Finance Stoic on how to get the raise I deserve!

Introduction to how to get the raise I deserve

To teach you how to get the raise I deserve, I am going to start by asking you some questions.

Next, I am going to dive into each question, explain why I asked it, and what you should do about it.

The questions we will be going over so you can prepare yourself are:

  1. Have you asked for a raise?
  2. Do you deserve a raise?
  3. Have you done your homework? Do you know:
    1. What your position pays?
    2. Where you fit in the pay range for your role?
    3. How your pay compares to your peers in that role?
  4. Have you considered alternatives to your current position?
    1. What are your alternatives?
    2. Can you structure the ask differently?
  5. Are you prepared to go to the altar?

Have you asked for a raise?

No doubt, you think you deserve a raise, almost everyone does. This is definitely consistent with teams I have led over the years. Not once has someone said, FS, I sh!t the bed this year, I think we should keep my salary flat, or cut it back a bit.

The question is, have you asked for a raise?

A study by Robert Half indicated that 40% of employees don’t talk to their managers about their careers. If you aren’t talking about your career, then you aren’t having a proper conversation about your salary.

A study by Paysa indicated that women are less likely than men to ask for a raise. Worse, when they do, they’re less likely to get it. This bothers me and it’s one of the reasons I am writing this post. We should all do our part to help push equality forward. In regard to female employees compared with male employees, the study found that 41% of women never ask for a raise and 42% of female respondents were denied raises, compared with 33% of male respondents.

So, are you one of those people who hasn’t asked for a raise? Were you expecting your magnanimous boss to drop by your desk and say “Well Ted, I have been thinking a lot about your career and I think you deserve a raise!”. Even more, wouldn’t it be great if she said, “In fact, I did some homework and I think that you deserve as 12.5% raise”, and 12.5% just happens to be the exact number you do deserve? I am fairly confident in saying that is NOT going to happen.

Two things to remember:

  1. No ask, no get
  2. The squeaky wheel gets the grease

Do you deserve a raise?

This is a hard question.

To answer it properly, I need you to be self aware and to do a fair amount of introspection. Further, though it is a later question, I will need you to have done some homework.

In determining whether you deserve a raise, I am going to ask you to consider eight questions:

  1. How long have I been with this company?
  2. How long have I been in this role?
  3. What are the current market dynamics?
  4. How is your company performing?
  5. How do I perform in my day to day role?
  6. What do I do above and beyond the expectations of my role ?
  7. Am I a fit in terms of corporate culture?
  8. How do I rank against my peer group, if there is one?

Questions 1 to 4 deal with whether you should seek a raise at this point in time. These are questions that may indicate that you don’t deserve a raise yet. I call these framing questions.

Questions 5 to 8 deal with your performance and directly impact whether you deserve a raise. I call these performance questions.

Framing questions

While the framing questions are not performance related. I would like you to appreciate that there is a time to ask for a raise and a time not to ask for a raise.

The first two questions are pretty simple, but relevant. The longer you have been with a Company, the more amenable management will be to giving you a raise.

If you have been in your role for a long time, it may be that you deserve a raise or that you are topping out for the role, which we will discuss later.

If you are new to the role, but tenured with the Company, then you ought to have gotten a raise when promoted.

The second two questions deal with whether it’s the right time to ask for the raise.

What are the current market dynamics?

There are a lot of ways to consider this.

What have you:

  • seen on television
  • heard on the radio
  • seen on social media
  • been reading in the newspaper

Do you read trade publications for your industry? If so, what are they saying?

What are the executives at your company saying? Have you asked them what they think?

What are recruiters saying? Are you getting cold called regularly for opportunities, or has it been a year or more since you heard from someone?

If the market is hot, then a request for a raise may be better met, as management will realize there is a risk of flight. If the market is cold, then there may be multiple people who would do your job. Perhaps it is not the right time to ask.

How is your Company’s performing?

Are you plugged in?

Do you know how your Company is doing?

Can they afford raises at the moment?

Heck, are they in the midst of layoffs? If so, you might not want to be the man or woman who puts up your hand and says, “can I have more money now that Ted is gone?” First, it would show management that you have a pretty low EQ. Second, it would not be seen very well by your colleagues if they were aware you had the audacity to go for it.

Performance questions

Now the fun begins. It is time to self-reflect and go deep on yourself.

How do I perform in my role, day-to-day?

There is no place in this process for either false modesty nor hubris. I need you to focus on the facts and be brutally honest with your personal positives and negatives.

In some companies, this is easier than others. For example:

  1. At Bridgewater Associates they operate on the practices of radical transparency and radical honesty. As a result, you consistently know how you are performing. In fact, colleagues now rate each other across over 100 attributes on a 1-10 scale in an iPad app called “Dots.”, in real time!
  2. At most consulting firms or accounting firms, you receive performance appraisal after each engagement and you also may be assigned a performance counselor who checks in with you at least quarterly to see how you are performing.
  3. You are in a professionally run organization with good HR practices, including :
    1. Specific and detailed job descriptions
    2. Regularly scheduled check-ins with a coach or mentor

It is when you don’t have these things in place that the onus is on you.

You need to work with your boss to prepare a detailed job description and understand what the expectations are for the role that you are in. Further, you will need to seek insight regularly to understand how you are performing. Regular enough that you will have sufficient time to action on areas of improvement. Not so often that your boss will find you annoying.

We are not going to go into specifics of what to do on a day-to-day basis to get the raises, that will be a later post.

What do I do above and beyond the day-to-day expectations of my role?

This is without a doubt, how to earn your raises and promotions.

Again, be brutally honest, do you have solid examples of over performing in your role relative to the expectations? For example:

  • Worked over-time every week to meet deadlines while understaffed
  • Taught colleagues who were new to the Company, without being asked
  • Implemented ideas that cumulatively saved the Company a lot of money
  • Automated processes to reduce the required hours, saving the Company money
  • Took work off of your bosses plate so that they could be freed up to work on more value-added work

You get the picture. Now ask yourself, how did I do?

Am I a cultural fit?

Do you know what your Company’s mission statement is?

If I asked you to name your Company’s values, could you?

Now, if I asked you how you have lived those values on a day-to-day basis in the workplace and outside of it, could you give me specific examples?

At work, do people on other teams look to you as an informal leader? Do people hold you up as a role model on your team? Corporately?

Do colleagues invite you to social events because of your fit with the team, not because you are the crazy fun drunk person?

How do you rank against your peer group?

At many companies, people are ranked against their peers in a number of different ways. Some tools that may be used:

  • Topgrading: ranking A, B and C players
  • Scaling: Whether it’s 1 – 5 or 1 – 10, as examples
  • Nine-box assessment: Needs improvement –> Star

If your Company has a system, Great! Your job is to understand how the system works and to assess yourself against the system. If you don’t have any of these systems, I recommend reading Topgrading and using it to assess yourself.

Next, you need to repeat these questions for each of the people in your peer group, if you have peers, to understand your likelihood of being successful in a bid to get a raise relative to your peers.

While it would be nice for everyone to be able to get a raise; generally, there are budget constraints, which is why it is relevant to understand your ranking.

Have you done your homework?

We already discussed some of the homework we needed you to do, which was market dynamics and corporate performance.

What does your role pay?

To ask for the raise you deserve, you need to know what your role pays and I also advise knowing what the next role pays.

I call these pay ranges and there are a few numbers that you need to understand:

  • Minimum is the floor for this role. It is the amount paid at the entry level.
  • Maximum is the ceiling for this role. It is the highest amount that someone would be paid for the role, before being promoted and moving to the next range.
  • Midpoint is the average of the minimum and maximum, which will be at the midpoint of the range.

To calculate pay ranges, you will need to attain market intelligence. To do so, I recommend:

  • Talking to recruiters and headhunters and getting their feedback
  • Reviewing salary guides, if any, for your role and for your industry
  • Reviewing job postings for your role and industry, ensuring they’re consistent with your role

In doing this, it is imperative that you compare apples to apples and oranges to oranges. Specifically, two things:

  1. Are the roles and job descriptions you are looking at alike?
  2. Are you considering the same compensation criteria?

I generally recommend reviewing total compensation, for example:

If you only compared the base salary and you worked for Company B, you may think your Company underpays you.

For the purpose of illustrating throughout, we are going to use a range for a corporate accountant and a senior corporate accountant:

To determine where you fit in the range, we are going to discuss compa-ratio and position in range.

Compa-ratio

The compa-ratio, short for comparative ratio, assesses the ratio of the amount actually paid to an individual, divided by the amount that would be paid to a fully competent performer in the job, which is defined as the midpoint of the range.

According to Australia’s National Remuneration Centre there are ordinarily five zones, each associated with a pre-defined level of performance:

  • 80-87% – new, inexperienced, or unsatisfactorily performing incumbents
  • 88-95% – those gaining experience but not yet fully competent in the job
  • 96-103% – fully competent performers performing the job as defined
  • 104-111% – those consistently performing the job at a lever higher than what the job definition requires
  • 112-120% – those universally recognized as outstanding performers, both inside and outside the organisation

Generally, you will increase through the range, and in the level of your compa-ratio with (1) Company tenure, (2) time in role, and (3) performance.

Have you used your market intelligence to calculate your range? Have you calculated your compa-ratio? How does it compare with your self-assessed performance?

Position in range

The Compa-ratio is a comparison against one piece of data, the midpoint; Rather than just being a comparison to one piece of data, position in range looks at a salary in relation to the whole pay range.

Let’s look at someone earning $57,500 per year.

Comparing them against the accountant range above, the compa-ratio and position in range are 115% and 88%, which indicates an above average performer who has worked their way through the range.

Meanwhile, that same comparison against the senior accountant range shows a compa-ratio and position in range of 88% and 13%, which indicates someone new to the role that is inexperienced relative to their peers.

Where are you? How could this help you determine where your pay should be?

Structuring the ask

By now, you have done your homework and you know what your role pays. You know how you’ve performed personally, and against your peers as far as you are able to tell. You also should have an idea on what you would like for compensation.

Before you go in for the ask, I would like you to think about the big picture we discussed earlier. Take into account the information from ever section I have asked you to think about above.

Depending on how the Company, and Market, are doing, you may want to structure your ask differently. Further, you may care about things as much, or more, than pure dollars and cents. For example, what non-financial metrics might you address in your request?

  • Work hours
  • Training opportunities
  • Increased vacation time
  • Flexible work arrangements

Some of these will actually cost the Company less money, which will increase the likelihood of success. To the extent you will get the same marginal utility [Yes, I pulled out Econ 101 for the 8th time since taking it 18 years ago], it is a win-win for both of you and you should always be seeking win-win opportunities.

Have you reviewed alternatives

When doing your research with headhunters and job postings, were there any that jumped out at you as good opportunities?

Have you had recruiters reaching out to you to look at opportunities?

If you are going in for a raise, sometimes it is good to have options in your back pocket. While you may not discuss them in your ask and you may not even want to pursue them, the increased confidence you will have in making your ask could increase your chances of success.

Are you prepared to go to the alter?

Homework is over.

You should now have determined what you want to ask for, you have options available, it’s time.

Going into the meeting [you did ask for one, right?], I would like you to bring a handout for your boss. In it, you should have:

  • An executive summary with your requested package, financial and non-financial
  • The pay ranges for your role, showing your current and proposed compensation, compa-ratio and position in range
  • Supporting documentation for your calculation of the ranges: salary guides, job postings, conversation with recruiters
  • Backup for your proposed compensation, which is where you ought to be able to speak to:
    • Cultural fit
    • Day-to-day performance
    • Performance above and beyond

The question is how far are you willing to go? If you don’t get your ask, would you pursue one of your other options?

The reason I ask is that you can negotiate much stronger if you aren’t afraid to walk away. For example, you can respond to any offer put forth with my favorite negotiating tactic from Never Split the Difference, “I can’t do that”. This answer is followed by silence and can be said multiple times until you boss is not going to offer more. Effectively, it forces them to negotiate against their self.

Once your boss does put the final offer forward, it’s in your court to determine what you are going to do.

Closing thoughts

Does this seem like a lot of work to you?

Are you willing to do the homework you need to do?

Would you prefer to do nothing and rely on the generosity of your boss and Company?

I can tell you that you will get out of this exercise, as most things in life, what you put into it.

Let me give you an example of what I do for my teams:

  • Create ranges for everyone from entry level positions to the Vice President level and share the relevant ranges with the colleagues
  • Have the managers on my team rank the colleagues that report into them on the categories that I discussed above plus additional categories
  • Meet with each manager to discuss their colleagues individually
  • Bring all the managers together and we rank each colleague against their peers, level by level
  • Meet with my boss, with all the support above, and fight to get my colleagues what they deserve
  • Deliver the results to each colleague and give them visibility into their future path with us: roles, responsibilities, titles, earnings

Now, that is me. Maybe with me, you could do less work. Within the same Company, I have talked to colleagues on other teams and their feedback is they have had no conversation of any meaningful value with their manager regarding their career path, compensation, etc. Each year, they’re simply given a number with no backup, nor discussion.

You need to know who you are meeting and what they do.

If I can do this for 25 people, you had better be able to do this for yourself.

If not, you will be saying I did NOT get the raise I deserve!

But…You will have actually gotten exactly what you deserve.

Until Next Time,

FS

Finance Stoic

Closing ask

If you’ve gotten this far, I have an ask for you. Ty, at Camp FIRE Finance, and I had a discussion on contributing posts to his site. The area I would like to focus on is the income increasing aspects of FIRE, as opposed to the expense reduction side.

If the content above resonates with you and you feel that more posts of this nature will help you achieve the incomes you are pursuing and you’d like to read them, then please let me and Ty know. If you’d like more, then I can get back to work on some more posts for Camp FIRE Finance.

4 thoughts on “Finance Stoic on how to get the raise I deserve!

  1. Getting a raise is all about showing how much value you being to your company. I’ve found it helpful to keep notes and records on the different things I have done so I can look back and remind managers of the different things I have accomplished when it is review time!

    Luckily, I have never had to ask for a raise because I had a leader that valued my work but I’m sure it will happen in the future. Nice post!

    Like

  2. I was very accomplished at getting raises and saw my annual compensation increase from x to 24x during my engineering and corporate management career. I never had to ask for a raise but indirectly did by passing on the job offers I received in great detail to my bosses and by being so good at my job they feared me leaving. By giving them great detail we both knew they could verify the offer and also possibly disrupt it so I used it to show them my first choice was loyalty but I did want them to make informed decisions about my market worth. It almost always worked and I generally felt overpaid throughout my career. In fact I eventually ran the company. It is very similar to what you are recommending which is very good advice.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s