How to ask for a pay rise

Feb 24, 2020 | Finance

Wouldn’t it be nice if your boss could recognise all your achievements at work and give you a pay rise without the need for an awkward money conversation?  I’m sure we would all love to have extra money fall into our accounts (even your boss!), however, that’s typically not how events play out.

At the end of the day, we all need to understand that our workplace is a business and employee salaries are an expense. As much as your boss may like you personally and value your input within the team, it’s up to you to show how your achievements have contributed to the growth of the business if you want to ask for a pay rise.  

Many people fail to make this connection and just believe if they work hard enough someone will eventually notice their efforts and reward them monetarily. This is unlikely to happen! Not because you aren’t worth a higher salary, but simply because this is the nature of business.  Put it this way, if you could get what you want for $x or $10,000 more, would you choose to pay more or less?

For many people, the thought of asking for more money (even if it’s justified) is nerve-wracking enough to forego this massive financial opportunity. However, we tend to forget that there are two sides to the wealth-building equation – previously we have shared extensively on how to structure your spending and managing bad debt, but today we want to encourage you to increase your earning potential to help you kick more goals in 2020!

This brings us to step one in the process.

Step 1) Know your worth

This is the most vital piece in the negotiation puzzle, and also why we should always start by asking ourselves “How much should I get paid for the service I am offering?”

Although most people will consider some form of this question in the initial stages of their employment, rarely will people revisit this question until it is too late (during the performance review meeting).

It’s important to have a number in mind for your ideal salary because this will help ground you in the negotiation process and allow you to consider your options once you have received a counteroffer or response from your boss.

Many people struggle with this step and tend to undervalue their skills or achievements when determining an appropriate salary. This is where research enters the equation.

To get a broad understanding of your market value as an employee, you can begin by searching for the average salary of others in your position. Likewise, you can scroll through online job boards to see what salary range is being advertised for your role at different companies.

For a more specific investigation, you can reach out to current and previous colleagues, mentors in your industry, or even your employee handbook. Some companies may have structured salary bands for specific roles and this can give you a better understanding of the scope you have to work with. 

If you are asking for a raise which takes you above the market average for your role, you need to be ready to justify why – maybe you have gone above your position description and worked on some business improvement projects, maybe you have smashed your KPIs and brought in lots of new business for your company, or maybe your position description has changed since you joined the company and you are now taking on more responsibility than when you first started.  

For this exercise it may be helpful to list out your day to day tasks and all your achievements in your time with the company, then compare it to the job description and see where there are discrepancies and areas you have added value beyond the scope of your role. 

Once you have a number in mind, it’s time to start preparing for the negotiation.

Step 2) Preparing yourself

You may have already guessed what this part entails. Like any other life skill, if you want to improve at something, you need to practice.

Although different people learn in different ways, it is always best to replicate the circumstances in which you will be delivering the final outcome. In this case, you will be having a verbal conversation with your boss so you should practice saying out loud what you want to say during the negotiation. The more you practice, the more confidently you can communicate your worth during the negotiation which makes a significant difference when convincing your boss of your value to the business.

Part of this process is also considering all the possible answers from your boss and how you might respond accordingly. For example, if you ask for a $x increase from your current salary and your boss comes back with the below, how would you respond? 

  • We looked at how your pay compares with people here in the company and outside the market, and we found that your pay is appropriate.
  • Unfortunately, we don’t have the budget to increase your compensation by $x, would you consider $y instead?
  • We have reviewed your performance and would like to see XYZ from you before we consider your pay rise request.

It’s easy to see your boss as your adversary in these conversations, but try to also practice empathy and understand that your boss might not be the final decision maker behind your pay rise, and if they are, they will need to also consider other factors such as pay equality in the company and budget constraints.

If you can’t achieve what you want monetarily, think about other benefits you would be willing to accept instead. For example, flexible work hours if you’re a parent, reimbursement for  professional development or further study, equity in the business, etc. Determine what you value and work with your boss, not against them.

Step 3) Preparing your boss

Although your boss may enjoy a surprise birthday present, they may not be as excited about a surprise pay rise request. 

Contrary to many employees who fear the “awkward”, “embarrassing” or “scary” conversation about money with their boss, you can easily turn this into a constructive discussion by ensuring you set the right context prior to your meeting.

Since your boss is likely to be quite busy, ensure you give them plenty of notice (1-2 weeks at least) and preface in your meeting request that you wish to discuss a review of your salary. A natural topic to pair in this discussion would be your career progression or professional development opportunities. By having another relevant item on the agenda, you can positively frame the conversation and ease into the negotiation more seamlessly.

If you are still several months away from your performance and salary review, don’t think you are off the hook! Set up a meeting with your boss to discuss, and ideally, quantify how you can be stepping up in your position to earn the salary you want. Not only does this show that you are proactive when it comes time for your pay review a few months down the track, but you can also show exactly how you have succeeded in your role using the metrics your boss gave you.

Step 4) How to ask for a pay rise

The big day is here! You have done your research, you have practiced how you will ask for the pay rise, and you have appropriately prepared your boss leading up to this chat – but you’re still super nervous!

This is okay. It’s perfectly normal to feel nervous before doing something outside your comfort zone; just remember that the worst case scenario is simply a ‘no’. You don’t lose anything by asking, yet you have so much to gain if it goes according to plan.

If you have put in the time to research and practice before hand, you will be able to power through your nerves and ask for what you want. Additionally, it helps to have a few negotiation principles up your sleeve.

  • Active listening – This shows respect to your boss and helps build trust in the conversation. You can demonstrate you are listening by repeating your boss’ key points and mirroring their body language.
  • Pace yourself – Don’t feel the need to accept the first offer on the table, as it is unlikely to be close to the final number your boss (or you) have in mind.
  • Embrace silence – Although this can be extremely uncomfortable, learn to sit with silence in between your questions and your boss’ response, rather than filling the void with irrelevant chatter and information. This is a powerful technique which can boost how confident you feel and appear.
  • Acknowledge objections – If you are faced with an initial rejection from your boss, don’t be afraid to gently push back. Keep the conversation flowing by repeating their objection (e.g. “you don’t have the budget for it now”) and following up with useful questions (e.g. “but do you know when there might be budget available for this?”)
  • Sleep on it – Even if you’re happy with the outcome, allow yourself some time to think through the proposal once you have detached yourself from any emotions you have during the negotiation. Ideally you can discuss it with someone you trust to gain an objective perspective.

Regardless of the end result, it is important that you continue having this conversation with yourself and your boss to ensure you are maximising your earning potential and opportunities for growth.

We hope this article was helpful and empowering for anyone looking to ask for a pay rise this year. If you have recently received a significant pay increase and you want some help developing a financial plan with the additional funds, please book in for a 15-minute chat with one of our advisers through this link.

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