How to Discuss a Pay Raise: 8 Executive Tips | by Gil Mahesh | Aug, 2022

The question of how to increase salaries is of concern to most employees. However, “ask” is the wrong term in this case.

These are negotiations that need to be initiated when the internal sense of the “give and take” balance is disturbed.

In the negotiation process, all factors must be taken into account — the company’s budget, grades, and the market situation. But the most important thing is that the employee should have a feeling of inner comfort, something that he gives to the company as his contribution to the results, and the employer more than returns in the form of a compensation package.

And this is not only a salary but also bonuses, promotions, insurance, training programs, ESG activities, etc.

So, how do you prepare for negotiations with your boss?

Start by finding out your employer’s rules. Going through the procedures will be easy if the company has adopted that employees know what affects the salary increase. In such a corporate culture, the mechanism will be transparent.

For example, the entire company is selling, and the contribution of each division is written in the strategic planning stage and then taken into account in the result. Then the employees understand what they all signed together and what they did.

This applies to the front office (sales, marketing, service), development, and back office (finance, HR, operations). Within each division, the dynamics of performance and results for employees are also spelled out. If they didn’t fulfill the plan, then they didn’t receive encouragement, but everyone understands why and tries to adjust the strategy and tactics together.

In such companies, salary increases are part of the overall planning process. But such flexibility and a motivating corporate culture have not yet been introduced everywhere, and salary procedures are often classified. The following recommendations provide clarity on how to proceed in these cases.

If the manager is not the owner of the company, then the manager of any link will need to justify the increase in the salary of the employee before his boss and the financial department. He will have to go through several stages of approval and complete it by the time the payroll (wage fund) is discussed.

To expedite approval, you can draft a corporate-style justification, including the most significant work achievements that management assessed and what they brought to the company.

• Full name, position, department, direct manager, HR manager, as well as stakeholders — representatives of cross-functional teams, whose opinion is worth asking.
• Key priorities for the past period and the results on them according to the assessment grades adopted by the company.

For example, in international companies, outstanding ratings are needed to justify a salary increase , and only exceed expectations (exceeding expectations) is not enough.

• Participation in the internal life and projects of the company (not direct functional duties). For example, it can be ESG activities or organizing a master class at a holiday for the company’s children with positive feedback.
• Additional education, advanced training, internal and external trainings, professional certifications for financial specialists.
• Internal awards (for example, “Best Public Sector Sales Employee of the Year”) and external awards (top 100 in the ranking of PR specialists), as well as public speaking, articles.
• Calculations of inflation for the period of work with links to official sources to argue how the purchasing value of wages has decreased when it comes to compensation.

You can make a justification in a text file, including the necessary data and calculations, or you can enter it into the HR system if this is accepted in the company. Then the manager and HR manager, whose approval is usually required, can more quickly pass the request up for a decision. And the manager will be pleased that his time was saved.

It is important to take into account that usually the salaries of employees increase from the beginning of the financial year. At the same time, the budget of the unit, taking into account the increased payroll, begins to be discussed in advance. In large companies, this is 2–3 months.

If your raise was not entered into the financial systems at the right time, most likely you will have to wait for the next opportunity and budgeting period. When a company grows rapidly, business models or business processes change, it can take a quarter or half a year. We must try to guess and not be upset if we have to wait longer than we would like.

If the balance of “give and take” in your relationship with the employer has been violated, you should not directly state this. Such a step can create a pressure effect and deprive you of the support of the leader.

It is worth going from the other side, more interesting to your superiors. This may be a personal meeting where you will discuss the results of the work and plans for the future. It is important to choose the moment, for example, after a successful review or the completion of a quarter.

At the meeting, start by asking for feedback and advice. If the manager does not ask himself, invite him to talk about what went well and what caused difficulties recently, and share ideas on how to make the processes in which you are involved more effective.

A sales manager at an international IT company closed several company-wide deals in the first and second quarters. At the same time, the latter was personally supervised by its leader.

During the previous three years of work, the employee also fulfilled the plan, but stood out from the group. In addition, he organized a cross-functional project team and took an active part in marketing activities, showing himself to be an enterprising and loyal employee.

At a personal meeting with the head, who did not hide his satisfaction with the results, the manager asked what prospects he might have in the company, and shared his opinion that in the new financial year it is worth allocating resources to focus on sales on the retail sector. He expects demand and is ready to build on the success of recent quarters there.

The employee was prepared and knew that such organizational issues should be discussed in advance. It turned out that at a recent strategic session, the opening of a direction was just discussed, and the head promised that he would consider his candidacy for a new position.

As a result, the employee received a promotion in grade, was appointed as the head of the department with a team in his subordination, and his income increased by 25%.

If an employee is expecting a promotion, they should be prepared to take on more responsibility. It is necessary to independently propose new tools to improve efficiency, initiate projects and supplement current responsibilities. If we are not talking about empowerment, you need to prove with facts in hand that you deserve better in this position.

Some managers have a negative attitude to comparing salaries in their company with others, suspecting the disloyalty of employees. But such justification as inflation can work. The argument “My income does not cover my costs — I need to think about how I could increase the first part” was repeatedly accepted, as well as a job offer from another company.

An increase in salary with the same responsibilities can be justified by an increase in efficiency and facts: “began to sell more for …”, “prepare documents for … faster and better”, “write faster for …”, etc.

In preparation for the arrival of a new boss, the employee analyzed the dynamics of offers on the market and inflation over the years of his work and prepared a rationale for a salary increase based on the market situation. He also included positive annual reviews and a comment about his marital status, explaining why his income doesn’t cover his expenses.

After meeting with the new manager at the end of the first joint quarter, which was very successful, the employee showed his calculations, and the manager agreed to request a promotion as an exception to the general rule, according to which one would have to wait at least another 6 months.

The new employer had a good relationship with his boss and knew corporate procedures in detail. As a result, the employee received a 30% increase in the fixed part.

It is useful to use coaching approaches even if the employee has not been trained in leadership. After all, the most durable decisions are those that a person has made himself.

To encourage a leader to make the right decision, one must firstly ask more questions and, secondly, identify problems and ask for advice. For example, you can build a conversation using the phrases:

• “Tell me, how do you rate my work?”;
• “What do you think about the deal with this bank?”;
• “My income is no longer covering my expenses because of the mortgage. What options do I have at my current place of work to solve this problem”;
• “An addition is expected in my family, I am very interested in increasing my own income. What are the new challenges facing the unit that I could take on?

The processes of changing compensation in a number of corporate cultures are organized differently. Therefore, it is important to understand what features prevail in the team of the leader, whose responsibility is to make a decision.

For example, in “purple” (family-clan) cultures (according to Claire Greaves’ Spiral Dynamics typology), where belonging, kinship, and tradition are the leading values, salary negotiation is often a painful process. After all, the very fact of belonging to a clan is a kind of reward for work.

And the employee proposing compensation questions the core value of the organization.

On the contrary, in corporate cultures that have reached the “green” level, salary information may be generally public. Values ​​here include harmony, equality and social acceptance as well as self-fulfillment.

In such a culture, a pay increase, provided it is lower than peers of the same caliber, can be seen as a legitimate act and an encouragement to create fairer relationships.

In different organizations, a salary increase can mean completely different things. It is important to clarify this when discussing a promotion with your manager.

In case of impossibility of salary increase, discussion of additional bonuses often leads to success, which can be very significant and do not require advance budgeting in systems.

If it was not possible to receive confirmation of the readiness to raise wages, it is necessary to clarify when and under what conditions the conversation can be resumed. And return to him at the appointed time or if the conditions are met.

If the manager promised to increase compensation within a certain period, then it is worth clarifying whether the employee should provide any additional information, for example, facts to prepare a rationale, or remind at some time in order to be in time by the time the payroll is discussed.