With Q4 around the corner, it’s a good time to start thinking about your performance evaluation at work, especially if you want a raise. When I worked full-time in corporate America, I used to salivate at every thought of getting a raise. Money was a huge motivator for me while I was building my career. I wanted financial independence as quickly as possible.
The funny thing is it took me a long time to specifically ask my bosses straight up for a raise. I didn’t have any issues voicing my desires for promotions, but I relied on my boss to assume I expected a raise along with a new title. Lesson #1, never assume your boss can read your mind.
Anyway, it took time for me to have enough confidence to openly talk about my compensation. But once I got through that first conversation about getting a raise, it got a heck of a lot easier after that. Not only were my efforts were worth it, I wished I hadn’t waited so long to ask for a raise.
Keep your finger on the pulse
If you want a raise, it’s important to be clued in on what’s going on in the economy, your company and its sector, and the global markets. For example, if you asked for a raise the day after Brexit was announced when stock markets around the globe were plummeting and people were (temporarily) panicking that the global economy was going to collapse, you’d come across looking like a total idiot.
So, what is going on these days? The unemployment rate for August held steady at 4.9 percent, the same rate since June. Compared to 5.1 percent a year ago, it’s fairly flat. But we’re still seeing a lot of companies downsizing. My general sense is make the most of your 9 to 5 and be cautious with your money.
If you work for a startup, be especially cautious. It’s shocking to me that so many startups are horrific at managing their cash flow and continue to shut down overnight leaving their employees in the lurch. A recent example is Mode Media, a “unicorn” startup that was once valued at a billion dollars and projected to generate more than $100 million this year, but “POOF!” it’s gone.
The economy isn’t much to holler about either these days and of course the upcoming election – that most of us don’t want to think about – leaves a lot in question about what our country’s economic growth is going to look like in 2017 and beyond.
Recent salary trends and forecasts
Salary budget projections for 2017 are 3.1 percent on average. That’s just a hair higher than this year’s average. While that might not be much to celebrate, the decent news is it’s higher than the U.S.’s target 2 percent rate of inflation.
Top performing employees might expect to see salary increases near the 6 to 8 percent range, but there are a lot of variables to come into play on an individual level. The sense I get is plenty of companies are staying cautious, especially those with international exposure, and many firms aren’t super motivated to increase salary budgets into next year.
However, a few industries in particular are expected to offer nice salary boosts next year, namely tech, legal and compliance. According to Robert Half, these roles are expected to offer the biggest gains:
- Litigation support / e-Discovery professionals: 7.3% (junior level) to 8.9% (senior level)
- Lawyers: 5.8% (senior level) to 6.9% (midlevel)
- Compliance professionals: 6.4% (senior level) to 6.9% (midlevel)
- Data scientists: 6.4%
- First year legal associates (large law firm): 6.2%
- Front-end web developers: 6.2%
- Big data engineers: 5.8%
- Network security engineers: 5.7%
- Contract managers: 5.4%
- Compliance analysts: 5.4%
Asking for a raise
Timing. If you want a raise, don’t underestimate the importance of timing. Sometimes you have to be patient and wait it out if the financial health of your company is dicey. For example, if your company just held a town hall last month announcing they are scaling back and implementing a hiring freeze, they will think you fell asleep in the meeting if you come to them asking for more money right now.
It’s also important to be patient if you’re simply too new at your job. I had an employee come to me asking for a raise after he’d only been at the company about 7 months – straight out of college – and I had to try hard not to laugh in his face. Okay that might sound a bit mean, but he was not a good performer and he totally fit the mold of a stereotypical clueless and entitled millennial. I had to bite my tongue. Asking for a raise when you’ve been at a job less than a year (and bad at your job) can make you look pretty immature and restless. You’ve got to be patient and earn it.
If you have an actual new job offer on the table that you’re contemplating accepting, please negotiate your salary before you sign the contract. If you take the offer as it stands in hopes of asking for a raise in six months, your boss is probably going to roll his/her eyes at your six month mark and say no and wonder why you took the job in the first place.
On the other hand, if you’re a well performing employee and have been in your role for more than one year, start talking to your boss well before the year end review process is nearing completion. Promotions and raises usually have to go through a vetting process with upper management that can take a month or longer to approve. By the time you’re sitting down to have your actual year end review meeting, the cutoff for submitting compensation changes for Jan. 1 is usually long past.
Red tape. Not only does it take time to get a raise approved, it can take cutting through a lot of red tape. I was once in compensation negotiations for over 3 months with one of my employers. Even though the local office wanted to help me, there were so many back and forth hurdles that had to be overcome out of the company HQ. It almost drove me crazy, but there wasn’t any avoiding the various layers of review.
Also, like it or not you’re competing with your peers for money. For example, my boss was given a set dollar amount each year that he had to allocate across our entire department. Not only was the size of the lump sum out of his control, it was small. Even when he wanted to give some employees more, his hands were pretty much tied. Granted, my past negotiations have taught me that if a company is profitable and wants you badly enough, they usually have much more flexibility than they like to let on. The more valuable and likable you are, the more squeezing power you have.
Just understand that you may not be able to score a raise on your first try and it may take jumping through some hoops to get what you want. But it’s worth it if you don’t aggravate your boss in the process and can get a higher compensation in the end. It’s important to know what you’re worth and to be fairly compensated for your skills and efforts.
If you keep hitting brick walls, it’s probably time to consider plan B and start looking for a new job and an opportunity to engineer your layoff. Sometimes even despite your best efforts, a company isn’t able or willing to pay good wages. Changing jobs can be a great way to negotiate higher compensation and increase your happiness and financial security in the process.
In closing, here’s one of my favorite quotes. Randy Pausch was quite the remarkable professor and an inspiration.
“The brick walls are there for a reason. The brick walls are not there to keep us out. The brick walls are there to give us a chance to show how badly we want something. Because the brick walls are there to stop the people who don’t want it badly enough. They’re there to stop the other people.” – Randy Pausch
Be sure to check out these related articles:
- How to ask for a raise in 10 easy steps
- Do introverts or extroverts make more money
- Feeling unappreciated at work? Here’s what you gotta do
Untemplaters, how badly do you want a raise ? Have you ever openly asked your boss for a raise before? What was your experience like? What do the expected salary increases look like for your sector next year?
Finance Solver says
Wow this was a fantastic post. Read every word as it relates so much to me (I just started working straight out of college in a rotational program). I’m not going to start asking for a raise anytime soon, cause it’s barely been 3 months since I started working, but maybe after the 1 year mark, I’ll start thinking about it depending on outside factors and my performance level. Great post! Bookmarked for a later read 🙂
So glad to hear you enjoyed it! Yes, I think it’s a good idea to get through your first year before asking for a raise. Your employer is still monitoring your progress and seeing how you measure up to your peers while you’re new. There’s a lot to learn in the first year. You’ll be surprised how much more you know at the end of your first year than when you started!
Full Time Finance says
Asking almost never hurts and you won’t receive unless you ask. As a former manager who use to decide employee raises I can tell you that usually I had a pot of money to split between my employees. So to get that raise you had to be the standout on my team. Remember though humans memories are geared to short term, so your actions over the last month will have a greater impact on your raise. Also remember you manager is tracking multiple people. He/she will need a reminder of your accomplishments, keep a log as it will help your case. Finally remember as a manager the best employee is the one that completes the task with minimal input from the manager. Do your best to be a self starter though ask for help if needed as it’s harder for your manager to fix it after a deadline is missed but also they don’t have the time to hold your hand on everything.
couldn’t agree more. I loved my standout employees who were independent, could follow directions and figure things out on their own. They were they ones I wanted to put forward for promotions and raises.
Mustard Seed Money says
I think too often the fear of rejection keeps us from asking for things that we believe that we deserve. I think it’s probably easier to negotiate a raise if we have alternatives, ie we know we can walk down the street and get hired for more money. With that said I definitely need to do a better job of market research so that I know what I am truly worth in the market place.
Yes, nobody wants to get rejected and the fear of that definitely puts the brakes on for a lot of people.
NZ Muse says
This year was the first I asked for a raise (at previous jobs: was only there a year, was union, and in another just too chicken to ask for review/raise – there was no HR structure and no performance reviews etc). Was terrifying and awkward but so glad I did it! Have a good relationship with the boss and was really upfront about how weird it felt, but as he said, it’s a good thing I did and he expected me to. We’re govt funded so don’t expect much and the amount is not really up to me or even him really. I think my next move will be going private sector – I’d like the experience, and to work somewhere that gives bonuses even!
Great job having the guts to have your first raise talk! Getting the weirdness of it out of the way and just going for it is a huge accomplishment. I hope things work out for you!
Dominic @ Gen Y Finance Guy says
Great post Sydney!
This is actually something I have been thinking about writing about a lot lately. Especially, after speaking with so many at FinCon recently. As you know I share a lot about my own income on the blog.
The most common question people ask is how I have been able to manage increasing my icnome so quickly over the past 8 years since graduating college. I have been able to compound my income just at of college by 45% a year on average.
There are 4 things I keep in mind when preparing for the raise conversation:
1 – People that ask for more money, make more money.
2 – Money is just an exchange of value, if you want to make a lot of money, then create a ton of value. I shoot to deliver 10X the value I plan to ask for. You need to think like a business person and quantify the impact of everything you do in terms of top line and/or bottom line.
3 – Find a way to make yourself appear indespensible. At the end of the day we are all replacable, but perception is a powerful tool.
4 – Network with the players in your orgnization. This means your boss and everyone above him. Help them get what they want, and you will always get what you want.
Obviously, you have to be good at your job. But I have found through my own experience that if you follow these 4 guidelines, it’s impossible not to get above market raises.
Also, if you want the average salary increase, do what average people do. Most people will never ask for a raise, let alone what they are worth. Most people will just do the job they were hired to do. There is a quote by Emerson “do the thing, get the reward.” You don’t get the raise and then increase your responsability and value, these are things you have to do before you ask for the raise. Average people take what they are given. High performers and high earners ask and get what they are worth.
very true. Going the extra mile paired with asking for a raise is a great combo. And making yourself as indispensable as possible can provide great leverage. That definitely helped me.
Financial Slacker says
I agree that talking about money is difficult. I remember one of my first jobs in high school, I was even uncomfortable asking for my paycheck.
As you said, one of the keys to getting a raise, especially in a smaller company is knowing what is happening with the company. Growth creates opportunities. When you’re adding new business, you need more people and people with more responsibility. This opens the door for promotions and raises.
When business is flat or declining, it’s really difficult to get more money for raises.
yeah timing is key in so many ways. Even making sure not to catch your boss on a bad day is super important.