Ever find yourself working tirelessly, adding value to your company, and thinking, “I truly deserve a raise”?
Recognizing your worth is the first step towards achieving the pay you deserve. However, negotiating a raise isn’t just about asking. It’s about presenting a case so compelling that ‘yes’ is the only sensible answer.
If you’re ready to turn that raise from a daydream into a direct deposit, these tips will help you build your value, negotiate with your employer, and close the deal. Let’s dive in!
What is a reasonable raise expectation?
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Before you walk into your boss’s office and ask for a raise, you should think of a reasonable number. On average, a 3-4% wage increase per year is standard. For example, if you’re currently earning $50,000 per year, a 4% annual salary increase would be around $52,000.
According to Statistics Canada, the average annual wage increase between 2021 and 2022 was 4.5%, which is higher than the 2.8% average wage increase we saw pre-pandemic. This was largely thanks to a hot labour market, where employees had more room to negotiate.
Now, the labour market is beginning to cool. As a result, many companies are expected to offer fewer wage increases across the board, according to the August 2023 Mercer QuickPulse Canada Compensation Planning Survey.
That said, a 3-4% wage increase is still well within reason.
How to negotiate a raise
If you’re a more direct person, you may consider just asking your boss for a raise. While this could work, it likely won’t get you the highest raise.
Instead, consider the following tips to learn how to negotiate a raise. If used right, you could be able to negotiate significantly more than the standard 3-4% raise.
Understand (and build) your value
Understanding your worth as an employee involves more than just tallying up your hours. The hardest working person in the building often isn’t the first to receive a raise. Instead, understanding your value to the company starts with recognizing the ripples your work creates.
Consider your daily responsibilities and the unique skills you bring to the table. Ask yourself questions like:
- How vital is the work I do to the company?
- How easily can I be replaced?
- Have I helped to boost sales or company morale?
- Have customers/clients written positive reviews about my performance?
- Have I learned or developed any new skills in the past year?
Be honest with yourself here. Based on how you answer these questions, you’ll begin to build a better understanding of your true value as an employee. Ultimately, the more value you bring to the table, the more negotiating power you have.
If you’re not satisfied with your answers, consider ways that you can build your value, such as:
- Volunteering to take on challenging projects
- Signing up for additional training or learning a new skill
- Offering customers and clients outstanding service
- Being a positive influence on your coworkers
Use time to your advantage
Believe it or not, some times are better than others to ask for a raise. If you miss the sweet spot, you may end up getting a lower raise (or no raise).
For best results, aim for when company spirits and finances are high. This is often post-project completion, during positive quarterly reports, or at annual reviews when the company’s budget is set.
During these times, make an extra effort to stand out. From your quality of work to your attitude, try to stay on the radar of key decision-makers. This will increase your chances of being the first to receive a promotion.
Anticipate counteroffers
When you pitch for a raise, expect counteroffers and objections. Your boss might state objections like budget constraints or impending economic problems. Here, you need to stay quick on your feet and showcase your flexibility.
Perhaps suggest a performance-based bonus or an alternative timeline for your raise to align with future company milestones.
During this process, listen actively and respond to everything with understanding. You don’t want to create friction or conflict, as this can immediately kill the deal. Instead, agree with their objections (as they may be very real) and be considerate of what they’re saying. Then, loop back around to discuss the reasons why you deserve a raise.
This is the subtle art of negotiation.
Don’t think of objections as roadblocks but as opportunities to reinforce your worth and dedication. Keep the dialogue open, positive, and focused on mutual benefit.
Practice your pitch
Don’t go into the meeting and try to wing it. Not only will you end up sounding unprofessional, but there’s a good chance you’ll forget some key points that could have really helped you make your case.
Take a few days to write out your key points. Then practice your pitch in the mirror till you can look yourself in the eye and feel complete confidence. Then, practice your pitch some more with your friends and family, asking them to role-play as your boss and offer objections.
Set a high “anchor”
By the time you walk into your employer’s office to discuss your raise, you’ll be confident and prepared to overcome any objection. Maintain this confidence throughout the meeting.
In order to increase your chances of negotiating a better raise, it can be beneficial to set a higher number than you actually want. In negotiation, this is often known as “setting an anchor.”
In some cases, you may get lucky and be granted the higher number. More often than not, though, your employer may negotiate your raise down, closer to the real (unstated) number that’s on your mind.
Don’t be afraid to look for alternatives
Sometimes, no matter how hard you negotiate, you’ll still be met with a ‘no.’ It may not be your fault, either. Perhaps your employer is going through a difficult financial time or operating with a tightened budget.
In this case, don’t be afraid to weigh your alternatives.
B.C. alone is expected to get over a million new jobs over the next decade, so there will be plenty of competition in the market. This is great news for employers looking to increase and expand on their current options.
If you’re a truly valuable player, there’s a very good chance that you’ll find another higher-paying opportunity out there.
Once you start receiving better offers from other employers, you may even be able to use these as additional ammunition to help you secure a raise if you want to stay with your current employer.
Written for Daily Hive by Christopher Liew, a CFA Charterholder, former financial advisor, and the creator of Wealth Awesome.
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