Your salary does more than dictate the way you can afford to live today; it also impacts your future. Annual raises are typically based on a percentage of your salary, so the more you make today, the more you’ll make next year. In addition, employee benefits, like life insurance and the amount of your employer’s match into your retirement plan, are often tied to annual wages. In fact, some estimates show that not negotiating your salary could lose you as much as $1 million over time.
Asking for a pay raise is a hard thing for many people to do; however, when you do it successfully, you’re helping to ensure a solid financial future for yourself and your dependents during your working years—and into your retirement.
Following the six tips below may help you have success the next time you negotiate for higher pay:
1. Don’t Wait for Your Employer to Offer a Raise; Take the Initiative
Many people assume that their manager or supervisor will automatically recognize workers who do their jobs well, and that all of that hard work will be rewarded accordingly. Unfortunately, it doesn’t always work that way in most organizations.
When you believe you deserve a pay raise, you can—and should—feel empowered to ask for one. Know what you want, and be confident in asking for what you’re worth.
2. Be Realistic About What Your Job is Worth
Do some research into the market value of your job. There are several salary comparison websites online, but you may also be able to ascertain the going rate for your occupation by looking at current job openings for the same or similar role at other companies in your geographical area. If your company uses salary “bands” for your job, find out where your current salary falls on the scale.
It’s also important to temper your expectations; asking for a 20 percent raise may not be realistic, even if you have hard data to back up why you think you deserve that higher pay. Understand that your company’s budget simply may not be able to support a significant pay increase all at once.
3. Have a Target in Mind
Go into salary negotiations with a target in mind. There are various schools of thought about whether you should bring up your target number or wait for your employer to be the first to offer a number; some of this will depend on your comfort level with the negotiations process, but your manager’s or supervisor’s style and personality will also come into play, as will your working relationship with him or her.
When you have a specific number in mind, you’ll be prepared to either accept your employer’s offered raise or try to negotiate to get to the level you believe is fair and appropriate.
4. Consider the Timing of Your Request
Asking for a raise right after you’ve had a “win” for the company or have been asked to assume additional responsibilities makes sense; that same request coming after a lousy performance review isn’t likely to be met with approval.
Similarly, if your company is in the midst of (or has recently completed) downsizing or is experiencing sluggish sales, you may be better off tabling your request for another time.
5. Sell Your Strengths
When it comes to the negotiations themselves, be confident. If you’ve done the research and learned that people in your role typically make $X, but you’re making $Y, make your case. Be prepared to share specific examples to help bolster your claim. Those may include specific projects you’ve completed and recognition you’ve received from customers, colleagues or other third parties.
Remember: Make your case on your merit and strengths; don’t simply ask for more money.
6. Be Prepared to Hear “No”
Finally, understand that you might not get what you’re asking for; there is no guarantee that you will hear “yes,” even when you have statistics and documentation to back up your request. If your request is denied, ask what you can do to increase your chances of a raise in the future. Take any advice or recommendations to heart.
If your boss agrees that you deserve a raise, but the salary budget just cannot afford it, ask if there is an option for a one-time bonus and/or a better job title instead.