Do you feel uncomfortable asking for more? Many people — especially women — don't enjoy negotiating. Others simply don't know how. It's time to learn.
Securing a raise is a key part of achieving financial success. An average raise of $5,000 invested over 30 years with a 6% return can add a whopping $395,290 to your nest egg. Additionally, since future salary increases are often based on a percentage of what you earn now, your salary will grow at a faster rate for the remainder of your career.
Use these four steps to overcome your apprehension and effectively negotiate your salary.
1. Record your performance. When you're essential to your company, the negotiation is much easier. Prepare a list of achievements to make your case for a raise. It's not enough to state that you deserve more money. Remember: Show, don't just tell. Make sure you capture the moments of praise so you have great examples to share with your boss.
Before you show your boss what you accomplished, you two need to agree on a performance plan. Work with your boss to define what success is for your role. What would provide so much value to your company that a raise becomes trivial? With a performance plan, you know exactly what you need to do to secure the raise you want.
2. Set a target. To negotiate properly, you want to bring with you a number to the table. You can prepare this number by looking at salary sites like Payscale, Glassdoor or Salary, or by talking with other people in the industry.
And there's more to compensation than salary, so also consider perks like extra vacation, additional training or increased responsibility.
3. Practice. Prepare yourself by enlisting a friend to help you role play the conversation. If you feel apprehensive about walking into your boss' office and asking for more, knowing what words to say makes a world of difference.
4. Prepare your boss. Salary negotiations can be as uncomfortable for your boss as they are to you — and that's not personal. Your boss has to consider a lot of factors in granting pay raises, and the decision may not be 100% in his or her hands.
Preparing your supervisor just means don't spring this conversation on the boss unexpectedly. Schedule a time to meet and talk. If you have a regular performance review, that's a good time to bring up the topic. However, if your company is one of the 27% that doesn't evaluate performance regularly, then ask for a meeting to evaluate your performance.
Timing is important. Avoid scheduling the meeting around extremely busy periods in the office when you manager feel frazzled or stressed. Don't have it around slow periods, either, when smaller profits make it harder to justify paying an employee more.
What to do if they say no? It's possible that your boss says no to a pay increase. Don't just give up. Ask for other forms of compensation, such as more paid time off and benefits. Request feedback and constructive criticism so you know what you need to do to get a yes. Work on that and ask for another compensation review in three to six months.
If you're doing a great job but your company is repeatedly resistant, or if you feel your opportunities for growth are limited, maybe now is the time to move to a different company. This shouldn't be your first choice of action, but is something to consider.
Asking for a raise takes a lot of effort. But again, this raise could add up to nearly half a million dollars over your working career. It's worth it to prepare adequately.