Why you should ask for a raise now

by Pop on August 7, 2010

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Why it’s dumb to just be “happy to have a job”

Standing still is not a career plan. Here’s how to turn the final months of the Great Recession into an opportunity to bolster your salary by 10% or more.

Oh yes, the job market is bad. You probably know someone who’s looking for a job right now. I know several, and many of these professionals have started to apply for temporary jobs in retail—folding clothes and working registers—and still haven’t gotten a bite. That’s enough to make anyone want to hunker down and just pray that the suits on the top floor don’t look your way.

That’s a big mistake. If there’s one thing I want you to take away from this post, it’s that there’s great power in taking five minutes to put yourself in someone else’s shoes. It’s such a basic concept, but no one does it. What are your boss’s greatest worries? What does he or she talk to his spouse about after getting home? What do good and bad days at the office look like for him?

Do that now, and you might find it’s not the worst time to ask for a raise after all. Why? Well, first it’s important to understand that it costs a lot to replace someone. According to the Employment Policy Foundation, it costs somewhere between $6,500 to $18,000 to replace an employee, depending on the industry. When you talk to human resources managers, they often talk in multiples of salary. Hard to find employees, like registered nurses in rural areas, can easily cost 150% of a base salary, from costs to hire a search firm, lost productivity costs, paying temporary workers, and so on.

In the meantime, HR managers are very worried about turnover right now. They’ve come to grips with the fact that many employees felt shafted during the downturn, and many are already starting to voluntarily leave for other jobs. Sorting through 1,000 applications for one position isn’t as fun as you might think.

With employee retention top of mind, that leaves you in a better bargaining position than 9.5% unemployment would imply. No matter if you think you’re getting paid fairly or not, asking for a raise is a conversation everyone should have regularly, if for no other reason than to keep your career in motion.

In this two-part series, I’ll explain how to prepare for that conversation and then how to have it, based on actual conversations with raise-givers and, in part two, on behavioral research into what negotiating tactics actually work, without leaving a bad taste in your boss’s mouth.

See where you stand.

Especially if you took a job during the downturn, there’s a good chance your employer took advantage of the weak job market to pay you less than what he might have a few years ago. Although companies are reinstating raises, they’re going to be less than 3% according to a recent survey.

At that rate, if you were brought in at $40,000 for a job that would normally pay $45,000, it’ll take four years to reach what your colleagues get paid today, putting yourself on the path for a long-term hit in wealth, simply because you picked an unlucky year to get a job.

If we were talking two decades ago, I’d give you this trick. Find a few work colleagues who feel they’re underpaid and have everyone write their salaries on a slip of paper. Put them into a hat, mix ‘em around, and lay them out on the table. You’ll quickly see where your salary falls, without anyone getting embarrassed about being poorly paid.

Luckily today, we don’t even have to do that. Some popular salary websites, like PayScale.com, are useful in getting you a general idea of the market for particular skills. But I’ve found GlassDoor to be more useful. If you work at a large company, you’ll be able to see the actual salaries of coworkers who have anonymously put their salaries into the system. That makes for a more accurate comparison, since companies aren’t always uniform in the titles they give to people doing the same job.

If you find yourself at the top of the salary range given by one of those tools, that’s great! But don’t rule out asking for a raise anyway. This is just an exercise to see how much of an increase could be achieved. Someone who sees they are at the bottom of the salary range has a better chance of getting a large increase than someone at the top.

Do a self assessment.

Everyone thinks they deserve a raise. Few people can prove it.

First, forget all of the reasons why you want a raise—they don’t matter. A raise negotiation isn’t personal. It’s not about your car payments or rising rent. You need to show your boss why he has a reason to give you a raise.

So, start putting together a list of reasons. You might, for example, regularly deliver programming assignments a week ahead of schedule, allowing your team to deliver products more quickly. If you’re in sales, maybe you convert prospects at an above average rate. Anything you write down should be central to your job or to your boss’s job. Ultimately, he probably has a boss to please too.

It doesn’t matter if you run the party planning committee. Honestly, unless you’re unionized, it also probably doesn’t matter if you’re spending extra hours at work. Your boss, and your boss’s boss, will need reasons to give you a raise that are central to their bottom line.

Some good examples of reasons for a raise:

1. The project I led came in 10% under budget.

2. Since I took charge of business development, we’ve acquired five new customers, one of which is on track to generate 20% of our revenue this year.

3. I’m developing our people. Since being put on my team, Sally and Jim have increased their sales performance by 25%.

And some bad examples:

1. I do just as much work as John, yet he gets paid $5,000 per year more.

2. I’m the first one here in the morning and the last one to leave. (If you don’t have results to show for it, the immediate question becomes, why does it take you so long to do your job?)

3. I haven’t gotten a raise in two years.

Hopefully, you have good reasons. If you don’t, you should still have this conversation with your boss, but more on that in part two.

Finding the best time to ask

You’ve probably heard that the best time is right after you get congratulated for a major accomplishment. This is only partially true. If you work for a big corporation, your boss might not have flexibility in the middle of the year to move money around.

So when will he? Get familiar with your company’s budgeting process to find an optimum time. If your company is like most, the fiscal year will begin in January or July.

Performance reviews are when your boss doles out whatever raises were determined by that earlier, budgeting process. And since raises are averaging just a few percentage points, it might not be an ideal time to ask for one. First, depending on the company, it’s likely the raises are already working their way through the payroll system by the time you hear about them. But second, giving an extra point or two to you means he or she has to take a point away from someone else. Not ideal.

Another great time to ask is after someone in your department leaves. As HR and your boss try to determine what salary they’ll give to whomever they hire as a replacement, you’ll have room to maneuver and take some away from that salary for yourself.

But honestly, the best time to ask for a raise is nearly always going to be “now” unless your company has just experienced something overly negative. Because even if you can’t get the raise at that meeting, it at least puts it on the table for when your boss has more flexibility.

Ok, ready for an uncomfortable conversation? Trust me, earning 10% to 20% more is going to be worth it. Here’s part two, which will walk you through the actual negotiation.


{ 5 comments… read them below or add one }

Rob Bennett August 9, 2010 at 12:45 pm

I love a well-argued counterintuitive take.

One thought I have re this one is that a lot of people will be afraid to go ahead and ask for a raise today. If that’s the case maybe you shouldn’t be asking for the raise. But if you have doubts re your own value, you should be asking yourself some hard questions. Those who worry about what will happen if they have an uncomfortable conversation with their boss need to be having an uncomfortable conversation with the man or woman in the mirror.


frogger August 10, 2010 at 10:36 pm

Earning more money is all about believing you are worth it. Here are the steps I took over the past year.

1. I was in an entry level position in my field for 3 years (credit analyst). I used relationships from a college internships to step up to the next level (commercial lender – a couple years ahead of the normal schedule, by the way) in late 2009 (bad economy). This netted me a small pay increase. I partially believed in myself in this case. I saw myself as a commercial lender, but I did not see myself earning like a commercial lender.

2. About 9 months later when my bank agreed to be purchased by a competitor for whom I did not want to work, I had calls from 3 banks wanting to employ me. This time, I saw myself as a commercial lender, and I also pictured myself earning like a commercial lender should. I took a lateral position with a similar small bank, but netted a 60% salary increase, signing bonus, and stock options.

Even in a recession, opportunities exist for people who can perform well.

Pop August 10, 2010 at 11:17 pm

@frogger Wow, that’s a great jump in any economy, let alone this one. If you get a chance, I’d love to hear how you got that big an increase at the new bank. Did you have to answer questions from the hiring manager about what you were earning in your current position? Were you nervous that they might look at your previous salary and lowball you based on it?

CG August 11, 2010 at 1:09 am

Hi Pop-

What a great post. I’ve been getting things in order for a month now, and have already planned to ask for a raise before Q4 starts.

Step 1 in my plan: Get in perfectly with the co-owner. Check.
Step 2 in my plan: Be awesome – make things happen and get things done. Check.
Step 3 in my plan: Develop those around me and hire people to do the menial stuff I have to do, without direction from the bosses. Check.
Step 4 in my plan: Get an offer from another company in case I feel the need go into a do-or-die situation. Second Interview next week, in the middle of an internship and interview with second company Sept. 2.

I’ll update this post when I find out if it works. Any incite would be great.

Pop August 11, 2010 at 7:57 pm

@CG Hey, thanks for your comment and for updating us on your progress! My post on steps you can take in the actual raise conversation should go up tomorrow morning, so hopefully there will be some help there.

I’m curious about your Step 3, when you say you’re hiring people for menial tasks. Do you mean you’re doing that on your own dime so you can be more productive? I know that’s something Tim Ferriss has written about and I’m curious as to how it’s actually working out for you.

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