Tis the season for annual performance reviews, but workers shouldn’t expect much of a pay raise in 2015. In a recent survey of 337 U.S. companies, business consultancy group Towers Watson found employers are planning to give full-time employees a 3% pay raise in the new year, only slightly more than the 2.9% increase they handed out in 2014.
And that’s for employees who are offered any raise at all. Not all firms adjust compensation on an annual basis, especially small businesses that may have much lower profit margins.
What happens if you don’t get the raise you were hoping for next year? A lot of people might quit. In fact, nearly 40% of workers say they would walk away from a job if they felt they weren’t being compensated fairly, according to the Society for Human Resource Management. And with the unemployment rate at its lowest point in six years (5.8%), workers might be willing to risk leaving a job these days. Before you pack up your cubicle, consider using your own bargaining power to negotiate your way to better compensation.
“I think employees sometimes don’t realize how much power they have,” says Lynne Eisaguirre, employment law expert and author of “We Need to Talk: Tough Conversations With Your Boss.” “Assuming you’ve had a good annual review, your boss wants to keep you. Turnover is a pain.”
If you like your job and you see yourself with your employer for years to come, don’t give up on them just yet. There are many other ways you can be compensated for your work, five of which we’ve highlighted below.
1. An investment in your ‘human capital.’
If a raise isn’t in your immediate future, ask your manager to invest in your talent in other ways – for example, by offering tuition reimbursement for a course that could help improve your skills on the job, or by allowing you to cross-train in other departments to broaden your skill set in-house.
“Looking beyond your own narrow specialty or focus becomes especially important as you work your way up the ladder,” says Eisaguirre. “Ask yourself what the company is struggling with and how can I bring value to that?
Learning new skills would definitely help you argue your case for more compensation down the road. The key is to frame your request in a way that highlights how these learning opportunities would help the company, not yourself. For example, Eisaguirre suggests framing your request like this: “If I learned how to do X, I could help advance the company’s plans to X by next year.”
2. A more flexible work schedule.
Maybe you’ve been killing yourself getting to work on time because of your child’s daycare schedule or you would like to try telecommuting. If you had a stellar annual review and you feel your work is valued by the higher-ups, asking them for more flexible working hours may be a great way to make up for an underwhelming raise. Make sure you explain exactly how these working hours will help boost your productivity and, as a result, the company’s productivity as well.
Just be realistic. If your company culture doesn't really mesh with the telecommuting thing, then don't push it. Instead, ask if you can come in an hour earlier and leave an hour earlier. Eisaguirre suggests asking for a trial of one or two days per week and then revisiting the issue after a month or so.
3. A better title.
There are few things as frustrating for a worker as feeling as if their job duties far exceed the scope of their job description or, especially, their salary. Asking for a new and improved title won't necessarily get you a raise, but it might be some small source of comfort — and a great way to remind your boss what a workhorse you are.
“Bosses these days are very stressed and busy themselves,” says Eisaguirre. “Bring a list of accomplishments and value you’ve added to the company throughout the year. It’s important to constantly remind them of what you’re doing.” Ask around or investigate online to find out what kinds of titles workers with your responsibilities at similar companies have.
And don’t let the conversation end there. Once you’ve made your case for a new title, be sure to ask when your next opportunity to discuss compensation will be.
4. Upgraded tools and gadgets
Being underpaid is bad enough, but it’s an extra indignity to have to toil away on outdated computers and rely on equipment in constant need of repairs. In lieu of a raise, ask your manager to upgrade your gadgets and explain how these changes will make you a more productive team member. If you regularly use your personal cell phone for work purposes, you have grounds to ask for bill reimbursement or a company-provided phone.
5. More vacation time.
The 41% of Americans who let their vacation days go unused each year certainly aren’t doing their mental or emotional health any favors. Depending on the type of company you work for, haggling for more vacation days can be a simple way to improve your benefits. Larger companies may be stricter about their time off allowances, while small companies may not be able to afford the lost manpower. But it can’t hurt to ask. Employees with longer tenure and excellent track records have an even better shot at winning extra vacay days.
Building a strategy:
Deciding what you want is the easy part. Coming up with a strategy to get it is where the real work comes in. You not only have to be sure you’re asking for things in the right way but also at the right time. Here are a few tips to help you finesse your bargaining points:
If the answer is no, don’t back down. Whether you’re asking for a pay raise or a better company parking spot, the worst response you can get is no. But that shouldn’t be the end of the discussion. At the end of your conversation, ask your boss if you can revisit the topic sometime during the next quarter. You want to leave the room knowing for sure whether “no” simply means “not right now” or actually means “never”.
“Unless your boss says ‘don’t darken my door ever again,’ I would bring it up again at the end of the quarter regardless of what he or she says,” Eisaguirre says.
Think about what your company needs, not what you need. Don't focus on what you need. Focus on what your company or team needs and how the benefits you’re asking for will help them reach their specific goals. If your company sets quarterly or annual goals, that information must be somewhere, or you can request it from your manager or HR team. For example, you may want to ask about getting reimbursed for courses on HTML5 or web design because you know the company wants to fill gaps in these areas. So long as the benefits you’re asking for somehow correlate to the company’s overall goals, your manager will have a much harder time saying no.
Time your request well. The best time to ask about compensation is around the time your managers are finalizing budgets for the upcoming year. Once those budgets are final, there’s not much they’ll be able to do for you. For most companies, that's usually near the end of the third quarter. If you don't get a chance for a sit-down performance review in the third quarter, ask your manager to meet instead. If you’re the one broaching the subject, be sure to approach them during a slow time of their day when they’re more likely to be available.
Research, research, research. Before you ask for the moon, know what you’re asking for is realistic. Ask colleagues or people you know in your industry about the types of benefits and perks offered by their employers. If you find out most people in your field are getting perks like access to a company car or telecommuting privileges, that will give you a better sense of what’s possible for you.
Eisaguirre even recommends requesting a meeting with whatever department in your company handles your benefits and compensation packages. Vaguely tell them you'd like to clarify your benefits and compensation for the year. Then ask what opportunities there may be to improve your package in the future. The benefits team may know about perks that you haven't heard of and help you figure out what to ask for.
Ask for ways you can improve. Not everyone gets quarterly or even semi-annual reviews. Make sure you pull your boss aside for a meeting every quarter or so to not only point out your successes but to seek feedback on your performance. If you are turned down for a raise based on performance, you need to know how to improve in order to better position yourself for a raise later.
“Bosses are notoriously dishonest during performance reviews,” Eisaguirre says. “They don’t like confrontation or telling employees they’re doing something wrong. But it’s always good information. You need to know how you’re perceived in the company and asking those questions is good."
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