Always do your research.
Your heart’s beating faster as you walk into your boss’s office to ask for a raise. This is the big one: the one where you ask for an extra 10, 15, or even 20% more in salary. You state your case, and you’re told you’ll be considered. Weeks go by, and you hear nothing.
Does this sound gut-wrenchingly familiar? There’s a good chance you committed one or more of the five fatal mistakes of negotiating a raise. I’ve been on both sides of the table, as an employee navigating annual reviews and asking for raises, and as an employer and CEO conducting more than 100 annual reviews since 2009.
In order to broach the topic of a raise, you need to first understand what’s at stake. Your employer will give you a raise when you’ve met all of the following conditions:
- You are producing more tangible value in your role than you’ve been compensated for since your last performance review (i.e. You are producing more, high-quality output).
- You are taking on responsibilities and initiatives outside of your core role and are excelling at them without dropping the ball.
- You have built up enough value in your company that your particular skills and talents are difficult to replace.
Once you’ve understood that any negotiation is based on two parties agreeing upon the perceived value being discussed, you’ll have a much more successful outcome. Steer clear from making any of these disastrous mistakes during a salary negotiation:
You don’t know what the market pays for your position
If you don’t understand the changing value of your role in the market, you won’t be able to anchor your request with facts. Market value is determined by:
- What you could earn for the same role elsewhere
- What your company would pay to replace you
- What your company would pay to keep you
Compare apples to apples when researching your role. Account for market size, geography, and cost of living standards. For instance, salaries in Toronto, Canada will be very different from those in San Francisco.
You’re asking for a raise prior to proving your capabilities
Employers are wary about paying for success in advance of it being achieved. If in the last year, you have over-performed in your role, but your responsibilities have stayed the same this year, asking for a performance bonus is much more appropriate and likely to get awarded.
To increase overall compensation, you must increase your responsibilities and do more work that creates tangible value for your company. A reasonable boss would be happy to compensate you for it.
You think working harder is the same as producing more
As coach John Wooden used to say, “Never mistake activity with achievement.” Applying effort, being a team player, and being a social butterfly at work won’t necessarily increase your value. If you find yourself talking about how you deserve a raise because you’re a hard worker, you’re automatically setting yourself up for disappointment.
To increase your salary, simply become an achiever in your role. Think of yourself as a sports player: The more goals you score, the better your contract gets.
You aren’t prepared to show your boss how you’ve provided more value
Prepare a well-structured document to show your boss how you’ve increased value for the company. Doing this prior to discussing your raise not only increases your confidence when speaking with your boss, but your boss will be pleasantly surprised to see that you’re so well prepared.
You aren’t asking the right questions
Your boss may have a number of objections to green-lighting your request for a raise. Understand that timing is everything when it comes to salary negotiations. In the event that you face an objection from your boss, ask him or her these questions:
- “Under what circumstances would you be happy to give me the raise I’m asking for?”
- “Which of my statements do you agree with? Which do have concerns about?”
- “What specific things need to happen so that we both agree this raise is merited at our next performance review?
Remember that “no” doesn’t mean “never.” It means “not right now,” which is precisely why asking better questions will help you navigate and pre-determine the factors involved in scoring your next raise.
BusinessCollective, launched in partnership with Citi, is a virtual mentorship program powered by North America’s most ambitious young thought leaders, entrepreneurs, executives and small business owners.