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How to negotiate for your pay rise

How to negotiate for your pay rise

Kate Southam discusses pay-rise negotiations.

It is that time of the year again when most of us are busy working on our performance reviews and preparing to have the inevitable pay rise discussion with our employers.

Having that discussion is never an easy task however knowing what needs to be done helps in making the process easy.

I will talk about pay reviews in three parts:

1. Setting the scene
2. How to prepare your pay-rise pitch
3. How to handle the review meeting (and the results of that review)

Oiling the squeaky wheel

The first step in preparing your pay-rise pitch is finding out the pay-review process at your particular organisation. Some employers review pay on the anniversary of an employee joining the company. Some slack employers use the squeaky wheel system—if you don't ask for a pay rise, you never get one.

However, most Australian organisations create budgets around a financial year.

The first day of a financial year is July 1 and the last June 30. That means employers have prepared budgets for the coming financial year by May, including allocating funds for additional head count (new staff) and pay rises for the company's existing staff.

Your performance is only one of the factors influencing a pay increase. The economy, your employer's financial performance and what your department has contributed to the organisation's coffers will all play a part.

The strength of the talent market also has an impact — so find out how hard you would be to replace. Job search and talk to recruiters and to industry contacts.

Employers will now be letting department heads know what the range is for pay rises.

For example, one company might set a range for salary increases of between 0 for poor or average performers to 5 per cent for good performers. When the time comes, you will want to ask the boss what the range is so that you know how you rate.

Also ask whether your employer links pay to performance. As puzzling as it might seem, some companies keep pay reviews and performance reviews separate.

It is important to understand that salaries move faster on the open job market than they do when you stay in a job. Unless, of course, you are promoted. It is not too early to raise the issue of a pay rise with your manager.

You can ask what the process is and flag that you will be preparing a written request for a pay review.

Your written request should include your achievements over the past year, any tasks you have taken on in addition to what you get paid for -- and any research you can find on pay rates for your role.

Please, can I have more?

Asking for a pay rise fills many people with dread. I've heard many times: “But my manager knows what I do, why should I have to ask for a pay rise?'' My answer: “Because you want a pay rise.''

I've been reading a new book, How To Get A Pay Rise by Medine Simmons and Merryl Naughton (Hardie Grant Books). They fill a couple of pages with excuses from people who want a pay rise but don't want to ask.

Managers are too busy doing their own work to note down all of your achievements. Be your own best advocate and document why you deserve a pay rise. Your boss will need to justify your pay rise to his/her boss so documented reasons will make this easier.

Items for the pitch include added responsibilities or managing extra people. Maybe during the downturn people left and you ended up with their workload. Look at the duties in your job description and then make a list of any additional tasks.

Or maybe your salary has fallen behind market rates. To find this out, check salary surveys on recruitment websites, ask friends in the same sector about salary ranges, check with industry associations you are a member of and talk to recruitment consultants.

You should do some job searching anyway to test demand for your skills, so chatting to recruiters is part of this. Other items to note in your pitch include emails or letters you have received for doing a great job, staff award nominations and other commendations. Document things you did to help to save costs, generate revenue or keep customers happy.

Once you have finished your document, ask your boss for a pay review meeting. Email your pitch a few days beforehand. By the time you do meet, half the work — the awkward half — is done. The boss might ask you to talk through the pitch so rehearse it, but hopefully they'll have read it. If your boss doesn't initiate a meeting, chase them up — nicely.

Preparing for a pay review

Now let’s talk about the pay review meeting.

To recap, you have researched the market, put a written pay rise pitch together, sent it to the boss with a meeting request and given him/her plenty of time to think through your points.

Now it is time to talk. You have rehearsed for the meeting and you have your written document on hand to refer to.

By the time you meet, half the work — the awkward half — is done. You just need a response but be prepared for your boss to ask you to talk him/her through your points.

There is a saying, “It's not what happens to you that's important but how you react to it." This is very true when it comes to pay rise news. Stay calm — no threats or tears. You have put a well-reasoned “business'' case forward for a pay rise. So what's the verdict?

If you get a flat “No'' then I would use a line from How To Get A Pay Rise (out next month from Hardie Grant Books) and say “OK, thanks.'' Once out of the meeting, start your job search in earnest.

If you hear, “Love to but the company is having financial issues'' then ask your manager for another pay review within three months. Job search as well as your employer could be on shaky ground. If you love your job and your manager agrees you've done a good job but the pay rise is tiny, then put some non-salary rewards on the table.

Rewards include internal or external training or representing your team on a company-wide project — both build your resume and ultimately your worth on the open employment market. You will still need to explain how the training will benefit your employer — not just you. Other items might include flexible work conditions, home access to the office system or better equipment or tools. Good luck.

Kate Southam is the Editor of and author of the Ask Kate column published online and in more than 100 News Ltd newspapers weekly.  Kate also writes the Cube Farmer blog.

Articles from The Daily Telegraph, May, 2010.