Mission possible: How to negotiate a better salary
With the U.S. economy predicted to slow down in 2020, a new study shows that U.S. companies aim to “hold the line” on salary increases next year, or at least put more rigid salary-hike performance standards in place.
According to the 2019 General Industry Salary Budget Survey, released by Willis Towers Watson Data Services, 2020 salary increases “are expected to hold steady in 2020 for exempt, non-management employees (3.1%), management employees (3.1%), nonexempt hourly employees (3.0%) and nonexempt salaried employees (2.9%).”
Companies are budgeting slightly smaller increases for executives (3.1% in 2020 versus 3.2% this year), the study adds. Over the past 10 years, employee pay raises have generally stayed at the 3% level, Willis Towers Watson reports.
“Despite an extremely tight labor market, most employers are either not willing or fiscally unable to increase their fixed costs across-the-board by bolstering their salary budgets,” says Catherine Hartmann, North America rewards leader at Willis Towers Watson. “Instead, many companies are doubling down on providing significantly larger market adjustments to employees in high-skill roles and selective pay raises to their top performers.”
“Some employers are also recognizing the contributions of these employees with better annual incentives and discretionary bonuses,” Hartmann adds.
Pay-scale pointers: Getting the salary you deserve on the job
If you’re a high performer at work and want to buck that trend and get a salary hike no matter what the economy is doing, you have the tools to do so — with these action tips from corporate financial experts who know the inside scoop on getting more money out of your employer.
Take some self-inventory first. Before asking for a raise, look in the mirror and ask yourself whether your workplace behavior merits an increase, says Timothy Wiedman, a retired professor of management and human resources at Doane University. “Firms these days rarely reward simply ‘showing up.’ But management will generally pay a premium for employees who model good behavior while getting the expected results. So ask yourself how you measure up.”
Know what the manager likes in an employee. Sizing up the person who can green-light your salary boost is a big advantage, says Brett Downes, SEO team leader at UK-based Ghost Marketing. “Knowing your audience helps,” Downes says. “If your boss is a stats person, then take in your performance figures to show your worth in dollars. However, if your boss is a people person, show how your influence has led to a more grounded team, sick leave is below average, and employee turnover is very low. If you know what buttons they like pressed, you can push them.”
Keep a record of your accomplishments. If you work for a larger organization, don’t assume your bosses know everything that you have accomplished, advises Kathy McCabe, a master-certified life and business coach based in Chicago, Illinois. “Often they don’t, especially if some of your work is not immediately profitable, but it will pay off in the long run for the company,” McCabe says. “For example, you may have done a significant amount of client development throughout the year that has strengthened client relationships.”
Throughout the year, keep a private detailed memo of any work that you have done that has added value to your organization, McCabe says. “Before salary raises and bonuses are decided, draft a memo with bullet points with your accomplishments and describing how it has helped the corporation.”
Decide how much you want, but prepare for pushback. You need to decide how much you want, McCabe says. “Whether you start negotiating with a specific number in mind or not might depend on the circumstances,” she notes. “Sometimes it is strategic to be open-ended when asking for a raise. Other times, it is better to provide the employer with a specific number.”
Either way, you want to decide ahead of time what your number is so that you know where you want to land in the negotiations. When you make your case, be ready for pushback and objections.
“Have a response ready to overcome all objections,” McCabe advises. “For example, if the company says, ‘We would love to pay you more, but we can’t afford to now,’ be ready with follow-up questions, such as: ‘When will you be able to pay me more?’ ‘Can we revisit this issue in three months?’ and ‘Will you ever be able to pay me more?’”
Increase your workload — before you seek a raise. If you want a raise, it is going to come with extra responsibilities and an additional workload, says Mike Sheety, owner and founder of ThatShirt, a custom T-shirt company based in Ontario, Canada. “Try to prove that you are ready for that raise by taking on tasks that you would have to take on after you are granted your raise. This ensures your employer that you are the right person for the job and that a raise isn’t going to waste.
Timing is important. Don’t ask for a raise too early. “You need to ensure your employer knows that you are worth that raise,” Sheety says. “You should wait at least a year on average before asking for a raise.”
Be first in line. Have a set dollar amount prepared before you meet your manager, says Samuel Johns, hiring manager at ResumeGenius.com. “Once in the meeting, ensure that you are the first one to propose an amount for your desired raise,” he advises.
By making the first offer, you are throwing out an anchor which the rest of the negotiation will be centered around.
“This is due to a human tendency referred to as anchoring,” Johns adds. “People tend to rely on the first piece of information presented in a scenario in which a decision needs to be made. If you haven’t decided on your desired amount or don’t start the negotiation with your anchor, you’ll likely end up settling for a smaller amount that is proposed by your manager.”
For example, let’s say you’re aiming for a raise of $2,500 (or roughly 3% of your annual $90,000 salary). “When you bring up the topic of a raise, your boss immediately throws out an anchor of $1,000, it’ll be far more difficult to negotiate your desired raise from this starting point,” Johns says.
Know your “reservation value.” Before entering a negotiation, have a “reservation value” in mind.
“In the science of negotiation, a ‘reservation value’ is the least favorable point at which you will accept a negotiated agreement,” Johns notes. “For example, if you start the negotiation with a request for a $5,000 raise, what is the lowest rebuttal amount that you’re willing to accept? Would you accept a counteroffer of $3,000 but not $2,000?”
Setting your reservation value before your negotiation is just as crucial as the anchor amount. “A reservation value is a nonnegotiable amount that you’ve decided your services are worth to your company,” Johns adds. “In essence, it’s the last proposed value that you’d be willing to accept before feeling undervalued and possibly even considering switching employers.”
If you don’t make your case, who will?
Let’s face facts. It’s going to be primarily up to you to build an ironclad case for your getting a big raise in salary. That takes planning, discipline, creativity, and yes, some nerve, when you’re sitting at the negotiating table.
Follow the tips above and your chances of landing that bigger paycheck will only grow larger — and leave you in the driver’s seat when the question of your financial value comes up in the workplace.
Especially in a time period where employers are throwing nickels around like manhole covers.