It’s 2022. Inflation is soaring, and employees are leaving their jobs at historical rates in search of something more lucrative and fulfilling. They are calling it the Great Resignation. Because of this, employers should be valuing their employees now more than ever and it just might be the best time in recent memory to ask your employer for a raise. But before you do, you need to consider how to do so and how NOT to do so.
In today’s blog, we will walk you through the best ways to ask for a raise that will lead to a positive, productive meeting with your boss that they will appreciate.
Before we get to the talking points, you first need to understand an important concept: You are an investment.
When you are first hired -- let's face it -- your employer doesn’t know much about you. They don’t know about your upbringing, your family life, your hobbies, or your interests. In other words, it isn’t a personal decision. It is a business decision. They see your skills, experience, and ideas, and they feel like you would be worth spending money on. They make a transaction with you. In exchange for your time, skills, and expertise, they exchange money, benefits, and incentives. Both parties agree upon that deal.
Fast forward a bit to where you are now.
Now you are hoping to renegotiate the terms of the original agreed-upon contract. Your employer may care about you at a personal level. They ask how the spouse and kids are, you go out for Happy Hour with your boss, or exchange white elephant gifts at Christmas. Your boss and coworkers might deeply care about you on a personal level, but understand this: As an employee, you are still an economic investment.
Understanding this is key to successfully asking for a raise.
Here are four talking points you should bring up in your conversation with your boss when asking for a raise:
1) Talk about the money you saved or made the company in the past
The theme you will be trying to communicate in your meeting with your boss is your value to the company and how the value you bring now exceeds what it did when you first started.
It would be wise to begin by talking about your wins since you’ve last started. Focus on the economic value you’ve brought to the firm. How have you saved or made them money? This should exceed the expectation of the original contract.
Remember, you were brought on as an investment, and investments should return more than you pay out, otherwise, it’s not a worthwhile investment, is it?
We must note sometimes, this is easier said than done. For example, if you are in sales, you can quite easily show the number of sales you brought in vs. the cost of your salary or commissions. But what if you are a salaried admin assistant? Your job isn’t to come in and make the company money. However, you can still talk about how much money you saved if you get creative. Maybe it is a process you streamlined which saved 5 hours a week or 260 hours a year at a rate of $20 an hour = $5,200. That’s $5,200 they would not have had if they had hired someone else for your position. Maybe you negotiated the price of software your company uses, which saved you $10,000. You can point to these things that show you have been a better economic investment than they originally anticipated.
2) Talk about your plan for making or saving them more money in the future.
Now that you have more experience and more skill in your area, you can leverage that to talk about how much you will make or save them in the future. Maybe you have specific sales goals and a plan to reach those goals.
Remember, you now provide a value you couldn’t have when you first started in knowledge and experience. Sometimes you see companies let well-experienced employees go because they simply can’t afford them anymore. Or at least that’s what it seems like on the surface. The more likely scenario is that the well-seasoned employee didn’t use their knowledge and experience to provide/communicate the additional value they are providing. So why wouldn’t the employer let them go for a younger, more motivated person at a lower rate?
3) Talk about your value on the open market.
Your value on the open market would be what you could make if you were to switch to a similar position in another company. You could look up the average salary for your position on websites like Glassdoor to see what other companies are paying. Perhaps your employer is paying you at or above the “going rate” for your position, in which case you might want to forego this talking point. But if your employer is getting you at a discount, this would be a great talking point to show them how much they would have to pay someone if you were to leave.
4) Talk about why you are indispensable.
The final talking point to show your value would be to talk about why you are indispensable. To go along with the previous talking point, sure you could show the company what they would have to pay a new employee to come in and take over your job. But a big piece to that puzzle is: could that new employee do what you do? How long would it take, how much training would have to happen for them to find someone to do what you do? This is when you can remind your employer of your qualifications for the job. Any certifications you’ve earned, education, or years learning the ins and outs of the company you work for.
These four talking points can be a great place to start when communicating how your value to the company has risen since your original hire date, which would warrant them considering re-writing the terms of the original contract.
So what should you avoid talking about?
We’ve given you four considerations for what you SHOULD talk about in your meeting asking for a raise. What should you avoid talking about? Perhaps the biggest (and common) mistake you can make is using your personal budgetary needs or financial goals as a convincing reason why you need a raise. Remember, you are an investment. And while the people you work with care about you, to be blunt, they are also not a charity. They are trying to run a successful and profitable business. So your personal financial needs are not in their realm of considerations when determining your pay rate. That doesn’t mean it is not important to you. It should absolutely be something you consider when asking for a raise – it’s just that you should avoid talking about it with your employer because it is far more effective to steer the conversation to the value you bring.