The Art of the Raise

Your career is your most valuable financial asset and managing it correctly can earn you millions of dollars in extra income throughout your lifetime. One way to maximize your earning power is to ask for a raise at certain times in your career as this piece from Kiplinger suggests. Let's start with why it makes financial sense to ask for a raise:

Remember, nothing ventured, nothing gained. Linda Babcock, an economics professor at Carnegie Mellon University, conducted a study of CMU graduates with master's degrees and found that 57% of men had negotiated their first salary, compared with just 7% of women. The men who bargained increased their salary, on average, by 7.4%, or $4,053. So if you believe you deserve a raise and don't ask for one, it's probably unfair to complain that you're underpaid.

That extra $4,053 can make a big, big difference, especially when compounded through four or five decades of work. With the right percentage raise every year, it can literally mean millions of extra dollars to you throughout your career.

Next, Kiplinger's gives some general tips on how to get a raise:

When my clients ask how to overcome their fear of confronting the boss, I tell them to start by assessing their negotiating position. Does your boss like you? How essential is your job to the organization? Would it be difficult for your employer to find someone at your current salary who could replace you? The more checks you can tally in the "yes" column, the more confident you should be in negotiating, the safer you are in requesting more money, and the firmer you can be in responding to a "no."

It's best if you can quantify how much your efforts add to the company's bottom line. If that's not possible, at least get comparable salaries for workers in your position. Check a Web site such as Salary.com, or consult a professional association, colleagues at your company or others, or outside recruiters. Then write a one-page memo to the boss estimating your fair market value. That will give your boss something tangible to show higher-ups to justify giving you a raise.

Money isn't everything. If your boss says more money isn't available, switch gears. For example, suggest an upgrade in your position. It's easier for your employer to rationalize a higher salary if your job description is changed to include higher-level work. Or ask if you can reopen negotiations in three months. If the boss agrees, put it in writing.

Can't get anywhere on salary? Try for a noncash, tax-free goodie: the right to telecommute, a more prestigious title, flexible hours, a week at a professional conference in Hawaii.

Let's put it this way: If you're a strong performer, your company is doing at least "ok" and you're paid at or below the going wage for your job, you shouldn't have much trouble getting a raise. And even if your boss can't give you one, she's likely to at least be sympathetic to your request (and will likely be as creative as possible to help you get something) as long as the request is made in the right manner. To me, the right manner is respectful, professional, and certainly not demanding or argumentative.

If you're an average to poor performer, then my only advice is to "get back to work." Forget asking for the raise, start working on notching some work accomplishments and demonstrating your value to the company, THEN ask for a raise.

Kiplinger's ends with a couple bits of advice that I thought were worthwhile:

Don't wrangle over every last dime. After taxes, the extra money you get is rarely worth any ill feelings you may generate. Even if your tough negotiating prevails, your employer will expect top-dollar performance. Mess up once and you may end up in the doghouse.

My rule of thumb -- and the advice I'd give my child -- is this: Reject the first offer, accept the second.

True, true, true -- especially the first tip. I've had people ask me for more money and not be willing to take a dime less. The company has had to give it to them because of a specific need at a certain time, but, believe me, people don't forget. I was happy to deal that employee some "salary justice" once the crisis had passed and his skills weren't so valuable. For a few measly hundred dollars less, he would have been fine, but he was greedy and generated lots of ill feelings.

Comments

[Anonymous]

"My rule of thumb -- and the advice I'd give my child -- is this: Reject the first offer, accept the second."

I did exactly that. It worked well. One of the best pieces of advice I've ever found on negotiation is that you should always leave something on the table. The trick to it is to find something you can give that the other party wants and you won't miss much. That's the entire point of every transaction. In theory, the two parties are exchanging what they have for something they want more.