5 Principles on How to Ask for a Raise

Many factors go into being worthy for a raise.  I deal with a wide variety of professions across my businesses: retail clerk, a high-fashion saleswoman, an MBA executive, an artist/animator, an accountant, a sales executive, a game store manager, and a butcher.  I have seen these principles work across a variety of professions.

To start, here is the worst “I want a raise” pitch I have ever had:

One of my employees, who was already the highest paid member of the team, wanted a raise.  A big one.  Like $30,000 more a year.  As we talked, the real reason for him wanting such a raise emerged: his brother-in-law just received a $30,000/year raise.  His wife, jealous, is bugging him why he doesn’t get a raise like her sister’s husband did.  Other than that, he was happy in his job and what he was doing.

Let me think… denied!  

Seeing as the real motivation here was showing his wife, in a concrete way, he was appreciated by his employer we decided to buy him and his wife dinner & theatre tickets.  His wife got a fancy evening out, she got off his back, and he got back to coding.

Let’s see how you can do a better job than this guy.

Special Note: When I pay my staff, I automatically give them a cost of living increase of 2% each year in January.  This effectively eliminates the whole cycle of “I need a raise because I’m not even making what I was a few years ago due to the cost of living going up.”  This is important because everything from here on has nothing to do with cost of living, it’s purely: I want a raise.

Principle 1: You are at Your Best Negotiating Position Before You Start

The time you have the most leverage to negotiate your pay is when you are about to start.  At this exact moment the company wants you BAD!  You are a hero solving a problem for them.  If you turn down the job, they have to go through the whole process again to find someone else, and maybe they don’t want that person as much as they want you.

I hired two senior software developers within a month of each other.  Both were to do essentially the same job and both had similar skills.  The first negotiated a starting salary $15,000 higher than the other guy.  

I felt bad after 2 years that the first guy kept making more money than the second only because of what was said in that one meeting.  So I decided to correct it and pay them both the same.  He was obviously happy when I went to his office, told him he was doing a good job, and he’s getting a $15k raise.

Do your best negotiating up front so you don’t have to rely on having a terrific manager like me. :-)

Principle 2: Understand the Responsibility/Compensation Ratio

I have a simple rule on how people are paid: based only on their capability and responsibility.  If their responsibility or capability doesn’t go up, neither does their pay.

This is hard for some employees to grasp depending on their background.  Just because you’ve been doing something for a while doesn’t intrinsically mean you are better at it.  You could have plateaued a long time ago and are just coasting.

The best argument an employee can make for getting a raise is:

I used to be responsible for just X, but now I am responsible for X and Y.
I used to be capable of only A, but now I am able to do A and B.

Someone who approaches me with this line of thinking gets my full attention.  Maybe I didn’t realize they were doing more or are capable of more.

This argument is also very compelling up the chain of command.  When I used to have a boss, after the employee made their case to me, I had to go make their case to my boss to get additional budget allocation.

Make your manager’s job easier by giving him a compelling responsibility/capability argument!

What I love about this graph is you can see as people make more money (presumably higher responsibility) they "get it" as to how the system works.  The people at the bottom think it is luck or they have no control over their income.  You do!

What I love about this graph is you can see as people make more money (presumably higher responsibility) they "get it" as to how the system works.  The people at the bottom think it is luck or they have no control over their income.  You do!

 

Principle 3: You have to Earn It

This sounds so obvious yet I am shocked it isn’t commonly executed.

First, prove you have grown your skills, responsibilities, capabilities before you ask for the raise.  The idea of the raise is it corrects an imbalance: here you are, doing all this awesomeness, but still getting the pay of someone far less awesome.  Oh the humanity!

At my first web development job I worked across a table from another young developer.  I worked my butt off, hit my deadlines, and learned all I could.  He worked in the morning and then sat around surfing the web and chatting in the afternoons.  He often missed deadlines.  

I was his supervisor (scheduling wise, not in charge of his pay) so I asked him why he didn’t work harder.  He said, “They aren’t paying me enough.  If they paid me more, I’d do more.”

It’s been 20 years and that statement still blows me away!  Yet it was a exactly how he felt and lived.  I see it all over the place.  But it is never going to happen, he’s got it backwards.  You work hard first, then you ask for the pay.

A few months later, I got a promotion with significant salary increase.  He was fired.  

Principle 4: Don’t Extort Me

I was promoted and now responsible for many more people.  Unfortunately, our company was losing $1.5 million a month so all budgets were locked.  Based on the responsibility/compensation ratio I wanted a raise.  $10,000/year seemed like the right number.

I went to my terrific manager and made my case.  He agreed with me but said there was just no more money, we were losing too much each month.  

He said the only way he could do it is if I went and found another job that would pay me more, and then he could argue to match it.  But: I had to be willing to go to that other job if they denied my request.  You can’t play this card and then say you were bluffing.

I didn’t think it was right to waste some other company’s time interviewing me, drafting up an offer, just to get a raise at the job I wanted to keep.  I understand this is how salary negotiation is done in many places, but the whole thing smells rotten.  I won’t play that game.

I totally agree with the argument that market value has increased.  Depending on what is hot, certain skills could be in demand and increasing a profession’s wages.  At this point I will want to retain my best performers by raising them to the fair market wage, while the others can happily go if they want.  

However, if someone came into my office and said they found a position somewhere else for X, would I be willing to match X?  I’d shake their hand and find a box to help empty their desk.

Headhunters (recruitment consultants) are a mixed grey area to this principle.  I’ve had a staff member come and say a headhunter contacted them through linked-in and offer them a position with more pay.  In this case they are coming to me early to determine if maybe now is a good time to move on, or if there is more opportunity here.  

As an employer I know this kind of thing happens so it doesn’t make me nearly as upset as the offer extortion.  Usually these end up being good conversations regardless of how it turns out.  I’ve had people stay and I’ve had people go.

Principle 5: Ask How

This final point is a ridiculously obvious one, but one rarely tried.

I believe strongly in annual employee performance reviews.  I have seen first hand the value of them to the managers and the employees.  But other than a few years at my software company, it just never seems to happen.  I need to improve this.  

If you are in a company that has regular performance reviews, then this is the perfect time to have a conversation.  If there isn’t anything formal, you will need to initiate.

Don’t have the “I want a raise” conversation.  Have the conversation before that conversation which is “How can I best increase my value here?”

As a manager, I’m more than happy to have that conversation.  I want my staff to improve, grow, and take on more responsibility.  Having them plugged into and aligned with our corporate goals? Oh, that’s a manager’s dream come true!

So talk one on one with your manager about what the next couple of years look like here.  What kind of skills will be necessary in the future that aren’t now?  What kind of responsibilities could you pick up?

Basically you are asking them to tell you exactly what you must do to Earn It.  This is great as it removes all the guesswork.

The only risk is if after you do whatever it is you talked about, is your manager and the business condition still the same?  Even if the answer is no, you are still a better more marketable employee by following this plan than if you just did your own thing.  

So no matter what happens, you win!

This was originally included at the end of the article 3 Strategies to Selling Your Ideas to Your Boss, Coworkers, & Minions as a bonus.  But I think this content is worthy to stand on its own.