5 Ways to Negotiate a Pay Raise

In this article you'll learn to negotiate your way into getting a pay raise

Author: Christopher Haynes
Christopher Haynes
Christopher Haynes
Asset Management | Investment Banking

Chris currently works as an investment associate with Ascension Ventures, a strategic healthcare venture fund that invests on behalf of thirteen of the nation's leading health systems with $88 billion in combined operating revenue. Previously, Chris served as an investment analyst with New Holland Capital, a hedge fund-of-funds asset management firm with $20 billion under management, and as an investment banking analyst in SunTrust Robinson Humphrey's Financial Sponsor Group.

Chris graduated Magna Cum Laude from the University of Florida with a Bachelor of Arts in Economics and earned a Master of Finance (MSF) from the Olin School of Business at Washington University in St. Louis.

Reviewed By: Patrick Curtis
Patrick Curtis
Patrick Curtis
Private Equity | Investment Banking

Prior to becoming our CEO & Founder at Wall Street Oasis, Patrick spent three years as a Private Equity Associate for Tailwind Capital in New York and two years as an Investment Banking Analyst at Rothschild.

Patrick has an MBA in Entrepreneurial Management from The Wharton School and a BA in Economics from Williams College.

Last Updated:November 22, 2023

How to Negotiate a pay raise?

Negotiating a pay raise can be a delicate matter, but it's a crucial aspect of your professional journey. Most of us work because we need to be compensated for our efforts, right? So, how do you navigate this potentially awkward conversation with your boss? 

Talking about pay requires the right environment. Avoid bringing up the topic casually in the midst of a busy workday. Instead, set up a dedicated meeting to discuss your request for a raise. This ensures that your request gets the attention it deserves.

Additionally, how you communicate your request matters. Depending on your relationship with your boss, you might want to give them a heads up about the meeting and its purpose. This can be particularly helpful if you're seeking their input on how to prepare for the discussion. Alternatively, you may opt for a more spontaneous, agenda-free approach and handle the conversation on the spot.

The timing of your request is crucial. If your organization is facing challenges, like losing a significant client or if your boss is dealing with an unusually high workload, it might not be the best time to discuss a pay raise. Wait for a more opportune moment when your boss is not overwhelmed with pressing issues.

Recognize that there can be various reasons why negotiating a pay raise feels challenging. It could be the discomfort of the conversation, lack of effective communication tools, or a fear of appearing greedy. Identifying these obstacles can help you address them more effectively.

If articulating your ideas during conversations feels challenging, it might be a sign that your negotiation and persuasion skills need refinement. This article introduces negotiation tools to help you navigate the pay raise conversation with ease and increase your chances of success.

Negotiating a pay raise is a common source of stress for many individuals. In a recent survey with over 160,060 workers, only 37% of workers asked for a raise from their employers.

Key Takeaways

  • Choose the right time to ask for a raise, like during annual reviews or when the company is doing well financially.
  • Understand what others in your industry are paid to make a reasonable salary request.
  • Demonstrate enthusiasm, teamwork, and your contributions to the company to build trust during negotiations.
  • Take your time to consider any offers, checking to see if they align with your priorities and life commitments.
  • Be confident, respect your manager's style, and have a plan for the next steps if needed.

When to ask for a pay raise?

In a typical scenario, your salary will not be a significant concern for the first six to ten months since you agreed with your employer during the job interview. During this period, your primary concern is to know your colleagues, the process of your work, and other job-related duties.

You will receive projects and spend generous time on them. Then, the thought of a pay raise emerges; I work a lot, and I deserve more for my efforts, or I brought a new idea, and the management put it into action, so I deserve a raise.

At this stage, your job duties have improved, and your performance has gotten a boost. Here it becomes a good time to ask for a pay raise.

In some scenarios and over time, a rise in the price level of goods occurs, called inflation. Your salary will buy fewer commodities than you usually were able to purchase.

All these scenarios would trigger the thought of a pay raise. Still, you have to think of the big picture of whether your organization is in a position where it can negotiate a pay raise due to financial problems.

You must also measure your contributions and skills to the organization. Check whether they helped achieve the organization’s goals. 

Frequency Of Asking for A Raise

Usually, it is better not to ask for a pay raise until you have passed one year at the company. In a survey, it was estimated that a worker who has been in a company for 3–4 years is three times more likely to receive a raise relative to a worker with less than 1 year.

There is no written law on the frequency at which a worker should ask for a pay raise. However, it is expected that a worker can ask for a raise once a year.

Avoid continuous demand because it does not become annoying for your manager. Check the timing of the year and the day you are asking for.

NOTE

The national average raise percentage is 3% for employees meeting their goals and employers’ expectations. And according to one study, 56.4% of employers plan to give employees a raise of 3%. But between worker expectations and high inflation, a 3% raise may not feel like a pay raise.

Steps in negotiating a pay raise

Here are five steps you can follow to master negotiation skills: These will work in a conversation where you persuade someone to do what you desire. But to be comfortable following them, you just need what you are asking for and believe you are worthy of getting it.

1. Choose the right time

There is a period when the company conducts a pay review which occurs at least once a year. This process corresponds with inflationary changes, a rising cost of living, or changes in job duties that employees pass through.

It is encouraged to negotiate a pay raise during this period, when you will have a higher probability of receiving your demand.

Other employees discuss signing a new contract at the end of a fiscal year. 

2. Understand your industry 

An HR director at Addison Group called Peg Buchenroth said, “Know your worth in the marketplace. That will serve you well in any negotiation”.

You will be able to differentiate yourself in the market. Consider not demanding a sharp increase in your salary if you receive a higher salary than your colleagues.

3. Express your commitment  

It is always necessary to give something in return for something you want. You must have a mindset that the conversation will end up in a win-win situation.

You desire a pay raise, but the manager wants an employee committed to the organization. Here are some actions you will exhibit to show your strong business care:

  • Demonstrate enthusiasm while completing your duties 
  • Contribute with your teammates 
  • Present your contributions to the company.

Your commitment to the organization will ease negotiating a pay raise since you continue building a strong foundation of trust.

4. Take your time

Learn to take your time to understand the whole picture. When you are presented with an offer, do not accept it immediately.

Suppose the manager has accepted your pay raise request, but on the condition that you will work an extra day during the week. Perhaps you don’t mind working an extra day, but take your time to determine if it’s reasonable given your availability and your life commitments.

5. Manage the negotiation

Verbal communication, body language, and written communication should be considered while negotiating with your manager. Every person has a unique way of communicating.

For example, your manager might be from a culture that does not prefer eye contact during communication. Then you have to respect their preferences to allow a comfortable negotiation. This will convey your message and result in effective results.

Avoid surprising your manager with unexpected requests. First, make sure to provide simple details. When you notice acceptance from your manager for your proposal, delve into more critical details.

After predicting your manager’s response and choosing a convenient communication method, it’s time to approach your manager.

Your attitude should be structured because you are requesting something you deserve, and certainly, it's not a favor. You are confident about it since you have done your research.

NOTE

Don't forget to use our Salary Comparison Tool to measure your salary against similar employees in your sector.

The Answer

Regardless of how compelling your business argument is, keep in mind that other variables are also at work, such as:

  • The company's financial situation may restrict your manager's hands
  • The industry in which you work may be on a declining trend
  • You may be at the end of a lengthy line of employees requesting raises.

You are more likely to succeed if market circumstances are favorable and your performance deserves a raise.

So what if you don't receive a raise? Hopefully, your manager will be able to suggest clear next steps to assist you in working for a future increase, ideally with an agreed-upon timeline for your next evaluation.

A process must be followed to grant a raise, and it is not a simple request. Sometimes, your request might be rejected due to budgeting conflicts or meeting business targets. But you have to plan your next step, which can be:

  • Wait on the request for better timing 
  • Ask for a better title instead 
  • Request a change in the reporting line.

There can be any request you think of as a priority or a step further to your success. Eventually, the whole point of negotiation is striving for better life opportunities. 

Researched and authored by Jasneet | LinkedIn

Reviewed & Edited by Ankit Sinha LinkedIn

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