Negotiating a Pay Rise
NEGOTIATING A PAY RISE
Employer & Employee perspective
1. DURING & AFTER NEW JOB INTERVIEWS
- During the interview process sell yourself based on skills and knowledge, but do avoid any salary discussions at the early stages. Give a strong case to hire you before you even talk about money. They will then attach a value to hiring you. Don’t refuse to talk about it, throw the question back to them.
- The first rule of negotiation: never show your cards at the beginning, let the other party say the figure first.
- The best time to negotiate after the offer and before acceptance – the point at which the employer clearly wants you for the job and has discounted others
- Chances of renegotiation after the offer are slim
- Be prepared to compromise in the event that the employer cannot initially take you on at that rate – Agree IN WRITING a guaranteed pay rise or bonus after a set, agreed period and possible series of objectives agreed between you
- If you are the employer recruiting someone who demands more money than you have available, do not give vague assurances. Handle this matter before you make an offer. Sell the benefits of location, other benefits of the company, training, educational assistance, career path, learning….
- Know the market rate – ask an external recruiter for advice – its free and its on the money!
- During negotiation maintain a positive & committed stance, keep it objective.
- It is always best to have more than one offer on the table. A good sales manager will respect you more and feel you are more valuable if in demand elsewhere. Don’t risk however turning it into a dutch auction. Avoid “ I wont accept less than…” turn of phrase
- As the new employee is a potentially valuable asset to the business, but its up to you to justify that investment in you. Always maintain a professional and clear business approach, rather than horse trading.
- As the employer, you also have to ensure that you employ staff at a fair market rate. If you overpay, you’re not getting value for money. On the other side, if you take someone at a lower than market rate you will be back to the drawing board sooner than you think.
- Contrary to popular belief it is not best to lie about your current salary, particularly with bigger employers – they will ask for P60, they will have their own benchmarking exercises and will know the market rate. If they sniff a lie you won’t be in a position to negotiate.
- If using a recruitment consultant, work with them on getting the best and fairest rate. You will be less likely to sour relations by being one removed in the process.
- Be prepared to be asked for a breakdown of your salary and to relate the variable element to your figures achieved. Make sure your numbers tally!
2. IN THE SAME JOB
When is a good time to discuss salary rises?
Prior to finalisation of company budgets, when company reviewing salary increases for all staff, when asked to take on extra responsibilities/ given promotion, when you have had a recent success.
Why is it given? A pay increase will normally be given for
- increased responsibility, or increased contribution to overall performance
- company performance is strong
- market demand for your skills is high and supply is low & retention is an issue
How can you prepare yourself for a salary negotiation meeting?
- Do your research beforehand – know what you want to get out of the meeting and what you will accept
- If HR are also involved aim to get the backing from your hiring manager first
- Call an external recruiter for advice, look at any relevant market info
- Lay the foundations – make sure your boss knows your successes and achievements in the role, don’t assume he/she knows them
- Understand the company’s position – salary scales, headcount, retention
- If you do not understand the organisations method of awarding pay increases, first step is to discuss with your boss.
- Ask for face to face meeting – to discuss your role and development – keep it simple & don’t be drawn into a discussion until you are at the meeting – tell them you want to ask for their advice.
- Make sure you have all your stats and record of achievements with you. Avoid using any points that are not fair, honest and right, as this will undermine your integrity and credibility
- The positive approach – If you feel the need to ask for a rise, ask for extra work and / or responsibility and link this to pay rise. If not immediately, agree a time in the future – mentoring others, increase territory, targets
- Ask for a performance related bonus or pay increase subject to achieving more output ie. In sales revenues, margin or activities that are linked to improved performance in general. You are offering to do something in return.
- 1ST rule of negotiation, do not state your opening position. Get them to say the number first
- Stay positive and constructive – try to present a neutral view almost as if you were an observer, rather than use emotive phrases “I want”, “I need”
- Write down your points for discussion in case you get nervous, bring them to the meeting.
- Present your case as to why you should receive more money, then talk turkey.
3. FACTORS AFFECTING NEGOTIATION – DO YOUR HOMEWORK
Lets look in more detail at all factors affecting negotiation….
You need to understand all of the following factors before deciding on how to approach the situation of negotiating a pay rise in your current job. Are you genuinely underpaid? Have you taken on extra responsibility? Put yourself in your boss’ shoes, and above all be objective in your research.
- How well paid compared to market rate? – Talk to the experts
- Rate of inflation (4.6% currently)
- Location - & cost of living associated with that
- Company stance on staff turnover, retention, recruitment and headcount (eg freeze)
- Company trading performance
- Available budget for pay rises
- When was last company-wide salary review, range of % increases awarded?
- When is next company-wide salary review and likely % increases?
- What precedents would be set by giving you a rise?
- How valued are you to your boss and company? - LINK TO KPI’s, new customers acquired, retained, problems solved, efficiencies achieved.
- How easy is it to replace you? What niche skills/knowledge do you have? How long would it take to train others? What is the availability of those skills externally?
- How much extra responsibility are you prepared to take on?
- How much extra effort and/or time are you prepared to put in?
- What will you do if the company says “no”? ie how much do you want to stay at the company and how confident are you in getting a better job elsewhere?
If you feel you have a genuine case, write down the points (you may get nervous and fluff your point!) Always remember you are generally one of a number of employees.
If you present a strong case the worst you will do is increase your chances of receiving a more favourable review the next time, or you will know precisely what you have to do to get that pay rise.
4. THERE’S MORE TO REMUNERATION THAN MONEY
If a manager does not have flexibility on cash benefits, perhaps he/she may be in a position to add in other factors of value to you. Keep the whole package in mind and what is important to you
- Working hours and conditions – flexibility
- Educational assistance
- Study leave
- Pension – rather than after probation period, from day 1 or backdated