Why now is a good time to ask for a pay raise

Employers are increasingly struggling to find high-quality workers, and many are raising salaries and wages to fill open positions.

In 2021, a record number of workers left their jobs in what has become known as a Great Resignation. A survey by the Pew Research Center found that workers quit because of low pay and a lack of advancement opportunities.

Today’s labor shortage is giving workers new leverage in the job market, especially since remote work has opened up more opportunities, making it a good time for people who think they should be making more money to ask for raises

Workers also have another advantage: it’s usually more expensive for your employer to replace you than it is to raise your salary.

“The hiring process is very long and expensive, and with labor shortages, it’s in an employer’s best interest to retain the people they have,” said Nicole Victoria, a money coach and author of a upcoming book on financial advice for millennials. “It’s easier to retain an old employee, and if you’re a good employee, it becomes an easy sell for you.”

Here are tips on how to successfully negotiate a higher salary.

“Show your results”

Replacing workers is expensive, given the time and resources companies spend interviewing and training new employees. Inevitably, there will be a period of time during which a new employee will not be as productive in the role compared to someone more experienced.

Keep in mind that your employer probably wants to keep you in the role. “Keeping the same person could have higher productivity, higher profit margins for the company, so generally it’s in their interest to try to keep you,” Victoria said.

If you want a raise, be prepared to prove your worth to your employer.

Do a self-review, evaluating your performance over the past year or six months. Highlight ways you’ve made your business more profitable or otherwise added value to the organization. Victoria even recommends coming prepared with a brochure that provides these types of metrics.

“Show your results, what you’ve done and what it means to the company or your boss. Sometimes your employer doesn’t realize all the things you’re doing,” she said.

Know your compensation range

It’s okay to ask your colleagues what they do to determine if you’re underpaid based on your role and duties. Also check with more senior mentors about what they think your salary range should be.

“Salary transparency should be discussed among all employees,” said Nick Meyer, a certified financial planner who shares financial information on the social media platform TikTok. “It’s important to know what you’re paid compared to your peers because that’s an argument you can use with your manager if you’re really underpaid compared to people doing the same job as you.”

Asking your co-workers what their salaries are is also perfectly legal.

“It’s not illegal to ask others what their salaries are. This is a good way to gauge whether or not you’re in line with what the company generally pays for your position,” said Bill Simonet of Simonet Financial Group, an asset manager. firm

Also check out sites like Glassdoor to get an idea of ​​what fair compensation is in your area for your role and industry.

“Some industry organizations publish reports with compensation ranges for different positions and experience levels. You can bring them to the meeting with your manager; know where you stand in terms of your job responsibilities and experience. Another option is to find out what other companies are paying for lateral positions,” said Hannah Szarszewski, founder of Blue Mountain Financial Planning.

Competing offers

Speaking of other companies, you gain leverage by presenting your boss with a competitive offer at the salary you want from another company.

“Before the meeting, get an offer from another employer. Tell the current employer that you’d like to stay, but you’ll need them to match the other offer. If they don’t, take the other job” , said JP Geisbauer. director of Centerpoint Financial Management.

Interview for other positions even if you don’t plan to accept another offer.

“It always helps if you’ve applied for other jobs and have a competitive offer even if you’re not thinking about leaving,” Meyer said.

Do it for them, not you

Inflation is at a 40-year high, and rightly so increasing the prices of all kinds of goods and services. But your own rising cost of living shouldn’t be your main argument for a salary adjustment.

“Mentioning inflation as a reason to increase compensation is fair, but you’d probably need more reasons because everyone is experiencing inflation, so it doesn’t make anyone stand out from their peers,” Szarszewski said.

Your employer cares more about how your job affects them and less about your own costs, such as rent or car payments.

“Put all the things together to show someone why you’re asking for this increase in compensation, so you’re not just saying it’s costing me 10% more for my rent, so you should pay me more. Maybe that will work , but it’s kind of weak,” said online financial advisor Katie Brewer.

Entrepreneurs are inherently selfish and want the best for themselves.

“Don’t say my car payments are going up or my mortgage is more expensive. Come in and say, ‘Here’s what I’ve done for the company, here’s how I’ve helped increase profitability metrics,'” he said. say Victoria. . “Put a number on everything if you can, talk about the value you bring to the organization. Those are the things that will make them want to keep you instead of telling them how it will benefit you.”

Beyond salary

If there’s no room for the raise you’re looking for, consider how much more you’d like to be compensated.

“Negotiate other things as well, such as increased contributions to your retirement plan, the ability to work from home, or an extra week of vacation. Think about what you want and ask for the most important things that don’t have any additional cost to the company, but they are valuable to you,” said Victoria.