The worst reason to ask for a pay raise is any reason that has to do with your personal finances. "I need more money because my rent went up" or "I need a pay raise because my car is about to die" are two examples.
Your expenses don't have any place in a conversation about your pay. If you accept a job that pays a certain amount for your services, then it's up to you to manage your finances, change your living situation or make whatever adjustments to your lifestyle you need to make in order to pay your bills with the salary you receive.
That's why the worst reason to ask for a raise is "I can't make it on my current salary!" no matter how true that statement may be.
The best reason to ask for a raise is that your current pay level doesn't reflect your level of contribution to the company, in hard-dollar terms.
You have to make an argument to your boss, including assumptions that you will make clear in your argument, that your performance at work contributes to additional revenues or money saved for your organization. That way, you can draw a straight line between what you're paid and the value of your services to your employer.
I wish I could tell you that just informing your boss that salary and payscale data show you're paid under the prevailing wage level for your job title would be justification for your manager to approve a pay raise, but that is often not the case.
Companies will give you a lot of reasons why your pay doesn't measure up to the published rates, or they'll flat-out tell you, "We pay under the market."
That makes no sense, but they say it anyway. Every company is in the market, and if they're cheap about salaries they're pulling the market down. It's literally nonsensical to say "We pay under the market" but that is something that underpaid working people have heard more than once.
You have to make a stronger argument than just "I'm paid lower than other people who do similar jobs are paid, according to survey data." For sure, if the survey data do show that you're paid under the market, include that information in your pay-raise pitch—but you have to do more than that.
You have to be able to show that your work has a financial impact that would be felt if you left.
Alicia is an HR Manager. She gets paid $62K which is not horrible for her position, but it certainly isn't at the midpoint for HR Managers in her city. Her company is small. The company has 50 employees, so Alicia does the payroll, HR, recruiting and training by herself with one part-time assistant.
Alicia created a financial argument for the pay raise she wants. In her pitch to her boss, the CFO, Alicia included data about her impact on the company's revenues, its recruiting costs, and other 'hard' factors.
Because her boss is a financial person, she minimized the 'soft' arguments she might have made if her boss were more tuned into issues like the company's reputation, its ability to hire great people and so on.
Alicia will educate her boss about those issues over time!
Alicia hired 15 people during the year, and each of those new people was responsible for about $200,000 in incremental revenues compared to the previous year.
Even after you take out their salaries, the company is making bank with its increased headcount and increased capacity. Alicia replaced a wan HR Manager who took months to hire new people.
Many of those new hires left. Turnover since Alicia's arrival has dropped close to zero.
When she sat down with her CFO to talk about her salary, Alicia didn't threaten to leave her job. She only told her CFO "My value to the company is well over $100K as you can see, but I'd like to create a roadmap to get to $75K, which is much more reasonable compensation for my services than the $62K I'm being paid now."
The CFO mulled it over and agreed on a set of milestones that Alicia will meet to gradually boost her salary by thirteen thousand dollars over 18 months.
Alicia was happy with that result. She knows her company is small, and every penny counts. She is happy to work her way up to her $75K goal.
Ormand is an Inventory Supervisor. He works for a big company with pay grades, but he is low in his pay grade because he came into the Inventory department from a lower-paying department. Ormand went to his manager months before his annual review and suggested that he was due for a bigger-than-average pay increase at review time.
Ormand wanted to give his boss as much time as possible to talk to the higher-ups about Ormand's bigger-than-average pay bump.
He said "Look at my results in the department. I've increased inventory turns and taken several hundred thousand dollars out of our inventory costs." Ormand, like Alicia, knows that his boss isn't making the pay-raise decision independently.
He will need higher approvals, so he needs all the ammunition he can get! Ormand and Alicia took the time to create reports or graphs that show their good arguments for lifting their pay rates. This process is callied "selling the seller." The seller is their boss—the person who has to sell other people on the pay raises Alicia and Ormand want!
What if Ormand's boss were not a big fan of Ormand and his work? In that case, Ormand would have abandoned his project to get a pay increase and started a job search, instead.
There is no point in asking your manager for a pay raise if you and s/he are not in synch. Imagine that you use a housecleaning service and you're unhappy with them. Every week you have to remind your housekeeper to dust the baseboards or mop the kitchen floor. The last thing you'd want your lackluster housekeeper to ask you is "Can I have a raise?"
You have to know that your boss is happy with your work, or you're wasting your time requesting a pay increase. That's why, if you have a salary bump in mind, a good way to start the conversation with your manager is "Can I ask you something? You seem to be happy with my work here—is that accurate?"
Many people think "I can't draw a straight line between my job and the company's financial success. I'm just [an Administrative Assistant, a bookkeeper, etc.]." It's not true! You can make assumptions and lay those assumptions out in your pay-raise argument. Every job has impact on the overall organization's success.
Your impact may be at the department level—that's fine. If you are someone who wouldn't be easy to replace and you know you're worth more than you're getting paid now, why not bring up the topic?
If your boss questions your assumptions, that's fine, too. In that case you'll go back to the drawing board with new information. The important thing in asking for a raise is to take your manager's point of view as you prepare your pitch. See your argument through his or her eyes and ask yourself the questions he or she is likely to ask you.
Don't expect a massive pay raise and don't expect it to happen immediately, but go ahead and start the conversation once your research is done and your pitch is secure. You'll grow muscles in the process!