Get that paper, Part 2: Asking for the raise you deserve

Hello, friends, and welcome to Part 2 of our series on getting a raise from your current employer. Part 1 shares the approaches you can take to identify a fair market rate for your role, company, and/or industry. If you don’t yet know what your number is, you’ll want to start there. If you have a number in mind, welcome to the Part 2 party, where we cover the best practices for making that raise request. (Links jump to sections.)

Asking for a raise is effortless for some people. They have the easy confidence and situational awareness to make their request without breaking a sweat. For the rest of us, I want to address some of the mental blocks or limiting beliefs you might have. 

If you’re hesitant to ask for more money because you don’t want to “look greedy,” remember: money is not a morally treacherous thing. Money, in this case, is simply what your company gives you in exchange for hours of your life. Asking for a fair exchange is asking to be valued and respected—which doesn’t make you greedy, or materialistic, or whatever other label you’ve put on this particular jar. 

I’ve also heard people say, “I don’t really need a higher salary.” (Yes, really.) Let’s be crystal clear: what you are paid in our society has nothing to do with “need,” and that goes both ways. If you can live happily on $50,000 per year but you’re killing it at a job that should be paying you $100,000, guess what you can do with the extra money? Whatever you want.

You can retire early and focus on your hobbies and relationships. You can take a sabbatical to work on a passion project. You can treat yourself to something on your bucket list. If you double your salary, you might be able to cut your hours in half. Heck, you can change nothing at all, and give half your new salary away to people and causes you care about. But you don’t have access to any of those options if you’re underpaid. 

Finally, if you successfully close the gap between what you’re paid and what you’re worth, you’re still technically underpaid. Employers simply do not pay anyone more than they’re worth. That is, in fact, a necessary condition for them to keep you on the books. As soon as you’re “overpaid,” it doesn’t make financial sense for them to keep you. So if you’re afraid that the mere act of asking for (or getting) a pay increase could lead to you losing your job, there’s virtually no chance of that happening. The worst thing your employer can say to a well-researched, thoughtfully composed request is “no.” So let’s create one of those! 

Identify the people involved in your pay decisions

Know who the pay decision-makers are at your company. Your manager may not have the final say, even if they’re supportive. Compensation requests often get sent up the chain, and you can prepare your boss with a detailed case so your request is effortless to pass along. The more specifics you include about the value you’ve added, the better—especially if you can point to profits or cost savings that you’ve led or supported. But it’s not just the people at the top who matter here. 

As I mentioned in Part 1, I’ve been coaching a client (“Blake”) who successfully obtained two pay increases totaling 50% during our year of working together. Blake did so many things right, and this one in particular was brilliant: Blake correctly assessed that the pay decision-maker would immediately check in with their direct manager and key coworkers (e.g., project leads Blake supported) about Blake’s value to the team. Blake talked to them first and asked them if they agreed with the ask. Blake’s manager and key coworkers all replied with an enthusiastic “yes,” which Blake noted in their letter to the decision-maker. 

Find the right time to ask

A standard performance discussion can be a great time to ask, but be aware of your company’s compensation decision cycles. For instance, let’s say you have a great end-of-year review in December, so you choose that moment to ask for a big raise. Then you find out that comp decisions were actually made in October based on June’s mid-year reviews. Although there’s nothing wrong with starting the conversation early, you will likely need to keep updating your case through mid-year. 

Likewise, pay attention to your company’s health. If your end-of-year review is usually a great time for comp discussions, but your company just posted its worst quarter ever, it’s probably a terrible time to ask. Conversely, if the company is killing it, you were a part of that and deserve a piece of the action, even if you’re asking out of cycle. 

It’s often difficult to get an out-of-cycle pay adjustment, but it’s not impossible (see: Blake’s second huge pay bump). Significant victories, role expansions, and/or changes in responsibility offer the best opportunities for these pay adjustments. This is especially true for a role expansion that didn’t come with a formal promotion.

If your company provides counteroffers, it may be easier to negotiate your salary if you already have an offer in hand from somewhere else. However, you have to be prepared for your employer to call your bluff, and be legitimately ready to walk to that other job if they do. Use this tactic carefully. (Some companies may also choose to call your bluff on principle; I question whether it’s legal or ethical to do so, but it happens.) 

Make your case for better compensation

Every 2–3 years, you should evaluate your skills and compensation against industry standards. Don’t limit yourself to asking only at yearly reviews if you’re constantly upgrading. Here are best practices for building a clear, fact-based case. 

  • Whether you’re negotiating a new job offer or a raise at your current workplace, magic words to use in your ask are “market research” or ”market rate” (which can include any and all sources, like work friends, as discussed in Part 1) and “industry average for this area” (which is where salary information sites and cost-of-living research come in, also in Part 1). 
  • Although cost-of-living can help you identify an appropriate number, we are not going to cite that as justification (in most cases). Instead, we’re going to talk about all the ways you add value for your employer. Have your skills, productivity, or responsibilities increased? Have your coworkers participated in the Great Resignation, and you’ve picked up their slack? If so, tell that story in shining detail. There’s a good chance your manager doesn’t realize everything you’ve been up to. (Blake says: “Can confirm!”)
  • Have you discussed this with your supervisor previously? If so, did you meet the requirements or expectations established in that conversation?
    If specific, measurable expectations were not clearly defined in previous conversations, get those expectations set with concrete metrics. No movable goalposts!
    If expectations were set and you met them, spell out how you’ve delivered. If not, it’s probably smart to wait unless there are excellent mitigating circumstances. 
  • Even if you plan to ask out loud, make your case in writing too. This will help keep your thoughts organized, and will come in handy if your manager needs to pass your request to another party. 
  • Run your request letter/speech by a few people who know your value, want to see you win, and have strong communication skills. Blake solicited input from several thoughtful friends and colleagues. As part of my services, I helped refine several drafts of the request letter. (Just another thing this friendly neighborhood financial coach can do for you!)   

We made you a present. (It’s a template!)

Because Blake is both an incredibly talented go-getter and a generous lion-hearted human being, they have offered up their letter as the foundation of a template for Fortuna readers. (Italicized text = tailor to your situation.) We’ve included a few extra tips, too:

Dear <Decision-Maker>, 

  1.  General opening: “I would like to be considered for a pay increase [during the next cycle, if applicable] to align my compensation with my expanded responsibilities / skills / credentials / productivity, which have increased dramatically since my last review / over the last year.”
  1.  Description of your value: “In the last year/since my last raise, I’ve…”
  • List your critical contributions to the company since your last raise. Ensure you capture the scope of your support, and provide concrete, quantitative metrics where possible (e.g., reduced costs by 60%; managed X people; turned a 26% profit).
  • Capture any skills you have acquired that enhance your value to the company (e.g., completed a relevant certificate or degree).
  1. Manager/supervisor buy-in: “My program managers / supported team leads, [names here] can attest to my continued and increasing contributions to the company’s success, and they support this raise request.”
  • If your direct manager/supervisor isn’t the person you’re submitting your request to, ensure your manager/supervisor supports this request first. It’s poor form to put words in their mouth (and may adversely affect your raise and position in the company).
  • You should also discuss this request with anyone who oversees or is supported by your work, even if they’re not your direct boss. In many cases, these people can be your greatest champions—even prompting upper management to think about granting you a pay raise before you get around to asking.
  1. Salary Request: “I enjoy my work at <Employer> and wish to continue my work / career / employment here. A pay review that aligns me with the market rate for my role, skills, and experience—which my research indicates is <your number here>—will allow me to to continue supporting our company’s great work. I welcome further discussion on roles, responsibilities, and pay. Thank you for your time and consideration in this matter.”
  • When considering market value, capture your unique skill sets in addition to  your general responsibilities. For instance, if you’re on the books as a Basketweaving Specialist but you often lend your coding experience to support your team, this should be noted in your compensation request and reflected in your number.
  • Do not sell yourself short. By approaching the problem and establishing the baseline (your salary request), you control the narrative. If you ask them to compensate you with what they think is fair, that number will likely be significantly lower than you deserve.
    (Fortuna note: this happened with Blake’s first request, which didn’t have a number attached. I was so proud of them when they put a real number in the second one!) 

Get that paper, get creative, or GTFO

If everything went smoothly and you got that raise, CONGRATULATIONS! 

If your company isn’t willing to meet your number and you have a better offer in hand, pack your things and Get Thy Fabulousness Out. (Is that not what that stands for?)

If your employer has a valid reason why they can’t quite meet your number and you’re not sure you’re ready to walk yet, it’s time to get creative. There are still ways to increase your effective pay rate that might not come immediately to mind.

Getting—or keeping—fully remote, hybrid remote, or flexible work arrangements (to include reducing hours without reducing pay) can give you back valuable time and gas money. If you’re allowed to go fully remote, or if your company has multiple locations, authorization to move to an area with a lower cost of living can help, if that appeals to you. If your company agrees to any alternate work arrangements, get their commitment in writing. (This goes for all job-related promises. I’ve seen bro-level agreements evaporate faster than spilled White Claw.) 

Benefits may also be negotiable: family leave, more paid time off, paid sabbaticals, stock options, increased 401(k) contributions, short/long term disability insurance, fully paid health insurance, permission to work part-time while retaining benefits access, educational reimbursements, dependent care flexible spending accounts… those are just the first ones that come to mind. Your employer might be able to offer you other perks that give you more time, peace of mind, and/or dollars in your pocket. 

Some of these approaches will be more accessible than others, depending on the size of your company. Big companies may have great programs you don’t even know about but can’t offer anything innovative or bespoke; small companies might have the flexibility to offer something off-beat and awesome but can’t afford to subsidize certain benefits. There are upsides in both cases, but the value depends on how valuable it is to you.  And of course, there’s always the option of a one-time bonus. 

When a bonus is better than a raise

I’m normally a fan of raises over bonuses. A raise locks in gains for the future, so you keep winning every year. Also, bonuses are taxed at a higher rate than regular pay because the IRS considers them “supplemental wages.” (Ugh.) 

However: if you see yourself leaving your employer within a year, or if your company experiences significant volatility, a lump-sum bonus when times are good may be a better way to go. Whatever the case, read the fine print to see if there are any vesting requirements or other rules that allow your employer to claw the money back if you leave within a certain timeframe. 

Balancing the equation

As a financial coach, I am often asked to help people manage the money going out: spending, saving, paying down debt. That’s an essential part of the equation. And if you’re getting a raise, it’s really important to figure out your expenses before you get used to having that extra money so you can protect yourself against lifestyle creep. I can help with that!

But if meeting your basic needs—housing, utilities, transportation, healthcare, food, and childcare—is eating up more than half your budget, that math can get really stressful, especially if you also have debt payments to make. No matter how hard you work on cutting your discretionary spending, you may need more income. While asking for a raise is a great place to start, it’s only one of the ways you can improve your earning power. If you find yourself needing support with either side of the equation, please reach out. I’d love to help you. 

Big thanks, once again, to my favorite editor. The blame for any incorrectly-crafted em dashes rests solely on my shoulders.

Photo by Pixabay on Pexels.com

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