5 tips to negotiate a pay rise that will leave you and your boss feeling good
It’s ingrained in all of us; we want to be valued for our contributions. In business, rightly or wrongly, we tie the value we bring to our employer with the amount of money they hand us.
Even though we put so much weight on this one proof point, it’s surprising how many of us feel awkward talking about money; let alone starting a conversation about getting more of it.
I’ve worked in employee benefits and sat on both sides of the salary negotiation table for many years. I hope the below tips will help you realise that with the right approach it doesn’t have to be hard work getting money out of your employer; in fact, they’ll feel good about it.
1. Prior preparation prevents piss poor performance
There are countless materials about what to do when you’re at the negotiating table with your boss.
But the actions required to give yourself the best opportunity of a successful outcome, occur well before you sit down and ask for more money.
As Deepak Malhotra in the Harvard Business Review explains;
“Substance is the terms that make up the final agreement. The process is how you will get from where you are today to that agreement. My advice to deal makers: Negotiate process before substance.”
With regards to salary negotiations, the process includes demonstrating the facts with tangible proof of your achievements. To do this, you must understand the expectations the business has for your role and be able to show your success.
You have to know what you’re worth. Looking at salary comparison websites, asking friends and mentors is a good start. I suggest making a few phone calls to recruiters advertising similar roles and finding out the salary on offer. If you want a firm benchmark, why not go for a few interviews.
Malhotra notes that “The more clarity and commitment you have regarding the process, the less likely you are to make mistakes on substance.”
If you’re prepared and can show a detailed understanding of the process when negotiating, you’re giving yourself the best opportunity for success.
2. Timing, it’s not everything, but it’s really important
When you approach your manager and ask for a raise, you need to appreciate that before that moment it was not their number one priority and that’s OK. Instead of blindsiding them with all your wants and desires, give them the heads up on what you want to discuss with time to prepare. It’s a professional and mature approach, setting a positive tone for what can be a tough conversation for both sides.
Use a bit of common sense with your timing; don’t ask your boss to “show you the money” when they’re noticeably stressed or it’s clear the business conditions aren’t great. On the other hand, if you’ve just saved the day or have been getting additional praise for going above and beyond, then it could be “go time”.
3. Don’t spit the dummy
Following these steps is going to give you the best chance of success but remember you aren’t guaranteed to get the outcome you want or think you deserve.
Maybe the request was unreasonable given circumstances you don’t have visibility on, or you didn’t provide enough supporting evidence to convince them. Whatever it was, please don’t make the all too common mistake of holding your employer to ransom. Comments like, “If I don’t get a pay rise, I am going to look elsewhere” should be in the no-go basket. Resorting to these kinds of statements will never result in a good outcome.
The most powerful approach when the discussion is not going your way is to be empathetic.
Dr Beth Fisher-Yoshida from Columbia University on Inc.com says that “while a tough negotiation might instinctively trigger your fight, flight or freeze response, showing empathy instead of responding with aggression or fear in the face of confrontation can help you get a glimpse of what the other negotiator actually regards as important.”
You need to consider your employer’s position, and while your natural response might be to take rejection of your requests as a personal attack, it’s likely to be very far from reality.
Even if you don’t get the initial outcome you’re after, you will have gained valuable experience, improving your skills for the next conversation.
4. Show them you’re a problem solver
Every employer is looking to reward proactive and engaged employees. They might not always be able to do that in the form of a bump in pay, but it doesn’t mean you can’t take maximising your remuneration into your own hands.
Depending on your role, you could look at asking for some stretch targets and performance-based bonuses which could be a great win/win.
However, money isn’t everything and being creative with what you ask for can, in many cases, see you achieve a more lucrative and happier outcome.
Professor Gillian Ku’s research from the London Business School showed that “our happiness is not solely defined by money — you would likely be satisfied and productive working for the same pay but with other benefits and perks.”
Flexible working arrangements are probably the most significant example of one of these “other benefits”. Offering flexibility has proven to engage and retain employees while providing higher productivity and results for the employer.
What kind of positive impact could a 9-day fortnight have on your life? What about starting a little later each day to be able to drop your kids to school? If you’ve proven your ability to manage work effectively and autonomously the research has shown the benefits are there for both you and your employer.
5. Ask for a pay rise that doesn’t cost them anything
If you’re like most people, money is important. After all, it’s what pays for your mortgage, groceries and utilities. But if your employer doesn’t have any more to give up, it doesn’t mean you’ve run out of options. There is another way to access more of the money they are already paying you.
Salary sacrificing is a great way to unlock more of your salary, without costing your employer anything.
Superannuation is a common one, and if you are starting to plan for retirement, then asking your employer to help you salary sacrifice additional money into super could be beneficial.
If you’re looking for an option to give you more in your take-home pay now, there’s one expense you’re already paying for that you can save thousands on, your car.
The ATO says any employee drawing a salary, is eligible to salary sacrifice their vehicle and its running costs, even if the car is used entirely for personal use. This benefit is called vehicle salary packaging or novated leasing, and it doesn’t cost your employer anything.
Employees who get to take advantage of vehicle salary packaging receive an average savings of $4,681* every year; this is equivalent to an $8,764 pay rise. Asking your employer if you can salary package a car is a no brainer.
We believe that every employee in Australia deserves to own their car in the cheapest and most tax-effective way possible. That’s why we’re making car salary packaging accessible to the 60,000 Australian businesses with up to 300 employees via our Lendly Pay platform.
Lendly Pay is free, easy to set up with no FBT liability; offering employees thousands of dollars in tax savings on their car at no cost to their employer.
*Lendly Pay drivers’ average annual tax-saving per car in FY19.