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- 💰 Negotiate your compensation
💰 Negotiate your compensation
Preston Victory
October 23, 2024
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Welcome, Future Early Retirees.
You’ve been working at your job for awhile and are doing a good job. You deserve a raise, right? Of course, but it is not always easy to have that conversation with your boss. When is the right time, and how do you approach this discussion? These are important details to know as this is a big deal for your financial future. I recently went through this myself and was fortunate to have some great guidance on this matter (thanks, Uncle Scott!).
In today’s newsletter:
When should you have these conversations?
One of the most important aspects of asking for an increase in compensation is doing it at the right time. For example, if your boss is going to be extremely busy in an upcoming week, it’s probably not the best idea to bring it up then. You shouldn't just come up and ask them out of the blue. They won’t like feeling ambushed and likely won't be able to give you a complete answer anyway.
Usually, the best time to bring this up is during a performance evaluation you have with your boss. Good companies will have these at least once a year, but if yours doesn't, it is totally appropriate for you to ask to meet with your boss to get feedback on your performance and discuss compensation.
I recommend waiting until you’ve been with the company for at least a year and can honestly say you’ve been a good worker. It could be a real turn-off for a company if they have an employee who has just joined and hasn’t proven themselves to be an effective performer. Having self-awareness is important, and a great way to practice this is to ask yourself the following questions:
Do I follow through on the things I say I am going to do?
Has my boss already given me feedback through subtle interactions?
If you feel good about your answers to these questions, I think it's time to set up a time to have this tough but important discussion!
Dos and Don’ts
Dos
1. Do Your Research: Understanding the market rate for your role helps you make a reasonable request. Use salary surveys, job postings, and industry standards to back your case. This shows you're informed and your request is based on market value, not just personal desire.
2. Do Document Your Achievements: Compile a list of your contributions, successes, and any additional responsibilities you've taken on. This provides concrete evidence of your value to the company, making a stronger case for why you deserve a raise.
3. Be Humble and Respectful: In general, you will usually get better results by being both of these things. If you work for a good employer, they will see this as a major positive and want to reward you for conducting yourself in this manner. This also means not being afraid to ask tough questions like what can you do to get your desired compensation increase.
4. Do Practice Your Pitch: Rehearsing what you'll say helps you to appear confident and professional. It ensures you cover all points without being sidetracked, and you can handle objections or questions smoothly. I like to kick things off with asking how the company handles increased compensation. This gives them a chance to satisfy your questions before you ask them. If the answer doesn’t satisfy you, don’t be afraid to ask other questions. It shouldn’t be a mystery how the process works.
5. Do Discuss Future Contributions: Employers are interested in what you will do moving forward, not just what you've done. Outline how you plan to contribute to the company's growth or improve your performance, linking your raise to future benefits for the company.
Don'ts
1. Don't Make It Personal: Avoid discussing personal financial problems or comparing your salary to colleagues'. The conversation should be about your professional worth and market value, not your personal needs or office gossip.
2. Don't Threaten to Leave (Unless You Mean It): Threatening to quit can backfire, painting you as disloyal or coercive. If you mention other opportunities, be prepared for the possibility they might not counter-offer, and you'll need to follow through.
3. Don't Be Vague or Unprepared: Walking in without specifics on why you deserve a raise or what amount you're looking for can make you seem unprofessional. Concrete data and clear reasoning are compelling.
4. Don't Ask Too Frequently: If you've recently had a salary adjustment or if you ask too often without significant new achievements or responsibilities, it might seem like you're not aware of or sensitive to the company's financial situation or standard review cycles.
5. Don't Neglect Non-Monetary Benefits: If a salary increase isn't possible, other perks like more vacation time, flexible working hours, or professional development opportunities can also be valuable. Focusing solely on money might limit your options.
The goal of these guidelines is to help you approach this difficult conversation with professionalism and preparedness, which increases your chances of a positive outcome while maintaining a good relationship with your employer.
If you walk away from this conversation feeling shamed for asking the question, it may be time to look for new employer. Unless you are there to work for free, you have every right to have an understanding of how compensation works at your company.
Thank you for reading!
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Talk to you all next Wednesday 🙋♂️
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