Many people often ask how to negotiate a pay rise. It’s an important skill that will help you throughout your life, no matter the stage in your career, whether you’re an assistant accountant or the CFO. There are several things you need to take into account when negotiating a pay rise.
Build a business case
The first thing you should do is look at your job specification for your current salary and compare it to what you actually do now. As an example, say you work in the finance team as an accountant. Since you started your responsibilities have now grown so you are now a manager and you now have extra duties, such as managing payroll.
Note any specific important tasks you have done. Maybe you did a great job helping with a project last month.
Get a list together with your new duties and your achievements. These will be proof that you deserve a pay rise and are a valuable asset to the business.
What is your market value?
When asking how to negotiate a pay rise, an important part is knowing what your market value is. If you’re being paid £45,000 a year and the market average is £50,000, then you have a strong case for getting the pay rise. If the average is £40,000, then you need a really solid business case.
You should talk to other people in similar roles in the same or similar companies to get an idea of how much people earn. Talking to a recruiter or checking a jobs board will also give you an idea of salary.
Know what you want
It’s important to know what figure you want. This will help later on in the negotiating stage. You need to decide what will happen if this number isn’t met. Will you leave? Will your performance and attitude go down?
If you feel you deserve a £5,000 pay rise and you are only offered £2,000, you will likely feel undervalued and demotivated. It’s worth accepting that you may end up looking for another job due to this.
Which is not a bad thing. Moving companies where you are paid what you deserve can often be a good move. Having experience in different companies can help your professional abilities grow even more.
Choose the right time
When asking you usually want to ask when it’s going well for people who make the decision. So if they’ve just been told they’ve massively overspent compared to budget and sales are down, maybe hold off a while.
Often times a company does a yearly review with employees to go over their personal development. During this time wages are often looked at, so this could be a good time to say that the you want more than just the usual 2% increase.
Talk with your boss
Your boss will in some way have an impact on the decision to give you a pay rise. Even if they don’t get to make the decision themselves, they will likely be asked for their opinion.
The best tip is to have a meeting with them first. Explain why you think you need one and ask them what they think. Hopefully they even have a few more reasons to add to your business case.
If you haven’t asked for a pay rise at the business before then they may be able to guide you through the companies process.
Presenting your case
This can depend on the business. Some companies will have a meeting where you present your case, some may look at an email you drafted and discuss it between themselves.
If possible insist on a meeting. You can go far more in depth with examples and you will have more influence with them if you are in the room.
Even suggest they go an talk with other people, such as the Sales Director to discuss what a great job you did with the project she is overseeing.
How to Negotiate a Pay Rise: Negotiation
Many businesses will want to negotiate the salary you requested. This is normal. It’s in their interest to pay you the lowest amount that will keep you motivated.
There are a few tips that you should use when negotiating:
Establish a range
If possible suggest a range for your pay increase. As an example, if you’re on $50,000 and you want a salary of $60,000. You should say, “I have looked at the market and for someone with my experience and skill set people get paid between $60,000 and $67,000.
A study in Columbia Business School discovered that people who requested a range for salary rather than a number ended up with higher salaries. This is is especially the case when the number you want is at the lower end.
Just don’t be silly with your range. If the job realistically pays between $55,000 and $65,000, don’t go asking for between $70,000 and $90,000.
Be polite and don’t rush
When negotiating, make sure you don’t rush into agreeing anything. When they come back with an offer, for example $60,000, thank them for the offer and say you need to think about it.
If you’re happy with the offer, accept, If you think you can squeeze a bit more then don’t be afraid to go back and request a bit more.
Keep being friendly and polite. Don’t be shy to keep reminding them of your achievements.
As a way to show your boss and the higher ups that you’re serious about doing a good job, make sure you define what success for your position now means and metrics for your next raise.
This not only shows them you’re thinking about staying around long term, but it gives you a clear path to follow.
If it doesn’t work out
There is always the chance that you won’t get the salary you want. When this happens you need to be ready to leave the negotiation table and think about your future.
Remain polite and thank them for looking at your case.
In reality if you want the pay rise you will likely have to look for a new job. As this is usually an even more effective way to get a pay increase.
Learning how to negotiate a pay rise is a vital skill and is something you should not be afraid to do.
Over a career spanning decades, having earning a few extra thousand a year and really turn into a significant sum of money. As an example, say you can negotiate yourself on average £3,000 a year more than if you didn’t ask. After a 30 year career you’d of earned an extra £90,000. That could mean some nicer holidays, a smaller mortgage or a newer car.