5 secrets to getting a raise at work
I have been the boss of many employees in my career and in this post I'll share exactly how most bosses think about employee compensation, so you can use it to your advantage.
There is nothing more important to securing your financial future than getting paid what you are worth and your lifetime earnings are significantly impacted by every raise that you get. This is because your future earning potential is impacted by your base salary today. Most Millennials are underpaid in their roles, but few do anything about it. You can.
If you want to get a raise you need to hack your boss. To hack your boss you need to understand how bosses think. Here's how to significantly improve your chance of getting a raise. For another perspective check out the Millennial Money podcast on how to maximize your value.
1. FIRST, CALCULATE YOUR MARKET VALUE
As an employer I am always trying to determine and keep track of an employees market value.
Market Value: This is what another company would be willing to pay you to do your job. Some jobs are in really high demand. Unfortunately for me running a digital marketing agency is tough because the talent is in really high demand. And they know it. It's not uncommon for my employees to get messages from recruiters offering higher pay. If you are lucky enough for this to happen to you here's my advice:
HACK 1: Ask the recruiter very specifically what the salary range is for the position. Then print out their message and take it to your boss at the right time. Ask for the upper bound of the salary range. It will work 90% of the time. Your boss probably wants to keep you and will give you a raise to stay. But don't get greedy and ask for anymore than the range the recruiter shared.
Even if you don't get contacted by a recruiter then you still need to determine your market value. You need to calculate what other people in your position in your city make. You can do this easily by doing some simple researching using the GlassDoor personalized salary estimate tool.
After using the GlassDoor tool, then you need to go searching for other data on salaries in your industry. A great way to find this information is by looking a research put out by recruiting firms in your industry. Most industries have recruiting firms that publish salary guides.
Here is a good one for advertising, creative, and digital marketing salaries is published by the Creative Group and free to download. It also includes a handy guide to calculate salaries specifically in your city based on a multiplier. (ex. if you live in New York multiply the salaries by 1.7x to determine the average in your city). Just search for [your industry] salary guides in Google and boom – there probably will be a report.
HACK 2: Print out the salary data from GlassDoor and the salary reports that you find for your industry. Save them for when you meet with your boss. Explain that you have used relevant date to calculate your market value and would like a raise. Ask for a raise that puts you at least in the 50th percentile of salary ranges for your position in your city. But don't get greedy and don't ask for more than a 10% raise. With one exception, if your "company value" is remarkably high based on your calculations below.
2. SECOND, CALCULATE YOUR VALUE TO YOUR COMPANY
Company Value: The second type of value you need to calculate is your value to your company. A lot of bosses and upper management do similar types of calculations that I am going to show you now. This is a little more difficult than calculating your market value, but here's how to do it.
Try and calculate how much it would cost to replace you. The cost of hiring a new employee is really high in most industries – especially salaried employees. Depending on your job it can cost between $2,000 – $25,000+ to replace you. Doing some simple research based on your role and salary (good article on the cost of losing an employee here) and you can roughly calculate what it would cost to replace you.
HACK 3: After you have calculated what it would cost to replace you, then you need to save that number, but DON'T share this with your boss. If one of my employees told me – "I want a raise because it would cost $12,500 to replace me," I wouldn't be happy. BUT, your boss knows it would cost a lot to replace you. So use this to your advantage when asking for a raise. It's worth giving you a raise just based on the cost to find your replacement. Any boss would give you a $3,000+ raise if it would cost $10,000 to find your replacement.
The second way to calculate: How much money is your company making off of your work? Or how much money have you made your company?
If you work in a law firm, ad agency, or other field where you have a personal or blended hourly rate your company charges for your time then this should be easy. It should also be easy if you are in sales and know how much business you have generated and closed.
HACK 4: If you are in a sales role and have less than a 15%-20% commission on your sales then you should ask for a raise. I have personally met way too many sales people who only get 5-10% commission. That means your boss and your company are getting a 90-95% return on your sales. And a vast majority of that is up-side of your company – meaning they wouldn't have that money if you weren't there. If you are a good salesperson most bosses are willing to give you a higher commission (at the risk of losing ALL of your sales if you leave). I strongly recommend that you negotiate for at least at 15% commission.
If you work in a blended rate environment, then just multiply your blended rate (ex. $150) x number of hours you work in a week (40) = $6,000 x 50 working weeks in a year = $300,000. This is how much money your company is billing clients for your time. If you make a $50,000 salary then your company is getting approximately 6x on your time. That's a big margin and your boss will likely give you a raise when the margin on your time is at least 3-4x.
3. THIRD, ASKING FOR THE RIGHT RAISE AMOUNT WILL IMPROVE YOUR ODDS
Very few bosses are going to give you more than a 5-10% raise, so you are less likely to get any raise at all if you go in asking for more. I personally believe that 10% is the perfect amount to ask for, unless you are find that you are being wildly underpaid based on your market and company value research. If you do find that you are really underpaid (to the tune of 20%+ or more) then you can go in with your research and ask to be for a raise that pays you at least the market rate for your position. If one of my employees did this (but couldn't because they are all getting paid at least market rates), then I would strongly consider bumping them up.
HACK 5: If you are getting paid significantly under your market value then you realistically could get a raise of 20%+ to the market level just by asking. That's an incredibly high ROI for for just doing a bit of research and asking your boss for a raise.
4. FOURTH, FIND THE PERFECT TIME TO ASK FOR A RAISE
A lot of employees don't know when to ask for a raise. Or they ask at the wrong time. When you ask can have a huge impact on whether or not your boss says yes.
On a random Tuesday at 4 pm when your boss is stressed out is not a good time. On a Friday afternoon before a Holiday is not a good time. Most Monday morning are also not good, because your boss doesn't like Monday mornings. So when is a good time?
HACK 6: Research shows that the best time to ask for a raise is Friday morning (after your boss has had their coffee of course!). So Friday morning around 10 or 11 am is a safe bet. The reason is because your boss is like you and is excited for the weekend. Psychology research also shows that people tend to be more generous in the morning before noon.
The three best times of year to ask for a raise are during your annual performance review (schedule it on a Friday), at the end of your company's fiscal year as long as company financial performance has been relative strong (you can figure both of these out by asking HR), or right after a big life event (like having a baby!). Here's why:
During your annual performance review your boss is already thinking about you and your worth. If you come with your market value research you are significantly more likely to get a higher raise. At the end of your fiscal year your boss is thinking about next year already and as long as company performance was at least okay to great, then you are more likely to get a yes. Finally, bosses are people too and some will have a soft spot for you when you are going through a big life event (especially starting a family). If you are having a baby then bring this to the table when you sit down with your boss. Say that you want to get a raise so you can start planning for your child's college fund and want to make sure that you can cover the extra expenses of having a child.
5. FIFTH, THEN JUST ASK FOR A RAISE
I have directly managed many employees in my career. But you know what? Of all the people I have managed do you know how many of them have asked me for a raise? One. Only one of my employees has ever asked me for a raise. I still can't believe this.
Do you want to know a secret? I would be willing to pay many of them more money if they just asked for it. I want them to be happy and stay at my company. They are worth a lot to me. Most employees don't know they probably have the upper hand and are more valuable to their boss than they think.
With the right data at the right time you are a lot more likely to get a raise. I hope it works for you. Let me know if and how your got a raise in the comments below. Best of luck!
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