Q: While the economy is in the
pits, my company is having a record year and is sitting on a mountain of
cash. Yet we employees are not getting a share of this largess.
Shouldn't we be rewarded for our exceptional effort in a tough market?
Actually, you don't have a lot to complain about. Certainly not enough to goad
you into looking for another job. You enjoy your current position, your
colleagues and your upside opportunities. You're just feeling you deserve a
little larger piece of the pie.
What should you do about it? In a perfect world your employer would share his
wealth and hand out bigger checks to everyone, but the American business scene
isn't utopia. Employees always line up behind stockholders and CEOs when it
comes to dividing the spoils. If you want more money, and your company isn't
giving it to you of its own volition, you'll have to ask for it.
Striding up to your manager and demanding a raise isn't something most people
relish. It's risky and fraught with the potential for rejection. Yet, you can
make it a much more comfortable and successful process if you follow the
Develop a Strategy
Negotiating comes naturally to only a lucky few. Even if you negotiate
regularly on behalf of your company, the stakes seem much higher when your ego
and income are on the line. Preparing yourself ahead of time will give you
more confidence and an infinitely better game plan than one derived via a
Begin your preparation by figuring out why you deserve a raise. In our
current economy there are a number of external factors in your favor.
This stock market is booming. Shareholder and officer compensation is
stratospheric. Given these two circumstances, it's much harder to deny a good employee a
reasonable increase when the company has a money tree growing in its backyard.
The tight job market is also in your favor. If your company lost you to another
firm willing to pay more, chances are you would be hard to replace. Human
resources and management would spend a lot of time and money finding your
substitute. Even if he were equally talented, he would still require some
settling-in time. This time represents an opportunity cost more wisely spent
on giving you a raise and reinforcing your loyalty.
There may also be some internal factors that stack the deck in your favor.
Recently captured a major new piece of business
Saved the company a significant amount of money
Increased your department's productivity beyond expectations
Accepted a lot more responsibility/authority
Raised the visibility of your firm
Received an outstanding performance review
Initiated the development of a new product or service
Improved quality and customer satisfaction to world-class levels?
All of these activities put you in a good position to ask for and get what you
want. In fact, they tend to be better ammunition than market forces because
they showcase your specific contribution to the company.
There is one other critical issue in developing reasons for what you want: your
request's advantage to your manager and company. People are much more likely
to help you if their enlightened self-interest is involved. If you can't
answer how your request benefits your department and what your company will
gain by paying you more, you are going to have a very tough sell.
Once you're satisfied you have good reasons for asking your organization for
more money, decide specifically what the amount should be. As with identifying
your reasons for deserving a raise, the amount you request will hinge upon both
what you are worth in the global market as well as your value to your company.
Job market compensation information may come from trusted colleagues in your
career field or industry, professional association surveys or job matching
services, the internet, headhunters or college placement offices.
Also, try to find out your position's compensation range within your company.
Usually, if you have been performing well, asking for an increase within this
range is more likely to get a favorable response than going above it.
If you think the internal range doesn't reflect today's competitive job market,
you may opt to develop other criteria for pegging your increase. For instance,
suppose you just saved your company $200,000 in accounting costs by outsourcing the department. You could make a reasonable case for your being entitled to a 5-10% of it, especially if this achievement was truly outstanding. Or maybe in the last year you have grown your division by 30% from 10 to 13 million dollars, while increasing its profit by 65% to $950,000. An extra $30,000 in salary or bonus still leaves plenty for the stockholders and other deserving participants.
When you don't have specific guidelines to follow, such as a viable compensation
range, you'll have to devise your own rationale for what a logical increase
might be. If you can justify it in your own mind and possess a formula for how
you calculated it, you are much more likely to find your management agreeing
A word of warning: it is very risky to base your request upon what your
internal corporate colleagues are making. Comparing your compensation
unfavorably to your peers' sounds like whining. Because most firms don't like
their employees discussing individual salaries, your having this information
may label you as a snooping malcontent who's liable to broadcast her sweetened
deal to all the troops and cause a massive morale problem.
For maximum impact, choose your timing carefully. Make a practice of asking for
what you want when:
You are a hero covered with glory. It's hard to turn down a winner who has
just done something outstanding for the greater good (translate that
bottom line). *See also other internal factors that stack the deck in your
Another corporation has made you a very tantalizing offer. In the spirit of
fair play, give your management the opportunity to match or exceed it. Do
this with just the right touch of humility and you will be hard to refuse.
On the other hand, deliver an ultimatum and you may be shown the door.
People backed into corners often come out swinging. Of course, you may get
what you want over the short term, while making a long-term enemy who will
bide his time and seek revenge when you least expect it.
Headhunters are courting you. Asking for what you want is much easier when
you are in high demand.
Company profits are up and the stock is rising.
You are putting in your request before the next budget cycle starts. While
it is possible to engineer a raise or bonus, once the budget has been poured
in concrete it isn't nearly as easy. Give yourself and your manager a
break, and make your increase a part of "the big package." Congress
does this all the time.
You evaluate your boss's bio-rhythms and approach him when he is on the
upside of all three. Never underestimate the power of a good or bad mood.
On the other hand, think twice about asking for more if:
Your work is frankly mediocre. Rising waters don't necessarily raise all
boats. Individual merit is becoming increasingly important in determining
Your company is downsizing. While our economy is thriving, there are still
organizations in the throes of massive layoffs. Asking for more money in
this situation is both futile and ill-advised. Ditto for the company in
New management has just arrived on the scene. They don't know you. In
their eyes, you have no track record. They may already be predisposed to
replace you with someone they trust from their inner circle. Make sure you
are on firm ground before you commence climbing.
After you've determined your reason for asking for the raise, its specific amount
and the proper timing, consider the objections your manager might have to giving
you what you want. Does she have the authority to say "yes"? People in sales
know only the person who signs the check can close the deal. If your manager
doesn't have the power to grant your request, you'll need to talk to the person
Other questions you should ask yourself are:
Is your timing or performance a problem for her?
Is your request out of line with the current compensation structure?
Have you neglected to develop a reason why satisfying you is also in
her and your company's best interest?
These are just a few of the many situations and attitudes that can doom your
request to failure. Thinking about objections in advance and devising ways to
counter them will take you another key step down the road to a bigger pay check.
Another factor to consider while you are formulating your strategy is your
manager's negotiating style. Generally there are two categories of negotiators:
the flea market hagglers and the straight forward players. Both types disdain
the other's style, so it's critical to identify the personality beforehand.
Hagglers love to think they have forced you to leave something on the table.
To help them achieve "victory," ask for 10-20% more than what you expect. When
they offer less, you'll both win. The no-nonsense negotiator wants to know 100%
of what you want and why. If he has a counter offer, it will be because he
honestly thinks he can't afford your request. You will probably come to a
meeting of the minds a lot faster with him because he wants closure while his
haggling friend loves the process.
Finally, before you set up a meeting to state your case, develop several
options. Plan A should be at least 100% of what you want. Plan B should
be 90-95% and Plan C would be something less than Plan B. Each of these
options may be cash alone: more salary, more commission or a bonus. You may
also be open to
increasing your non-taxable benefits such as free parking, stock options, a
club membership or regular trips to conventions in exotic places. Be prepared
to say why you are interested in each plan and why you would be willing to
agree to a lesser option.
With your agenda prepared, it's time to broach the issue with your
Here are some tips
that will serve you well during your negotiating conversation:
Start with plan A,
which is 100% of what you want or more if your manager likes to
haggle. Have Plan B and C ready, in case your employee canít or
wonít agree to Plan A. Remember that your compensation package is
composed of salary, bonuses, benefits and perks. Benefits, bonuses
and perks may be a part of your request as well. In fact they are
often easier to get than immediate cash.
Listen carefully to
your fellow negotiator. She may develop some options you hadn't considered that
will work well for everyone.
Don't suggest or accept potential plans you don't want. Sometimes in the
heat of the moment, you may be tempted to do this. Always give yourself a
day or two to decide if Plan D makes sense.
Look upon your conversation as a collaborative compromise. Both of you
will probably give up something along the way, but each should be pleased
by the final outcome. Remember, you will be working with this person on a
daily basis for a long time, and she has a great deal of control over your
If you can't reach a satisfactory agreement, tell your manager you are very
disappointed you weren't able to work things out. Don't threaten or issue
an ultimatum. Just act genuinely disappointed and let her sweat. Now, she
will begin thinking about what you might do. Given the circumstances, you
might lose interest in your job, become a morale problem or even move to a
competitor. Can she live with that?
Deliver an ultimatum
and you may be shown the door. People backed into corners often come
out swinging. Of course, you may get what you want over the short
term, but you could create a long-term enemy, who will bide his time
and seek revenge when you least expect it.
A True Story
I once worked with a client who managed a privately-owned art gallery. When
she first started, she was a trainee who knew little about art but had a real
interest in it along with excellent small business management skills. After a
year she was running the entire operation and selling more paintings and
sculptures than the owner. When she asked for a raise he gave a variety of
reasons why he couldn't afford it. She was disappointed and told him so. Two
days later he met all her requests and added a few perks of his own. He had
decided he needed her more than the money. Smart choice!
A View from the Top
Mina Brown, former CFO and COO of Aviall, Inc. and currently a Principal of
Transition Resources, Inc., has hired and managed thousands of people in her rise
to the Executive Office. When I asked her what would convince her to give
someone an impromptu raise, she made the following observations:
This person must have either completed some credential or mastered a new
skill that would make him much more valuable on the job.
Her contribution to the company must be truly outstanding or far beyond the
requirements of our original contract.
If his job isn't easily quantifiable, he will need to devise some
measurable criterion tied to revenue/profit by which I can see a tangible
difference between his contribution and expected performance.
It's unlikely I would make a monetary counter offer to one from another
company. I would be more inclined to suggest we find a way to enhance her
responsibilities or develop a better job fit.
If someone came to me comparing his compensation unfavorably with his
internal peers, I would check his performance versus theirs. Chances are he
doesn't deserve what they are making.
I would enjoy brainstorming how a person could add value to the company in
his current role. When he had achieved the goals or measures we set, I'd be
happy to give him a raise.
Mina and I agree that a good company
rarely falls significantly behind the compensation curve. Sharp
executives know that keeping good people requires paying them what they
are worth. This is particularly true of Gen X and Y. If you need to ask
for a raise, this may be symptomatic of greater problems than your
compensation alone. Or it can be an ideal opportunity for a teaching
moment when your management learns to be more cognizant of its employees