January 8, 2015
How to Ask For a Raise
I’m guessing this topic will get some good play, both internally at Return Path and externally. It’s an important topic for many reasons, although one of the best ones I can think of is that most people aren’t comfortable asking for raises (especially women and more introverted people, according to lots of research as well as Sheryl Sandberg’s Lean In).
My whole point in writing this is to make compensation part of normal conversations between a manager and a team member. This requires the manager making it comfortable (without negative stigma), and the employee approaching it maturely.
My guess is that the two most common ways most people ask for raises when they bother to do so are (1) they get another job offer and try to get their current employer to match, or (2) they come to their boss with a very emotional appeal about how hard they are working, or that they heard Sally down the hall makes more money than they do, and that’s not fair. Although either one may work (particularly the first one), there’s a better way to think about the whole process that removes the emotion and produces a better outcome for both employer and company.
Compensation is fundamentally a data-driven process for companies. The high-level data inputs are the size of payroll, the amount of aggregate increase the company can afford, and the framework for distributing that aggregate increase by department or by level of performance. A second set of position- or person-specific data looks at performance within a level, promotions, and internal leveling, and external comparables. Fundamentally, smart companies will approach compensation by paying people fairly (both internally and externally) to do their jobs so they keep their best people from looking for new jobs because of compensation.
If compensation is a data-driven process for companies, employees should treat asking for raises as a data-driven process, too. How can you go about that? What data can you bring to a compensation conversation with your manager to make it go as smoothly as possible?
- Let your manager know ahead of time that you’d like to discuss your compensation at your next 1:1, so he or she is prepared for that topic to come up.Blindsiding will never result in a calm and collected conversation.
- Be mindful of the company’s compensation cycle timing. If the company has an annual process and you are just about to hit it (within 2-3 months), then consider carefully whether you want to ask for a raise off-cycle, or whether you just want to give your manager data to consider for the company’s normal cycle. If you’re really off-cycle (e.g., 4-8 months away), then you should note to your manager that you’re specifically asking for off-cycle consideration
- Bring internal data: your most recent performance review or ratings as well as any other specific feedback or praise you’ve received from your manager, colleagues, or senior people. See below for one additional thought on internal data
- Bring external data: bring in compensation and job requirement and scope data from multiple online sources, or even from recruiters if you’ve been called recently and asked about comp and scope of roles. The most important parts here are the two I bolded – you can’t just bring in a single data point, and you also have to include detailed job scope and requirements to make your point. If you only find one data point that supports a raise, expect your manager or HR team to counter with five that don’t. If you bring in examples that aren’t truly comparable (the title is right, but the scope is way off, or the job requirements call for 10 years of experience when you have 5), then expect your manager to call you out on that
- Recognize that cash compensation is only one part of the mix. Obviously an important part, but not the only part. Incentive compensation, equity, perks (gym membership, healthcare, etc. – they all add up!), and even company environment and lifestyle are all important considerations and important levers to pull in terms of your total compensation
- Have the conversation in a non-emotional manner. State your position clearly and unambiguously – you feel you deserve a raise of Q because of X, Y, and Z. Tell your manager that you enjoy your job and the company and want to continue working there, fairly paid and amply motivated. Don’t threaten to quit if you don’t get your way, leave the acrimony at the door, set a follow-up date for the next conversation to give your manager time to think about it and discuss it with HR, and be careful about citing your colleagues’ compensation (see next point)
The one piece of data that’s tricky to surface is internal comparables. Even the most transparent organizations usually treat compensation data as confidential. Now, most companies are also not idiots, and they realize that people probably talk about compensation at the water cooler. But bringing up a specific point like “I know what Sally makes, and I make less, and that’s not fair” is likely to agitate a manager or executive because of the confidentiality of compensation. However, as one point among many, simply asking your manager, “do you feel like my compensation is fair relative to internal comparables for both my position and performance?” and even asking questions like “which positions internally do you think are good comparables for my compensation?” are both fair game and will make your point in a less confrontational or compromising manner.
Managers, how can you best handle situations where employees come in to discuss their compensation with you?
- Most important are two things you can do proactively here. First, be sure to set a tone with your team that they should always be comfortable talking to you about compensation openly and directly. That you might or might not agree with them, but the conversation is safe – remove the stigma. Second, be proactive yourself. Make sure you’re in touch with market rates for the roles on your team. Make sure you’re rewarding high performers with more responsibility and more money. And make sure you don’t let “job scope creep” happen where you just load up your good people quietly with more responsibility and don’t officially change their scope/title/comp
- If the employee does not more or less follow the steps above and approach this in a planful, non-emotional way, I’d suggest stopping him before the conversation gets more than one or two sentences in. Empathize with his concern, hand him a copy of this blog post, and tell him to come back in a week ready to talk. That saves both of you from an unnecessarily uncomfortable conversation, and it gives you time to prepare as well (see next item)
- If the employee does more or less follow the steps above and approaches this rationally, then listen, empathize, take good notes, and agree to the follow-up meeting. Then sit with your manager or department head or HR to review the data surfaced by the employee, develop your own data-driven perspective, and respond in the meeting with the employee with data, regardless of your response. If you do give a raise, the data makes it less about “I like you.” If you don’t, you can emphasize the employee’s importance to you and steer the discussion towards “how to make more money in the future” by expanding role scope or improving performance
I hope this advice is helpful for both managers and employees. Compensation is a weird topic – one of the weirdest at companies, but it need not be so awkward for people to bring up.