As you set career goals for 2012, a raise might be on your list. After all, the economy is slowly recovering, unemployment is ticking down and your employer is likely in a better financial position than in the last year or three.
But before you go into your boss's office demanding more money, take the time to lay the groundwork for a successful conversation. This means researching the typical compensation and salary path for your industry, company, and job position. Most important, understand exactly what results your boss expects of you, so you can demonstrate that you've exceeded them.
"The framework of the conversation shouldn't be, 'this is what I want; I want a raise,' it should be, 'I know what the company wants of me: x, y and z, and I've done it,' " says Peter Handal, chairman and chief executive officer of Dale Carnegie Training.
If you and your manager haven't already set specific performance goals that you can compare your work against, have a conversation to come up with goals for the coming year. Be explicit about the financial rewards associated with achieving those goals, whether it's a bonus for successful sales or a salary increase for a certain level of performance. Then, follow up at an agreed-upon time -- perhaps three months -- with a broader discussion about your career that includes the question of compensation.
"Don't wait until the salary raises are given to you. By the time it comes to you, it has gone through five or six levels of approval, and it's a done deal," says Zahir Ladhani, president of the compensation business at Kenexa, whose Salary.com division offers online salary data and tools. "For your manager to be able to shift some dollars, you need to start the process at least two to three months ahead of time."
If you've never negotiated a raise before, you're in good company. Only 12% of people surveyed by Salary.com always seek more money during an annual performance review, while 44% never bring up the subject of raises at review time.
It's okay to acknowledge that the topic of money may be uncomfortable, says Alan King, president of Workplace Options, a benefits support firm based in Raleigh, N.C. Tell your supervisor that you'd just like to begin the conversation so that the two of you are on the same page for your career goals; you don't need a decision about a raise immediately.<!-- more -->
"What you're offering to the employer isn't just, 'Give me something,' you're saying to the employer, 'I want to grow in this company,' " King says. If you're already at the top of the pay range for your position, you may need to seek a promotion rather than a raise -- you'll only earn more when you achieve a higher level of responsibility.
Never speak disparagingly or compare yourself to another employee when seeking a raise, nor should you threaten to leave if you don't get more money. Instead, keep the conversation positive and collaborative. Think about how you can become more valuable to the employer. If your benchmark research shows that you're earning less than you should be for the job you're performing, say, "Help me understand this," suggests Ladhani.
It’s also good to keep in mind that each job has a unique maturity curve, the trajectory of salary increases that you can expect for meeting performance goals, says Katie Bardaro, analytics manager at PayScale, an online compensation data company based in Seattle. The maturity curve will be flatter if most of your value to the employer is due to your education or pre-employment training; it will be steeper if you gain valuable experience every year.
For instance, a starting pharmacist can expect to earn about $100,000 but not see much growth over the course of a career, with ending compensation only about $106,000. By contrast, a software developer or lawyer will become more valuable to the employer every year because of on-the-job learning, and can expect strong raises, Bardaro says.
Be sure to understand the financial position of your employer and the overall industry before you begin a salary discussion. You'll appear out of touch if you ask for a raise when the company is in distress.
"If you're in manufacturing, construction, retail, real estate, things are not looking good for you…." Bardaro says. "The industries that see huge increases in pay are energy, oil exploration, engineering, scientific research and biotechnology."
If your manager doesn't have a budget for the raise you're seeking, consider asking for benefits such as extra vacation time, a bigger health care subsidy, educational or professional development opportunities, a gym membership, or a parking spot in the garage. Or, explore the potential for bonuses or profit sharing.
That's what Jason Jepson, 37, a business development executive in Austin, Texas, negotiated at a previous job in which he targeted corporate clients who paid retainers of $20,000 to $30,000 a month. Although his employer had never previously shared revenue from new clients, Jepson successfully argued that in just three months with a new client, his annual salary would be covered.
"Go in looking at the complete business, see how you fit in and your overall impact. Negotiate from there and you will win every time," Jepson says. "Everyone works a lot harder when they're working for more money."