Thoughts on Asking for a Raise
Or anything else
Today we are going to talk through the process of what to do, and maybe what not to do, when you have to go talk to your boss about a raise.
It is important to think through this because most people would just assume that all you have to do is to screw up your courage and go ask for a raise. That, of course, is part of it, but there are ways to be more successful. There are things you can do to make the system work for you.
What would happen if I told you that you had to go ask for a raise, or any other thing of value, from your company right now? What would you tell me? What would you do? How would you approach it?
You might say “I’m going to ask for a raise because I deserve it!” or you might say “I’m going to ask for a raise because I haven’t had a decent pay increase in years!” Maybe you’d say, “I’m going to talk to Human Resources about getting a raise because that’s what they do!”
None of these reasons or things are going to get you what you want. When I have this conversation with people the first thing I usually figure out is that they have no idea what they want. If you don’t know what you want you can’t ask for it and you probably won’t get it.
The first and most important step in getting what you want is to figure out what it is that you want. You can’t just walk in and blindside your boss with a list of emotion-filled grievances. You need to get your head and your position straight in your own mind before you can do anything.
What do you want? It is usually more than just more money. Most people have a list of things that they would like from a job. Make a list of what you want and throw in all the wish list and nice to have items because you are preparing for a negotiation.
When you negotiate, you need to have a list of things so that you can give in on some things in order to get other things. Maybe you can’t get that 30% raise but you can get a 15% raise with a car allowance and a new computer for your office?
When you are making your list remember that compensation comes in other forms than salary. There is variable compensation based on performance, bonuses and commissions that can be quite lucrative if you are a value-added resource. If you have a way to measure your direct impact on revenue increase or cost savings maybe you can get a cut of that worked into your compensation?
The particularly great thing about variable compensation is that it is based on your impact on the company’s fortunes and when you do well the company does well. It’s a great way to negotiate a bigger pie for everyone instead of fighting over the existing pie crumbs.
In compensation negotiation, like anything else, you want to look for the 3rd way and think out of the box.
Some people get club memberships, cars, clothing allowance, per diems…I’ve even seen people get part of their compensation in heating fuel and food to avoid government theft. Think about all these things when you make your big list.
On your big list you will have ‘must haves’, ‘nice to haves’ and ‘throw aways’ – identify each.
I’ll go into negotiation skills more in a moment but let’s go back to the most important thing you need to get straight and that is your inner game, your emotional state. You need to find a way to be emotionally detached from the negotiation process. You can’t go in angry, or needy, or scared. You have to go in positive and confident. You need to do whatever it is to get your head straight around this project.
Most business people are rational people and love to have a rational business based discussion with you. What they don’t want is to have to sit through some weird, emotion-laced shouting match or crying session with you.
When you are asking for something from your company you are selling a product. That product is you. You need to be able to dispassionately advocate for the value of that product. You will be compensated in exchange for the demonstrable value of that product.
The strongest position is if you can demonstrate how that product will positively impact the company’s revenue, profit or costs. Think about it. How do you add value to the company? Do your actions result in customer retention? Do they create innovations? Do they lead to demonstrable continuous improvement? Figure it out and write it down.
That is how you ask for a raise. You say “Boss, I really like working here, I’d like to review with you the impact I’m having and how I can help us be more successful. I’ve got some ideas I’d like to share and get your help with.”
You logical argument has 3 parts.
- Here are all the ways I have and continue to add value to you and the company.
- Here is my plan and my ideas on how I’m going to help the company’s success next year and for the next 3-5 years.
- The unspoken thought that you would hate to have to take your value creating talents somewhere else. (i.e. Here’s what you have to lose Boss.)
Don’t go through HR. Try to meet with your boss or the person who controls the budget directly. Try to get them out of their office. HR and review processes and all the rest are specifically designed to take negotiating power away from the employee and commoditize your value.
You’ll hear “No one got more than a 3% raise this year.” That doesn’t apply to you. You add value. You can quantify that value. It’s their choice whether they want to pay now or when they have to replace you because that scenario will be way more expensive for them.
My point is there is someone in the organization who can say ‘yes’. You need to meet with that person. I can guarantee that person doesn’t sit in HR.
Do your research. You are going to need facts on how you add value to the company. Activity is not value. “I manage 30 people” is not a value statement. “I have saved 5% of the operating budget year over year for the past 3 years and that’s worth $300M dollars in net present value cash to you, sir.” Is a value statement.
Set a high anchor. When you start negotiation someone throws out a number. That number, right or wrong, is known as ‘the anchor’. You have a range in your head. Don’t start in the middle of the range. Start above the top of the range. As long as you can back up your value points and do it with a positive manner, no one is going to be offended.
Understand the ‘whiplash’ factor. The person who throws out the first number sets the anchor. The person who receives that number reacts to the offer. When you react to the first offer exhibit the whiplash factor. Act like you’ve been slapped. “$5,000! – I can’t live on that!” This will reset the anchor when you counter.
Make the pie bigger. The best way for everyone to win is to make the pie bigger. How can you give the company what it wants AND get paid for it. That’s why sales is such a great job to make money in because it is tied directly to revenue. You can essentially say “Hey, if I give you $10 you didn’t have before, can I have $1 of it?”
I know this sort of conversation is uncomfortable for most people. Uncomfortable conversations are good. They create movement and change. You can make it less uncomfortable by practicing your pitch. Check your body language. Don’t stutter, stumble, look at the floor or giggle uncontrollably.
Finally, know your core self values and be willing to walk away. It’s only a job. There is no reason to compromise yourself or your core values for a job. Find a way to make it your passion and get paid for it.
And…this is important…a job does not define your core value as a person. You have that core value independent of where you work. Always be willing to walk away. Walking away may make you more whole than staying.
Don’t get me wrong. I’m not saying threatening to quit is a reasonable negotiation strategy. However, understanding the cost of hiring a new person to replace you, and quantifying that is a reasonable thing.
You could say, “If they don’t give me this raise I’m going to quit!” Let’s talk through that. Are you willing to walk away if you don’t get what you want? You cannot negotiate successfully if you aren’t willing to walk away. That’s like saying give me what I want or I’m going to shoot myself.
No business person worth their salt will take kindly to being threatened or blackmailed even if you are valuable to the company. Threatening to quit is a valid strategy but you can’t do it in the form of threatening to quit.
Try this instead. “You know Bob, I really like working for you and the XYZ company, and I would rather not have to entertain the offers that I’ve been getting. This is difficult for me because I see that the average compensation for people in my role is $100 a second and I’ve been at $95 per second for a couple years now. I would hate to leave given all we’ve accomplished together over the last couple years and how well I know we’re going to do going forward. I know how hard it would be for you to find someone of my experience. Can we have a frank discussion over how we can work together to help me out of this jam?”
My point is that you can relay the information that he is screwed if he doesn’t do something but you’re asking for help, not threatening. You’re leaving him plenty of escape routes instead of forcing him up against a wall.
I hope some of this comes in handy for some of you as we go into the fall budget review cycle. And remember I get 10% commission on any raises that result from this article.
Unless you have a better offer?
😉