Despite the decline in the securities markets, the new year has brought some decent news for workers' salaries. If you want to leverage that information by asking for a raise, plan ahead.
According to data from the Economic Research Institute, U.S. employers in 2016 are expected to boost salaries by 2.7 percent compared to last year, a slight decrease from 2.9 percent in 2015. A forecast from organizational advisory firm Korn Ferry also projects a 2.7 percent jump. Coupled with a modest .3 percent rise in inflation, that is the first increase in "real wages"— money's actual purchasing power — in three years.
Is this a formula for across the board raises? Not so, said Caroline Dowd-Higgins, author of “This is Not The Career I Ordered.”
“It's a competitive marketplace,” she said. “The 'talent wars' are back. With unemployment rates very low and baby boomers retiring, hiring is up with more opportunities and competition is fierce."
A raise in 2016 is certainly not out of the question. What is out of the question is a scattered, poorly thought out approach to asking for one.
Do some legwork
To make the best pitch possible, start by doing some digging. Examine your job description carefully and, from there, see what other comparably framed jobs in your area are commanding for salary — PayScale can help. That way, you could proceed from the basis that your compensation isn’t in line with prevailing levels.
“Any time you realize you are underpaid is a good time to negotiate a raise regardless of the economic conditions, because your employer will need to spend more to replace you than to give you the raise,” said Katie Donovan, founder of Equal Pay Negotiations.
Another factor is the demand for your career or field. When opportunities are abundant, employers want to hang onto top talent — check for your line of work in the Bureau of Labor Statistics' list of the fastest growing jobs.
A benchmark of effective salary requests is documenting your value to your employer. Barry Maher, author of “Filling The Glass,” suggests sending regular updates to your boss of successful projects, significant achievements and other activities that would support a pay bump.
“Come evaluation time, the boss may well use those notes to help write the evaluation,” he said. “And, at the very least, you'll have all that ammunition when it's time to discuss raises.”
“How has your work impacted the company's financials? Have you saved them money? Have you increased revenue?” added Donovan. “A manager who negotiated a new vendor contract saving the company $100,000 has shown where the $10,000 for his raise can be found.”
Lastly, take into account how things are faring on the other side of the equation. A company that’s growing and doing well will be better positioned to consider salary hikes than another whose outlook is bleak.
“Take a long, hard look at the company's economic health before asking for a raise,” said career coach Cheryl Palmer. “If you ask for a raise when the company is clearly struggling, not only will you not get the raise, but you will also raise doubts in the employer's mind about your professional savvy.”
Even a well-prepared employee’s salary request may go nowhere if the timing isn’t optimal. For one thing, many companies have established schedules when salary requests are considered. Ask your supervisor or human resources if that’s the case where you work.
“Many organizations have annual merit or review cycles, so asking for a raise out of cycle might be difficult for the employer to accommodate,” said human resources consultant TyAnn Osborn. “Managers might not have direct authority to provide raises and the request might have to go up the chain for approval.”
Another strategy is to time the request with the most immediate leverage in mind— for instance, just after you’ve successfully completed a major project, closed a big sale or some other achievement.
“That is the time when you are perceived to be the most valuable and can tie your request for an increase into the value you delivered,” said Hank Boyer, president and CEO of Boyer Management Group. “Your case is strengthened if you can provide an impact statement of how the employer benefited from what you did, especially if you can support it with hard numbers.”
One caveat, added Boyer, is to be careful about pointing out an achievement that runs counter to a pattern of lesser achievement: “If the strong performance is an anomaly, you likely won't be able to convince your employer to grant an increase.”
Prepare to dicker
Slam dunks are rare, so prepare to negotiate.
“Assume the first offer is negotiable; in most cases it is,” said Ed Wertheim, associate professor at the D'Amore-Mckim School of Business at Northeastern University. “There is nothing wrong with negotiating; there is nothing wrong with asking for time and asking if there is flexibility in an offer.”
When negotiating, it can be effective to move beyond numbers to other elements often associated with a raise, such as a corresponding increase in responsibility or function beneficial to the company — in effect, framing the raise as an investment in the organization’s future and not just an added expense, Osborn noted.
Wertheim pointed out other areas of negotiation outside of salary that may be valuable: tuition reimbursement, moving expenses, flextime, severance pay or health care.
Lastly, use a rejection of your offer as a possible opportunity to lay the groundwork for a future request.
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“Politely and respectfully ask your boss if you can sit down together and determine what specifically you need to do in order to earn the raise in the future,” Maher said. “Try to work out deliverables that are as specific as possible and try to pin down a timeframe. Then report your progress regularly. Once you've met those specific goals, it will be very difficult for your boss not to grant your raise or, at the very least, fight for it.”
Jeff Wuorio lives in Southern Maine, where he covers personal finance and entrepreneurship. He may be reached at firstname.lastname@example.org and his website is at jeffwuorio.com.