How to ask for a raise and negotiate salary – complete guide ·
Asking for a raise can feel quite a scary situation: You are putting yourself and your value to the company up for evaluation, and there is always a chance that you don’t like the answer you will get. Many people also don’t feel comfortable to ask for more in general, and thus might think that they are maybe doing something wrong and are seen as greedy, if they ask for more salary. However, the first thing to understand about salary raises, is that they are regular business events and decisions, and there is nothing wrong in asking for one, especially when you prepare and time your request well, and know that you are more valuable to your company, than your current salary reflects. Read the following complete guide and learn how to ask for a raise and negotiate your salary without doubts and hesitation. This article is adopted from my new book, 7 Principles of Becoming a Leader. If you you enjoy the article and find it usable, you will probably love the book!
Why should you ask for a raise and negotiate your salary?
When the occasion is right, you should absolutely ask for a salary increase, as people who are proactive and willing to negotiate will end up with significantly higher salaries during their careers (if they have the expertise and results to back it up). This is one area where modesty doesn’t generally pay off. As the saying goes, in business you don’t get what you are worth, but what you negotiate -so get ready to ask for a raise and negotiate salary with the guide below. Salary negotiations are also an integral part of your career management skills, and building up this part of your career management skill set can make a huge difference on your career earnings.
How to prepare for asking a raise and why should your salary be increased
The salary raise request should always be tied to the value you are delivering to the company. If you see that you are delivering more value than before, either due to better performance on your old tasks, or due to additional tasks and responsibilities you have taken over, it is good time to start preparing to ask for a salary increase. The timing of the request is also essential, as your management must have a budget for your salary raise. You should find out when the salary budgets are made and start the discussion with your manager already before they are locked for the year, so he can include your salary raise into the budget. This is especially true if you are aiming for a bigger raise that is not covered by the regular raises during normal salary raise cycles of the company. These regular raises are quite often somewhere between 2-5% and are automatically included in the salary budgets. However, in this article we are aiming for a bigger salary increase, from 15% and up, and this usually needs a bit more preparation from yourself and from your management.
There are usually two starting points for asking more money; either you feel that you are contributing more than you are getting rewarded in your current job, or when you are moving to a new position and take additional responsibilities. In both cases, you should be prepared to present your case, and negotiate for your salary for the best results: It is always possible that the promotion doesn’t come with an appropriate salary raise, unless you negotiate it yourself.
Some companies include salary negotiations to performance review sessions, and some don’t. Make sure you know the exact process and schedules for budgeting and deciding the salary raises, so you can time your request correctly. HR department and your manager can both help you to understand the process and schedule.
How to ask for a raise and negotiate higher salary – complete guide:
Build your case for asking a salary raise.
- Make a list of responsibilities and results you had and delivered when you started at your position with the current salary, and then a list of what you are currently doing and what you have delivered to demonstrate your increased value for the company. Exact figures and facts are always helpful to drive your point. Power point works well for presenting your whole case.
- Any special success stories, big projects, improvements, new deals or innovations are very beneficial, so add them. If they have a clear monetary value that you clearly contributed to, it doesn’t hurt to add the numbers as a reminder, as sometimes managers tend to forget how great things are done by their team members.
- Add any future plans and aspirations that will add even further value. Show that you are willing to take more responsibility and deliver even more. If you are being promoted, you should be able to present here how you plan to succeed in your next position. Please check the article “how to “ask” for a promotion” for more info.
- Do research of the salaries for similar positions on your area (or even in your company), to get a good feeling what the salary range should be. This is a guideline, but don’t let it tie you down: If you know that you are an exceptional high-performer, you can ask for more than the general salary range is. Just let your manager also know, that you understand that you are asking for more than anyone else, and then present clearly why your contribution to the company is worth it. You should let the manager know what your research for the salaries has revealed. You can also ask his comments and feedback on your findings to gauge his view on them. If you are moving into a new position, you shouldn’t push for above average salary range for that position, until you have proven yourself. However, also be sure that you don’t accept a new position or promotion without a raise but ask for an appropriate salary for the new position. Unfortunately, some managers still go with the “let’s see you perform first in the new position, and then talk about the raise”-tactic. I find this tactic untasteful, and it undermines their own decision to promote you, and can severely affect the motivation and engagement boost that you get from the promotion. If they try this, just say that you expect to have a salary that is appropriate for the position from the day one, so you can completely set aside any money issues for now, and fully focus on your new work. If the promotion with all the new responsibilities is given to you, the benefits of the new position should naturally also be given at the same time.
- Any additional reasons that are related to the company and your performance. For example, additional degrees or certifications are good material here, as are public exploits, such as writing and publishing articles or even bigger work, such as books or videos that reach bigger audiences even outside of your company.
- Consider the situation of the company: The best time to ask is, If the company is doing very well, and has just succeeded in some major business endeavours. If company isn’t doing well, and has some financial challenges, it is extremely hard to get your salary raise through.
- Avoid any personal reasons, such as “I need more money, as I rented a bigger apartment” and so on, as they don’t matter to your value to the company. Only personal reasons that might be applicable here are big life changes, that would force you to seek out other better paying employers, if you can’t get a raise here. These reasons should, however, never be your main point for the raise, and should be brought up only, if you have other solid reasons, but the company is not giving you a raise, and thus you would be forced to change employer. Also don’t bluff with this or use it as a blackmail. Just lay down the facts, and tell that you would like to stay, but due to your new life situation you can’t do that, unless your salary is adjusted. Neediness or desperation are not a strong position to negotiate from, so avoid showing them, even if you would be in a tight spot.
- The whole case should be well in order and logically show why you are creating more value, than you are currently compensated for. While salary issues feel highly personal for you, they are still business decisions for the company and your manager and should be presented as such.
Decide how big salary raise you aim for and prepare your numbers to negotiate.
- Once you have the preparations done, pick up a number that you aim at. The new salary should be based on your personal productivity and success at your work, any additional responsibilities you have taken over (basically your value to the company) and current market rates & market situation. This should be adjusted by the company’s situation: The better the company is doing, the higher salary you can aim for. Most people get stuck with the percentages in their raise, but if you have truly changed your performance and responsibilities, you can forget the percentages and just pick a number that you see reflects your current position and contribution.
- Once you have figured out the new salary you will aim at, you should set up the starting numbers for the negotiation. You shouldn’t go directly to the number you want but start a bit higher, so you have some room to negotiate. For example, if you would aim at a raise from $100.000 to $120.000, I would start by giving a number around $135.000. This anchors the number $135.000 into your negotiation partner’s mind, and that number is then used as a reference point for the further negotiations, and subsequently makes your actual target, $120.000 feel much more reasonable sum. Sometimes you can use even higher anchoring numbers, if you have a good read on the situation, but beware that if you go way overboard, you might end the discussion before it even started, and leave a really bad impression. Another not-so-aggressive option is to give a range: $120.000-$135.000. When using ranges, you will most likely end up with an offer on the low end of the range, so make sure your set the range accordingly.
Please note, that for these kinds of raises, you will need a very strong case, but if you have it, there is nothing stopping you from getting 20-30% raise, if you play your cards well. There are most probably people in your company that get two or even ten times more money than you, so the money is there, if you bring enough value to the table. I recommend you pick up a realistic but still challenging enough number to aim at.
Set up a meeting, present your case for the salary raise and negotiate.
- Make sure that you book the meeting early enough, so your manager has time to consider and prepare your salary raise request for the next budget. Remember, you are not trying to get a big raise to your next month’s salary but set it up for a suitable time in the future.
- Present your prepared case for the manager and ask his feedback and thoughts. You should drive a positive and cooperative atmosphere for the negotiation and express that you are committed to the company and appreciate that you can work there. Arrogance and aggressiveness are sure ways to get the negotiations on the wrong tracks and alienate your manager from yourself and your cause. You will need your manager on your side for the next steps, so make sure this doesn’t happen. A good way to start is just to say: “I have been now working for xx time for the company (since the last raise), and I think that I am contributing much more than I used to. Would it be good time to talk about my salary now?” and you can continue: “I would like to start by going through my current responsibilities and results” and then start presenting your case and demonstrating your value to the company. You should be able to present your case with confidence, as you prepared well for it and know that your reasons are valid and request fair.
- When he asks for your number, tell him your number or range and see what happens. Don’t start explaining or negotiating, but let him think about it, and talk about it, while you listen. The more he talks about it, the more he will in general negotiate with himself to raise the offer. Just wait patiently and see where he ends up.
- If he comes up with a number that is acceptable for you, make the deal. If the number is lower than you expected, you can keep talking about your work and responsibilities and future possibilities without saying “yes” or “no” and see if he pushes the offer up. People have a need to close uncertain situations as quickly as possible, and as you are not eager to close it by yourself, your negotiation partner usually pushes to close it by negotiation with himself to come up with an acceptable offer. If the offer doesn’t get up anymore, and is below what you were expecting, you can also say “no” to the lower offer at this point, and ask him to think about it, and maybe you can return to the topic later after you both have considered the situation. You have to assess the situation when you get a smaller offer and then figure out what your next move could be. You could accept the offer and ask for a continuation plan on how to reach the salary you were aiming at, or you could keep pushing for the target amount in further negotiation rounds. Depending on how valuable your contribution is, and how well you can present your case and negotiate, you might get there. A more radical approach is to say “no” for the offer (for now) and ask if you could talk about it again later, as you have both weighed your options.
- Prepare for a “no” or a time-out: You might well end up with a stern “no” for your request, without even a small offer. If this happens, ask for the feedback, and for a plan on how to get your salary on the level that you see is appropriate. If you get the plan and some targets, work with them. If you don’t get clear feedback and a plan, or even a possibility for a new discussion in the future, you must consider your options, and decide if you want to stay with the company with your current salary, or if you should start looking for new opportunities. Also have an honest self-reflection session about your work and results to understand if you are overestimating your value to the company, and if that is the reason why your request got denied.
- Make sure that all the possible additional responsibilities and tasks are clearly agreed with the raise, so you don’t get any unpleasant surprises later.
- The better negotiation skills and strategy you have, the better results you can generate. I recommend you reading “Never Split the Difference” by Chris Voss to get your negotiation skills into a new level. These kinds of negotiations should always be cooperative and supportive and rely on the good relationship and trust with your manager.
- One thing to understand is that your manager might not be the one who in the end approves the salary raise. He might need to check back with his manager or some other stakeholders and convince them that you have earned the salary raise. If your manager is not happy with your performance, behaviour or negotiation tactics, and feels that you are pushing him too hard, he will not advocate your case efficiently to his superiors, and they might easily deny the raise. The best bet is to have a great relationship with your manager, build a logical case for your salary raise, and get him to advocate your case willingly towards the upper management. If your manager truly believes that you have earned the raise, he will fight for it, and that can make all the difference. You can help him to do this by making sure that you create a short “executive summary” of your case that he can use to justify your raise for the upper management. In the best case, you also have a relationship with your upper management, so that they know your value first-hand, and thus are more likely to sponsor your salary raise request.
Additional points about salary negotiations and getting salary increases
The best timing to ask for a raise when you are also discussing a promotion is right after the decision for your promotion is made, and the promotion is being offered to you. Just make sure that you negotiate the new salary before you accept the new responsibilities and start your new job. Sometimes the promotion and salary raise are naturally linked together, and you can’t play with the timing. The best play is to let the employer to make an offer for you, rather than asking for a certain sum by yourself. If you don’t know the exact budget for your new salary, you might underestimate the salary range, and thus negotiate the salary down by yourself. If the offer given is too low, you can always proceed negotiate a higher one, according to the instructions above. Remember, that you can take a time out to think about the situation, or even say “no” to a promotion offer, if the benefits don’t compensate the additional effort.
The same basic tactic for presenting your desired salary numbers also works while you are negotiating for an offer from a new company. If you just can, push them to give you the first offer, rather than giving them your current salary or salary request. You stand to get higher offers this way. If they push for a number before they have made a decision to hire you, you can try delaying it by saying for example: “I’m sure we can come to an agreement for the compensation, if everything else matches well”. Another way is to do enough research to have an idea about the possible salary ranges, and go with an option: “According to my research, salary range for this kind of position at this area should be $xx”. Just make sure that you pick up a range that is high enough, so you don’t negotiate your salary down from the beginning. If they come back with an answer, that the range is way too high, you can ask them to tell what is the correct range, and get information about their budget. The main idea here is that if you give your numbers early, you might actually aim way too low, and thus negotiate against yourself for a lower salary than they have budgeted for the position. They might not correct your error for asking too little, and you only learn later that you asked for a significantly less than the general salary range for your position in the company is, and all your colleagues are earning much more than you for the same work. Not a nice position to be in.
Using offers from other companies for leverage to negotiate higher salary
Using offers from other companies for leverage is a double-edged sword as a strategy. If you are in a highly competed market with a good skill set, you are bound to get some external offers, whether you are really looking for them or not. I suggest that you should be always looking for competing offers, as this is the best way to benchmark your market value, and this also offers you some additional security and freedom from your current employer and builds your professional confidence. However, I recommend that you bring competing offers to the salary negotiations only in two occasions:
- You are really ready to change companies and want to give your current employer a chance to make a counteroffer. This can end up in mixed reactions. Some managers appreciate the chance you are giving them, and others take it personally, and feel that you are blackmailing them, and want to get rid of you quickly. Anyhow, there isn’t much to lose in this situation, if you handle it with grace, so you should go for it. Also do this only if you really would like to still work in your current company.
- Your salary is clearly under the market standard, and your company is not willing to negotiate. By bringing in some competing offers, you might be able to demonstrate that your company is paying clearly under the general market value on your area, and that there are other companies, who are willing to take the risk of hiring new employees while still paying clearly better salaries. I would first use this as a general notion, while talking about appropriate salary ranges for you, and if this doesn’t drive the point in, I would consider if it would be a good time to tell that you have some alternatives on the table. As with the first point, at this stage, you should be actually ready to change companies, if your management still denies the salary raise or gets annoyed by your attempt to pressure them.
Beware, that both cases will burn your trust and relationship capital, and it might be a long road to build it back if you decide to stay in the company. Sometimes these tactics can also cause immediate and drastic actions from managers who don’t tolerate any kind of pressure play against them. Depending on the employee protection laws of the country, you might get even fired for this in the worst case. The better you know your management and understand the competitive market situation on your area, the better you can judge, if these tactics are suitable for your situation.
It is worth knowing that it costs approximately 1-2 year’s salary for a company to replace a highly skilled knowledge worker. While this is not something to throw at your manager’s face, it is something for you to consider, when you evaluate your own value for the company. Just beware, that as of my experience many managers don’t know this and thus are prone to making very costly decisions denying salary raises and losing important employees. You can check this article for more information.
Summary: how to ask for a raise
Prepare your salary raise request well
Know your value for the company
Research the salary ranges on your area
Base your request on the value you provide for the company
Size your salary increase request well
Time your salary raise request well
Prepare to negotiate for your desired salary raise
Get your supervisor on your side to help you get your desired salary increase
Don’t accept the first offer but negotiate for higher increase
Don’t blackmail your management
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