On a recent post, one reader left the following comment:
As an aside, in reference to your comment on the link you posted, I want to thank you for the emphasis on working to raise your salary level. It was largely your writings on the subject that have led me to ask for raises, negotiate my salary upfront, and just generally actively work to grow my career. I'm currently in the process of negotiating a promotion that should result in both a significant salary increase and a significant title change.
These are all things I probably would not have been as aggressive at if I had not read and believed your posts (and I was skeptical at first if the high percentages that you put in there, like 6 or 8% average annual raises, were really possible for any sustained amount of time). I like to think I probably would have figured this out on my own at some point, but at the time I first found your site a few years ago, I hadn't been at my first job overly long, and was just figuring that 3% or 4% raises were going to be the norm for my life.
You helped give me a different perspective, and because of that, I am richer both monetarily and in how fulfilling my career is (and I believe the path I'm on should keep me feeling fulfilled for a long time). Thanks again. I hope you and the site stay online for a long time.
I LOVE hearing testimonies from people who apply my thoughts and benefit from doing so!
I contacted this reader and asked him to tell his story to the FMF audience. He just started his career and has a long way to go, but for someone so young, he has some great advice. Given the headstart he's already built and his great attitude, I think he's destined to grow his career (and his income) significantly in the years and decades to come. Here's his story.
I was somewhat hesitant in writing this, simply because I am still very much at the beginning of my career, and I thought people might look at me and say, “What does this young punk know about anything?” For all I know, they still might, but hopefully there's something useful to somebody that will read this.
I had the somewhat distinct privilege of graduating at the height of the recession back in 2009. I've read several times that this is bound to have a negative impact on my salary now and for years in the future, if previous generations' experiences in graduating during a recession are any indicator of the future.
Perhaps an even more distinct privilege that I've had is that the recession has never affected my ability to earn income. Due to my high performance in one of my classes, one of my professors recommended that I consider applying to a certain company. I sent my professor my resume, didn't hear anything back for a long time, and then found out later that I wasn't far enough along in my studies for them to seriously consider me. But I checked back several months later in 2008, was told to submit my resume again, and this time I easily got selected for a paid internship with an engineering company. At the same time, I was tutoring at the university I attended. The internship paid pretty well, close to the median individual salary if I'd been working full-time, which was pretty exciting for me. The tutoring didn't pay as well, but I mostly did it because I enjoy trying to help others learn new skills, and it was a good way for me to brush up on my own skills.
In 2009, when I graduated, I got a full-time offer which I felt was extremely good considering the economy at the time – it was around 25% higher than the median household salary, so I considered myself very well off. I thought about trying to negotiate on it, but I figured that it was already a generous offer and I might be making a mistake if I didn't just accept it. In retrospect, I probably could have gotten at least a slightly higher offer if I'd tried.
FMF note: I did the exact same thing out of grad school -- took the offer because I thought it was good. I too should have asked for more.
It was shortly after I got my full-time offer, as I got more involved with more projects, that I started to realize that I was a cut above many of my coworkers that had far more years’ experience, and who I'm certain were making far more than I did. This is also the time that I started getting annoyed that I wasn't making more. My first annual raise was 4%, which everyone assured me was a good number, and I was satisfied. My second raise was 5.2%; however, it was higher only because I got a promotion. Despite the fact that my annual review was considerably more positive than the previous year, and I felt much more useful and much more valuable to the company, my merit increase portion of that raise actually dropped 20%, which was frustrating. My next raise was again around 4%, despite much better reviews again.
Around this time was when I started reading several personal finance blogs, most notably FMF and I Will Teach You To Be Rich. Both blogs placed a high emphasis on growing your income. Both seemed to think that it was possible to quickly and consistently get high salary increases. I remember reading one of FMF's articles about the different salary levels you'd attain after 20 or so years of working, assuming certain starting salaries and certain annual raise percentages. I think he had a few different levels of average raises, something like 2%, 4%, 6%, and 8%. When I thought about my raises, and the articles that I'd been reading showing that you were lucky if you were getting any raises at all, I wasn't really sure that it was reasonable trying for anything over 4% or so. After all, I was working for a good company, I was a very high performer, and my raises were going down or staying flat even while I was becoming an ever bigger asset for my company.
FMF note: I moved this article noted above to Wealth Lion, but hope to re-work it and bring it back to FMF soon.
I started sharing concerns about my salary with my management. They agreed that they'd like to pay me more, but they didn't appear to be able to really be able to do a whole lot about it. I assumed that it would get taken care of by getting larger annual raises, but I started realizing eventually that annual raises were ALWAYS going to be capped at a certain amount, because we were a large corporation and there was a lot of effort put into smoothing things out so that no one was getting too big or too small of a raise. If I got more, then someone else was getting less, and there wasn't any way that I was going to get the type of raises I felt I deserved.
After reading a number of different articles on salary negotiation, showing that you're deserving of a raise, how to ask for a raise, etc., I realized I had made a mistake by simply telling my management that I felt like I should be earning more. I had good managers that I trusted, and that liked me, but they didn't have the power to just go and give me a big raise simply because I was starting to feel undervalued. I figured that sometime over the couple years that I raised my concerns with them on occasion, that there would be some change, but there never was. Eventually, at a time when I figured that my stock in the company was a high as it had ever been, when everything was going right for me, I told my manager that I would be formally requesting a salary increase. I put together a presentation detailing how I was delivering value far above my pay level, and made a formal request for a significant salary increase.
This was relatively nerve-wracking for me. I KNEW that I had a good case, that I was providing a lot of value to the company, that I was a top performer, but it was still intimidating going to my management and trying to put a dollar amount to how much more I felt that I was worth. I had to really psych myself up in order to finally make the plunge, but I'm glad that I did.
My department's management quickly approved the increase, but it was eventually denied by HR, which decided that I was actually making about as much as I could make anywhere else in the region. That was obviously not the outcome I was expecting or hoping for, and that was the beginning of the end for me with that company. I updated my resume, being careful to frame my working experience in the context of how I delivered value above and beyond the norm expected for my position. Where possible, I put how much time/money I'd saved, how I'd improved the company's culture, how I'd taken initiative to improve our processes. I assume that I did a good job with the resume, considering that I applied to five companies, none of which knew me from Adam, and four of them responded with interest. I interviewed with two, and eventually got two very good offers, both of which were higher than the amount I would have earned had my company given me the raise that I originally requested. I gave my company the opportunity to counteroffer, which they eventually did, though it was not as high as either of the two other companies. It was very gratifying knowing that whatever choice I decided on, within a couple weeks I would be making a lot more than I was before.
When trying to decide on a company, I decided that this time I was going to negotiate upfront. While on the phone with their hiring director, I noted that I was expecting an offer from another company any hour, that I had already told the other company the offer amount that I already had so I was expecting them to at least match it, and I wanted to see if they could make me a better offer. She responded immediately that they could go as high as $2000/year higher than the original offer. The offer that I got from the second company roughly matched the offer that I had from the first company, but I had already pretty much decided on the first company. I tried one more time with the first company to try and get a better deal, which I wasn't able to, and I eventually agreed with them on their best offer. I'm still somewhat amazed that I got an extra $2000/year for simply asking for a better offer.
FMF note: $2,000 extra for a 2-minute ask. That's a pretty good hourly wage!
I came out of that process believing that I negotiated as well as I could in that circumstance. I might have been able to get a better offer from the second company, and it was actually probably a better deal monetarily due to the better benefits they offered, but I felt that the first company would be a better fit for me. Money isn't everything, after all.
FMF note: I too have accepted less money (though more than I was currently making) to work for one company over another. He's right that money isn't everything.
A little under a year after taking that job (my current job), after a few members of my team had departed for better offers, I felt that I could probably get a better offer somewhere else. Since I enjoy my job, I went to my manager and told him that I figured I could go elsewhere and get a better offer, that I would prefer to stay with our company, but there's only so long that I can pass up potentially better opportunities, particularly when I had already passed up one concrete offer that would have been financially better for me. He assured me that they were going to do what they could to keep me there. I mentioned my experiences with my previous company and that I wasn't going to wait a couple years for things to get better this time, which he agreed was reasonable.
After a few meetings with him, we came up with a plan to get me into a different position that would come with the type of pay raise and other financial incentives that I've been seeking, and a new role/title, potentially with more responsibility (perhaps some type of managerial position). We're still in the process of figuring out what exactly the new position will be, and it will naturally depend on the company's needs and how we're doing, so I don't know exactly what's in store, but we have agreed on a deadline a few months away where we'll either have things all worked out and I'll have a new position with new salary, or I'll be looking for a new job. At this time, I have no reason to believe that things won't work out, and the potential payoff is great enough that I'm willing to chance it.
It's really a powerful change to go from feeling underpaid and undervalued, to feeling like you're in control of your career and it's going how you want it to go. Good luck to everyone else in growing your careers and maximizing your job satisfaction and earning power!
Some final thoughts:
- I've always been open with management about my professional concerns, desires, and ideas that might improve the company. When I started my job search at my previous job, I let my management know. I've promised my manager at my current job that if I start looking for a new job, I'll let them know. I've read that this is not a wise thing to do, but I've been fortunate to have good managers, I'm a top performer, and I didn't/don't fear retaliation. I believe that good companies should feel obligated to try and meet the needs of their employees, particularly their top performers, but those employees should probably also feel obligated to let their employers know there's a problem and give them a chance to fix it. The squeaky wheel gets the grease, and if you don't speak up, there's a good chance that you're not going to get what you want.
- I regret not having made a formal request for a raise sooner. It's easy for management to tell you how your annual raise is dependent on how the company's doing, how everyone else in your group is doing, etc., and that's why your raise wasn't higher than it was. When you come to them and say, “I'm happy here, but I don't feel that my salary is commensurate with my performance, and that's why I'm asking for a __% raise (or a promotion),” the ball is then in their court and you're giving them the information to pass up to their bosses as to why you deserve more. You're either going to end up getting what you asked for, or you're going to find out that your company doesn't value you the way you feel you deserve to be valued. Assuming that you've done your research and you can tell that what you asked for is reasonable, it's probably time for you to start searching for a company that will value you more.
- Don't be afraid to negotiate. Assuming you're not asking for ridiculous things, the worst they're going to say is no, and you might be surprised by what they'll say yes to.
- If you look at my full-time salary, my pay has increased ~6.5% compounded annually since I first went full-time (hopefully that number will be going up soon when I get my new position in a few months). If you include my part-time pay level from my internship (assuming that I had worked full time), I've averaged ~16% average annual salary increases.
- If you're looking to change jobs, do some work on your resume. There's no need to go overboard, but particularly if you don't have a network built up yet, you should probably consider a good resume as a minimum requirement for getting noticed. Hiring managers want to know what you've accomplished, how you're going to save them time/money/effort, not that you can do the same things that everyone else in your position has done. Of course, this presupposes that you have accomplished something that you're able to quantify.
If you want to accomplish something or get noticed at your current job, I would suggest the following:
- Look around and see if there's anything obviously wrong with your company. If you feel that you didn't get enough training when you were hired, think about the things you wish you would have known as a new hire, then put together a training plan and present it to your management. If there's a bottleneck in some process (or if you don't really have any processes), try to think of a way to overcome that bottleneck. I've been surprised multiple times by the positive attention that I've garnered simply by doing something obvious that the company hadn't tried before, or by putting out some suggestions that others had probably thought of but not tried to implement.
- Don't be afraid to make a suggestion that's outside of your realm of responsibility. I think too many people take the approach that, “That's so-and-so's responsibility, not mine, so who am I to tell others how to do their jobs?” This has to be done delicately, of course, but a good way to show you're deserving of more responsibility is to show that you're actively looking for ways to improve not only yourself, but the entire company.
- Figure out what your boss needs and then try to meet those needs. They might be obvious, or you might just try going to your boss and saying something to the effect of, “I noticed you've been pretty stressed about _________; is there anything I can do to lighten the load?"