How to get a pay rise

How to get a pay rise

Pay reviews are upon us!

Your lifetime savings are significantly impacted by every pay rise that you receive. £25,000 today at an average pay rise of 2% means that you’ll be earning £41,000 in 25 years. This means that your wage has kept up with the economy at best and you have had no real inflation adjusted wage increase. A millennial’s tendency towards loyalty means that they are grossly underpaid in their roles, but they do nothing about it. Let’s get this straight – you can!

Before you start thinking about your pay rise you need to think about your worth. There are two perspectives here, your self-worth and the value you add to your company. The below five steps will increase your chances of getting that meaningful pay rise.

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1. Calculate your fair market value

What is market value? Market value is the value that employers would pay if you were to get a new job at the market average rate.

How much do you think other companies would pay you to do your job? If you’ve been in your job for 5 years with the same company and have only received a 2% pay rise per year because the company “is experiencing tough times” then the market has probably moved on! Trust me, your skills are commodities and they follow simple supply and demand dynamics so some positions have wage growth of +12% per year.

If you have a position which is sought after then you have no doubt been head hunted and approached by recruiters. I tend to log these interactions and gather the required information from the recruiter. Ask them what the salary range is, what perks could you expect. Print it out and save it for your pay review (if you have a structured one, if not I’ll come to that shortly).

If you don’t have a sought-after position then worry no more because calculating your market value has never been easier. You can gather lots of information from web-based tools such as Glassdoor.com or even by looking at recruitment sites. The key to an accurate reading here is having a job title which matches your position and to make sure you select location. A great tool for this is payscale.com. Here you can add your skills and experience which will give you a far more accurate reading. Recruitment firms relevant to your industry will publish detailed salary reports. After amassing all of the above information pick the value which is in the 50th percentile and save it for the right moment.

2. Calculate your value to your company

The market value can diverge markedly from real value. It’s the same as anything. It’s more subjective and difficult to calculate but it will be along the lines of the below calculations.

The cost of hiring a new employee is exceptionally high – especially employees on a salary. I know that my recruiter received 20% of my salary to place me. Depending on your job it can cost between £2,000 – £25,000+ to replace you. This is not a value that you can ask for but it will certainly add to your leverage and arsenal especially if you know that it would cost £10,000 to recruit a replacement and train them up. Remember, time is money to the employer and if you are a good egg, they might find it difficult to find someone similar.

What value do you generate? If you can quantify the value added eg; £300,000 of sales or billed time then you can demonstrate your worth in quite an obvious and simplistic way. What about them cost savings you spotted? That market opportunity you saw? The customer lead that you sourced? If you know that you have demonstrable areas where you add value then you could even link a bonus to this. Let’s be honest, sales people should push for at least 15% commissions. If you can’t sell your worth to your company then you don’t deserve to be in sales!

If you are in law or accountancy then how much are they charging the customer for your time? They are basically subletting your time – so make sure you get a decent rate on their return!

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3. Be realistic and not greedy

It will be hard for your boss to justify a pay rise of higher than 10% unless of course you are trading at a greater discount to fair value than 10%. If you are worth £25,000 but you are only being paid £20,000 then you can certainly go into your meeting armed with points 1 and 2.

I’m going to ask for 9% this year. Why? Well firstly, I think that the productivity I have achieved is greater than my current pay. I have also accomplished all the personal development tasks that my employer set at the start of the year. I value this as a fair 6% increase. Secondly, inflation is going to be 3% this year. I will not accept my hard work to be eroded away by inflation. I know that my company is charging more due to cost increases so, why shouldn’t I?

4. Time it right

Timing the right moment to ask for a raise can be awkward, I know.

You can get this right from the start by asking for a pay review every year as you start your new job otherwise it can become very difficult to work out when to ask. If your employer knows that you expect a pay review it won’t come as a surprise to them and they may have a considered response.

If you don’t have a structured pay review then you need to consider timing as it’s quite important. Let’s be honest, asking for a pay rise after a mistake or a poor quarter isn’t ideal. You want to ask when you are on a high and value is considered highest. Also, asking on a Monday morning is usually a bad time to ask as everyone hates Mondays. Ask on a Friday after lunch and you’ll notice it is much more relaxed.

Managers understand that you have a life too and if you play on their heartstrings a little then it can go a long way. Perhaps you are saving for a deposit or starting a family? Drop it into the conversation.

5. Just Ask

The amount of people who want a pay rise and the amount of people who actually ask is astonishing. Especially amongst millennials. According to research only 12% of people directly ask for a pay rise.

Guess what, you are valuable and your employer clearly wants you otherwise you’d be gone already. All you have to do is be honest and get what you want in life. If you are going in armed with the right data then you’ll be just fine. If they don’t accept and you consider yourself undervalued, time to move on. Loyalties are nothing in this world, especially in business. At least you’ll get the market rate – minimum!

P.S don’t forget to review them on Glassdoor.com! Save us all the wasted time.

 

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