu of salary increases.