You stick to your monthly budget, save a good chunk of your paycheck and never spend beyond your means. But spending wisely can only do so much for your finances, and it’s much less fun than something else you can do to quickly improve your financial situation: boost your income.
Even if you love your job, or are just grateful to have one, it’s always worth it to discuss a salary increase. But according to a 2012 survey from LinkedIn, only 26% of women feel confident about negotiating. We’ve got the answers to 10 common questions you might have about navigating this conversation.
1. What is a compensation package?
A compensation package is what you earn in exchange for your work—and what’s on the table for negotiation. A typical compensation package is based around wages. Most employers also present financial incentives like signing or performance-based bonuses, opportunities to purchase stock options, or profit-sharing plans, where a portion of yearly profits is divided among employees.
Compensation packages typically also include other benefits, like paid vacation, health insurance coverage, maternity leave and a retirement plan. Some benefits, like worker’s compensation insurance and Social Security, are legally mandated. Then there are the perks, like tuition reimbursement, gym membership or an employee discount. If you work at Facebook, expect free meals and snacks. Four Seasons employees can snag free nights at all the hotel chain’s properties. These aren’t on the table for negotiation, but benefits like flex time may be.
According to the Bureau of Labor Statistics, benefits account for about 30% of employee compensation. You can ask HR about the dollar value of the benefits if you want to see how they stack up against other offers, but keep in mind that money isn’t necessarily the most important factor.
2. What should I do to prepare for the salary or raise negotiation?
You want to walk into the conversation with a solid sense of what you’re worth and what you can contribute to your employer. That way, you can make realistic requests—and then defend them.
Start by digging around for an average salary for your position. Websites like Salary.com and PayScale.com can help you get an idea of what’s typical for someone with your job and skills, and GlassDoor.com can even give you a peek into what’s standard at your company. Consult with mentors and others in your industry to get a sense of what others in similar positions in your field are making.
Use this information to come up with a target salary goal. Choose a few extra benefits (More vacation? Better health insurance?) that you’d like to get if you don’t get that salary.
That’s pretty much all you need for salary negotiations with a future employer. If you’re looking for a raise with your current employer, first make sure that you deserve it. If not, then come back in a few months! If you feel you’ve earned it, compile a list of your major contributions and accomplishments, with an eye toward solid numbers and your department and company-wide goals. After crafting a compelling argument as to why you deserve a raise, practice your request with a friend or in the mirror.
3. Just after I’ve gotten a job offer, how do I convince my future employer I deserve a higher salary without putting her off with the request?
If you’ve landed an offer and have started negotiating, your future employer already knows you’re a catch. You’ll never have more power to boost your income than you do when you’re holding that offer letter. And getting a big jump when you start a new job will make all your future raises even bigger.
That said, approach the conversation confidently, but not aggressively. When the company tells you its offer, keep a poker face and say that it was less than you were expecting—even if it’s more than you could have imagined. Explain that you’re excited about the position, but that you’re also considering other options. If that doesn’t get them to sweeten the deal, don’t be afraid to mention any competing offers you have on the table.
Know when to stop pushing, too. Most employers enter a negotiation expecting that the candidate will ask for more, and you want to negotiate enough to get the extra that they were prepared to give. But use your knowledge of comparable salaries, and when you sense that you’ve reached the limit, be gracious about accepting an offer.
4. How do I convince my current employer that I deserve a raise?
If you’ve been logging your recent accomplishments and quantified how they’ve helped the company reach its goals, you’ve already done half the work. (If not, you’re not yet prepared to negotiate for a raise!)
Once you’ve got your list of awesomeness compiled, the only other things you have to do are:
- Time your request to follow on the heels of any victories, such as reeling in three heavyweight clients in six months or winning a professional award.
- Catch your boss at a time when she’ll have the time and energy to deal with your request—not when she has three huge deadlines coming up.
- If you sense that budgets are tight, suggest extra work you can take on that will help the company further its goals.
5. What’s a reasonable salary increase to actually aim for, and how often should I negotiate for one?
You may think you’re worth a million bucks, but you don’t want to make a request that will get you laughed out of the office. While it’s useful to consult GlassDoor.com or Salary.com to see what the salary range is for your position, you should also keep in mind that most raises are modest, and only rarely will a company offer a raise as high as, say, 20%.
Another way to decide how much to ask for is to check your budget. You can use the Budgeting Tool to figure out what kind of raise you’ll need to reach your ideal income. If you’d like to give your monthly income a $300 bump, count it as an extra $3,600 a year. Double that figure to account for taxes (and the inevitable negotiating down), and ask for a $7,200 raise.
Aside from your post-victory glow periods, the best time to ask for a raise is during your yearly performance review. Even if you’re not ready for a raise, or your boss is hesitant to budge, you could request that your paycheck grow to keep up with annual inflation—a cost-of-living increase—so that you’re not losing money. But always take into account your employer’s financial situation. Bad year? Don’t aim too high.
6. Is there ever a time I shouldn’t negotiate?
You should always try to negotiate when starting a job, and you should always consider asking for a raise when your yearly performance review comes up. (However, if it’s a bad year at the company, and you already know that the answer will be no, there’s no point in irritating higher-ups.) In most cases, though, the worst that can happen is that your employer says no. Even then, taking the initiative to negotiate can impress your bosses—especially if you handle it well.
Another reason to fight for regular pay raises: even if the paycheck you’re pulling in feels like “enough,” normal inflation means the value of your money decreases over time. So if your wages aren’t keeping up with the gradual rise in everyday prices, your purchasing power could be falling.
7. I’m transferring to an office in a pricier city, and I know my rent will go up. How can I make sure my paycheck does too?
Start by checking with HR to see if your company has a relocation policy, which can include reimbursements for things like travel, moving and finding a new place to live. To negotiate a pay increase, figure out how much you’ll need by comparing the cost of living in your current city and your new city, using online calculators from sites like Salary.com or Sperling’s Best Places. Also, if you have good relationships with colleagues in that city, try to get a sense of whether your current salary is indeed at the lower end of the scale. Then, when you go over the terms of your relocation with your boss, explain that since your costs will be higher, you expect to get a comparable salary for someone at your level in your new city.
Your odds are good. For many companies, it’s standard to help employees maintain their quality of life after a move—especially if you’re headed overseas. Plus, taking on a new position in a different city shows you’re committed to your employer, and a relocation is often a chance to advance your career.
8. How can I ask for a more flexible schedule or more vacation time without looking like a slacker?
Whether you’re looking for flex time or more time off, only make your request if you’ve worked out a plan that will ensure your hours out of the office do not impede workflow or inconvenience your colleagues. This means coming up with ways to cover any hours you are not in the office or accomplish any duties that you can’t handle before or after your extra vacation. If you have a meeting-intensive schedule, make sure your time off doesn’t make it harder for others to get enough face time with you to get their work done.
Timing is also key in this kind of request. Asking for more time off is reasonable if you’ve been slaving away, but it will definitely send the wrong message if your boss already thinks you’re phoning it in. Instead, wait until you’ve reached a major goal. Your boss might appreciate it, too, especially if budgets are tight and there’s less room for a salary increase.
9. What do I do if my request is turned down?
It’s natural to feel deflated and frustrated, but don’t let your disappointment show. Instead, ask for constructive feedback: Find out what you will need to do in order to get that raise and then ask if you can revisit the issue in six months.
If you sense that your employer would have liked to reward you with a raise but was constrained by budgets, you can make another kind of request: Instead of a $5,000 boost to your salary, what about a tuition reimbursement for the computer programming class you’ve been eyeing? Or that extra week of vacation?
10. I got another job offer in order to get my company to give me a raise. How do I get my boss to give me a counteroffer?
This approach to getting a raise is best if you’re looking for a big jump, and your company either only gives raises in the single-digit percentages, or, for other reasons, isn’t willing to give you the kind of increase you think you deserve.
How you approach this delicate conversation depends on how much you feel your company values you. If you’re an integral part of the firm and your hard work has been recognized, you can afford to be a little bolder in negotiations. Either way, your boss might call your bluff, so only bring up your new offer if you’re willing to take it.
If you’re set on staying at your current company, be clear about your intentions and emphasize your loyalty. Use the job offer as leverage, never as a threat. Explain to your boss that while another firm has recruited you, you’d prefer to stay where you are—and use your great track record to remind her why she wants you to stick around too. Ask how you can work together to come up with compensation that makes sense for you given the competitive offers you’ve received. If you’re trying this kind of negotiation at a company where budgets are tight, you could also let your boss know that it’s not all about the money. If you’re interested in other benefits such as a different title or shorter hours, you can put those on the negotiating table as well.