Maximizing your compensation: How to negotiate your salary, ask for a raise, and more
What’s the best way to negotiate your compensation at the time of hire or a raise thereafter? What are employers and managers thinking when you ask for more? How can you set yourself up for success?
This is our crucible, our elephant in the room, our hill to climb and all sorts of other bad metaphors. The reality is that nothing is more important yet scares the bageezus out of us more than compensation—establishing it with a new job, figuring out how and when to ask for more over time, understanding what’s fair and how to change your situation if it’s not. The most important thing I have to say on this one is that I’ve rarely received a raise or promotion without asking for it. The crazy thing is just how rarely men or women get promoted and paid more out of the blue. Experience suggests that you must ask for it and that asking for it requires leverage. By leverage I mean that you need to be confident that you’re valued by the organization and considered to be critical to its success in one way or another and/or difficult and costly to replace.
By the time I made “the ask” at various points throughout my career journey, I was usually long overdue and knew I was indispensable, that they really couldn’t say no. Meanwhile, the unfortunate reality is that I was probably a year past the point that I should have asked every time, and effectively squandered a year that I could have been paid more. That said, it’s better to be late than never and looking back, I’m blown away by how life changing each of these asking points were for me—both from a professional and personal standpoint.
My point is that I can’t underscore the importance of being relentlessly strategic about your moves on this chess board that is our career—look ahead, see your advantage, anticipate where you want to be, figure out how to make it a reality, set yourself up for success. If you keep your head down and think it’s just going to happen for you, chances are that it never will. The cold hard reality is that no one will give you more than they absolutely must. Forcing functions play a massively important role in this game of career and life more broadly, so figure out how to achieve yours and turn it into your advantage. It’s going to be scary, awkward, and even downright painful—for you and the “other side”—but it’s an inevitably important part of your career that you can game the crap out of in a great way if you embrace it with the right strategy, tone and content.
Maximizing your compensation: Where to begin
I believe that the path to successfully maximizing your compensation requires understanding the answers to the following three questions:
What is your role worth in the marketplace? More specifically, what are people paid at the high and low end and what are the other relevant benefits? What is the broader environment of supply and demand related to your particular role, specifically in the sector you’re employed (e.g., healthcare vs. technology vs. finance)?
How is the role valued in your firm vs. others? The reality is that the same role has varied value in different firms for a myriad of reasons—either because of the direct economic impact it has on operations or because the management team values it highly (or not). A good example of this is marketing roles, which are considered central and the most senior in consumer products companies, but more of a non-core service provider in other types of companies like hospitals.
For this role in this particular firm, what skills and deliverables are most valued? More specifically, what would really help you stand out and make it clear that you’re adding value, get you seen as indispensable, make everyone “afraid” if they learn you might leave, realize that it would be difficult or impossible to replace you? How can you quickly and tangibly solve someone’s problem and/or create value for them and the firm?
Negotiating your salary
First things first—make sure you can back up your “number” with market data. In some cases, compensation data is more public while in other cases what people are paid is elusive and therefore what you should be paid is confusing. One thing is for certain—chances are you could get more. Over the course of my career, I’ve seen people ask for all sorts of things that I never knew were available. That doesn’t mean you should burn bridges as part of understanding what’s available and getting what you deserve, but it does mean you need to do your homework and be assertive, ask friends in other firms, gather all sorts of data from online positions that appear to be comparable and pull together what you want. At the end of this post, I’ve included all sorts of great resources for comparative research.
The second thing to understand is that it’s important to ensure you’re happy with your base salary vs. just settling. If you go into a job making less than you want/deserve, don’t expect you’ll be able to get what you want down the road because more often than not, you won’t. While you’ll sometimes have an opportunity to ask for more later on, many companies only give cost of living increases (~3%) each year, if that.
With that said, if you’re forced to take a lower starting point, you can try to make an agreement that you and your employer will re-evaluate your salary once you’ve had a chance to prove yourself, however, try to avoid this situation as it rarely works out and can create awkwardness on both sides.
If you’re unable to get to the base salary you want but still really want the job, try and see if there’s something else you can get. Maybe it’s more paid time off (three weeks instead of two) or perhaps even a more generous commission and/or bonus structure (e.g., if you’re in sales, you can ask for 10.5% of sales revenue instead of 10%).
One hugely important thing to know that most people don’t realize (heck, I didn’t know this until recently) is that you DO NOT have to reveal your current compensation, even though most employers will ask for it during the recruiting and/or interviewing process. Instead, you can state what you want to make in the role. This is critical because you may have “grown up” in a company where you started relatively low on the compensation scale but turned out to be a superstar yet the employer never bumped you up to a level that makes sense for your contribution simply because they were never forced to do it.
Instead consider what they would have had to pay if they were hiring someone new from the outside into your role with the level of experience that you now have. Moreover, focus on establishing where you want your compensation to be based on market rates and what you think the role is worth to the employer, or what they’d have to pay another candidate.
Over the last few decades, performance reviews have evolved. Some companies still take a structured approach to the annual review while others are going toward a more dynamic approach of continuous feedback. In cases where there’s a formal review process at a particular time, the compensation/raise event is typically part of that and you’re given clarity on whether you’re receiving a title change and/or raise and if yes, why or if no, why not.
In the event that this is the structure of your company, but the outcome didn’t turn out the way you’d like, make sure you get clarity with specifics on why it didn’t happen (i.e., why you didn’t get increase and/or promotion you wanted) and what is needed to achieve it (i.e., if I do XYZ in this time frame, then that will lead to the promotion/raise, etc.). If the organization is unable to make that advancement journey clear, then the outcome is still an important one because you’ve forced clarity on what will happen or not and put yourself in a better position to make the right decision for yourself, explore other options, etc.
If you’re in a firm that’s less structured—i.e., no set review time and/or compensation adjustment approach, then you’re going to have to initiate this on your own at a point in time that makes sense. Be thoughtful about everything that’s going on with the organization, both directly related to your role and with the economics of the business more broadly. See the board and target a moment, a milestone, when your contribution will be particularly clear, tangible, visible. Schedule a meeting to establish your goals—for the company, your contribution as a part of it, your personal objectives based on that—i.e., establishing your economic value to the organization and commitment as part of it before then teeing up your ask. Don’t just say “I’ve been here a long time, so it’s time for a raise” or “I work hard and on weekends, so I deserve more.” Make the case about why your ask makes sense to the business.
How to ask for a raise or promotion
So how do you ask for an increase in compensation or change in title? What should you know and do before you walk into the room? Do your homework and put together a five-slide deck that documents the timeline of your tenure and shows your evolution and major accomplishments and contributions. Include data points as context on market rates vs. you, your economic impact vs. what you’re asking, etc. Be crystal clear about what you want—in title and/or in compensation. Stay away from the emotional and the personal but be excited, positive, and entrepreneurial. Show your value on the team and communicate all of the ways you want to step up and become more of a leader/owner. Use it as an opportunity to force clarity around how you’re really viewed (valued or not) and how you can improve. You probably won’t get a “yes” right away, but let them consider it, leaving the document for them to review and consider. Mention that you’d like to schedule a follow-up meeting to understand how you can maximize your career success and impact on the organization over time. Be clear about who you want to be, what you can do for them vs. setting it up as “what are you going to do for me? What’s my career path?” Be clear and strong about your vision and your contribution so far and in the future.
A big part of your analysis should be understanding your particular value—i.e., specifics about what you do that creates money or economic advantage for the organization, either in terms of driving sales or revenue success or cutting costs and improving profitability in one way or another. There are loads of ways to do that, even if you’re not directly selling deals. Connect the dots between what you do every day and how that helps the business, ensuring that all the dots lead to a rough estimate of value or the money that’s created that wouldn’t happen if you weren’t part of the organization.
What this means is that many factors you might think are relevant, such as “I’ve been here many years” or “I work so hard, even on weekends” or “I’ve been killing myself traveling every week” aren’t relevant unless you can tie them to an outcome and the economic result those factors have enabled. Your travels to a troubled customer who’s paying the company a great deal of money is now happy and not going to leave you for a competitor. Or your hard work on nights and weekends enabled you to achieve a product launch on time or even early that’s going to drive significant revenue opportunity and growth for the firm. Or you having been at the firm for so many years has enabled you to build a presence and credibility with your customers that minimizes attrition and helps you drive the sale of additional products or services into them. Even if you’re not in a customer-facing role, your departure from the company would still mean all sorts of costs to your employer. In the back of their heads, they’re doing the math on how much it would cost to train someone new (both financially and also in terms of time spent) if you were to leave.
As you pull together your case and your confidence to ask for more, be sure to focus on them vs. you. Build an argument for why this is good for them. Be clear about what you’ve done, what you’ve accomplished economically while also painting a picture for what you’re going to do next. Be creative about attaching promotions in title or pay raises to your achieving particular milestones that you establish, knowing that they will have a meaningful impact on the business and effectively create economic value that can be used to fund your compensation increase (either through doing the job of 2-3 people, automating something that will cut costs, creating something compelling that will bring in new customers, etc.).
What to do if you don’t get the raise or promotion
If you continue to hit a wall and not get what you think you deserve/what you’re worth, there’s really no better way to realize a meaningful increase in your compensation than moving to a new company and/or getting an offer from another company (or two!) and using the compensation data you gather through the process to realize a jump of maybe 20% where you might otherwise continue to receive a modest 3-5% increase by continuing in your existing role. Leaving a job you know and love can be tough, but creating new challenges for yourself can open up entirely new worlds.
The point is that over the course of your career, it’s critical to create opportunities for yourself to continuously increase your compensation. It’s so important to do that by being entrepreneurial about the way you create leverage for yourself, pursuing new positions when the time is right, and taking those opportunities when it makes sense to move on or using them to improve your current situation and “encourage” your current employer to do right by you. The reality is that if they don’t make things right, it’s time to move on regardless.
The last word: My perspective as a manager on raises and promotions
As a manager, I’ve had many people come to me with an ask that was really reasonable with a clear case for it and I was almost always able to make it happen. In most cases, I hadn’t done it not because I didn’t want to but because there’s so much going on it just wasn’t on my radar. When I do reviews/raises every year, we get a pool and rather than spreading it across everyone, I try to concentrate it on a few higher performers to really give them something meaningful. Sometimes, I’m trying to significantly increase someone who’s underpaid vs. their value.
The whole thing is tricky because you don’t want to ask for something crazy because you’ll create a bad feeling that will stick around for a while. Plus, being the highest paid in a particular role, comes with a great deal of pressure. The more you make, the more is expected. And when times get tough, you’re a target—you’ll probably be the first person on the cut list unless you’ve made yourself truly indispensable.
- Compensation is at the center of your economic advancement and self-reliance. Your ability to maximize your freedom, your choices, your credibility, your superhero(ine) powers is inevitably tied to your earning power, or your compensation. It’s certainly not the only thing that matters in that equation, but it’s inevitably and undoubtedly one of the most important. With economic resources comes power—the power to say yes, no, and everything in between.
- Know your value. With the internet, it’s relatively easy to get a sense of what various positions are paid and ensure you’re getting “market.” Take the time to ask around, search job sites, and even ask for compensation studies from the employer if that’s an option, clarifying what the scale is based on in terms of years of experience, degrees and skill sets, and more. While you’re not locked into your compensation for life, where you anchor at the start of a job is a big deal. Raises can be hard to come by and even if they’re provided, they’re usually given out as a function of what you’re already paid vs. what you might actually deserve vs. others. It’s not fair, but it’s unfortunately the way things usually are.
- Build your case and your confidence to ask for more. This isn’t going to be easy—at least it’s never been for me. And you might not get what you want, but the exercise of prepping for the meeting will be a good one and the conversation will be invaluable as you force clarity around how your value is perceived and exactly what’s needed to get what you want. Even if you have to endure a “no,” what you’ll get in terms of clear goals and terms is so darn critical to your realizing success and happiness over the long term (vs. stewing in frustration that you’re not getting what you deserve and not doing anything about it).
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Christina Van Houten is the founder of Women at Work. Based in Boston with her husband and two teenage sons, she has spent the last 20 years of her career as a senior executive in the enterprise technology sector. Prior to evolving into tech, Christina founded a women's athletic apparel brand and served in several public interest roles focused on community and economic development. She started working at age thirteen and hasn't stopped since. She’s eager to help women find their way to the best possible life they can achieve.