Inflation is at a record high, the highest it’s been since 1981. The last several months have been daunting; inflation soared, the price of goods skyrocketed, and your paycheck doesn’t go as far as it used to. The consumer price index (CPI) rose 8.5% in the last 12 months, and economists still predict that inflation will continue to climb with the looming potential for a U.S. recession. On top of this, the effect of U.S. inflation has global impacts.
You’re not alone if you’ve questioned how you will afford everything. But fear not; it may be the perfect time to ask your boss for a raise. With the labor shortages of 2021 and the Great Resignation continuing to echo into this year, your leveraging power may be higher than you expect.
But how do you go about it?
Asking for a raise can feel awkward and intimidating. To ease the burden, we’ve prepared a simple guide to help you plan and prepare to ask for a raise.
Factor in a Cost-of-Living Adjustment
Discussing a cost-of-living adjustment (COLA) with your boss can be a straightforward route to bridging the topic of a raise. The cost of essentials like food, electricity, and gas have all increased, leaving little leftover for discretionary spending or saving. It is only reasonable that employers factor in the rise of costs with employees’ salaries. The Bureau of Labor Statistics records in the 12-month period ending in June 2022 that the wages and salaries for civilian workers increased by 5.3 percent and 5.7 percent for private industry workers. Although states and the federal government do not require employers to give a cost-of-living adjustment, referencing and using COLA and the Consumer Price Index (CPI) as bargaining tools in negotiating a higher salary can be beneficial and convincing. If your company does not offer you a cost-of-living adjustment, it may be time to consider looking for a new company that offers competitive salaries.
Do Your Research
Before approaching your boss, research what a competitive salary is for your job role. You can use websites like Glassdoor and PayScale to measure your current salary against your job role or similar titles from the same industry. When using these tools, factor in your geographic area and years of experience to ensure that the salary data is correct. Certain geographic regions like New York or San Francisco may have a far higher salary for your role than your metropolitan area, so using the correct region will safeguard against sharing inaccurate information with your boss.
Show Your Value
Reflect on your achievements over the last year. Prepare a presentation that compiles your accomplishments and illustrates the value you have brought to your team and the organization. If you have access to the dollar amount of revenue that your work has brought to the company, include it to help visualize your ROI as an employee. Presenting this document when you meet with your boss will be beneficial for several reasons:
- Establishing your worth as an employee
- Keeping the meeting and salary negotiation structured
- Allowing you to drive the discussion
Determine What You Want
Senior Lecturer at UC Berkeley Haas School of Business, Holly Schroth, suggests identifying your BATNA and setting your resistance point as you prepare for your salary negotiation. BATNA is the “best alternative to a negotiated agreement,” or what happens if you don’t reach agreement. On the other hand, your resistance point is your bottom line, which helps you understand when to walk away from the negotiation.
According to Schroth, “you should always set this prior to negotiating when you are in a rational state of mind. Salary negotiations can become emotional. The resistance point helps prevent you from accepting an offer that you may later regret. Do not change your resistance point at the table. If you think you set it in error, step away from the table and conduct more research before adjusting it”. Determining your BATNA and resistance point in advance will enable you to recognize your end goal and avoid conceding to a subpar raise.
Don’t Spring it On Your Boss
Your manager will presumably not appreciate you asking for a raise out of the blue. Plan a time to meet with your manager to discuss a raise – this will create a favorable discussion for both parties. You can approach the situation in person or via email (depending on your personal preference). An example of asking for a meeting to discuss a raise with your boss is the below email:
I would love to schedule some time on your calendar to discuss my salary. Given my strong performance and the growing inflation, I believe a raise is applicable. I have loved working on the team and everything we have achieved thus far, and I am really looking forward to my future with the company. When would work for you to meet and discuss this?
Practice Your Spiel Beforehand
Practice is crucial! Knowing what you want to say and potential responses to your boss will empower you to feel confident during the actual negotiation. As you rehearse, outline different scenarios that could happen and write down different reactions to each.
Things to Consider for the Salary Negotiation
Start Slightly Higher than Your Salary Goal
Your boss will likely negotiate your initial salary request down so factor in about an additional 5% from your desired raise to leave room for negotiation.
Mention Non-Cash Benefits as an Alternative
If your boss does not meet your desired salary raise, you can communicate an interest in receiving other cash benefits to offset the dollar difference. Examples of non-cash benefits are:
- Extra paid time off (PTO) or sick days
- Health benefits (insurance plans for medical/dental/vision)
- Retirement benefits (401K plans, pension plans, or stock options)
- Additional days of WFH (which can help save on gas money)
- Other Options
- Company purchasing you a new laptop or cell phone (for personal or business use)
- Transportation allowance
- Professional development allowance
- Childcare services or allowance for childcare
After You Ask
It is probable that your boss will request time to assess your request. Be prepared to not receive an answer immediately.
It is possible for your boss to deny your salary increase request. If that does happen, ask your manager why the request was denied and what you can do in the future. Remember, your request may have been rejected for reasons unrelated to you. After receiving a rejection, you have the opportunity to assess where you stand. It could be an opportunity to rethink your career path and job position.
If you receive a yes, show your appreciation and continue to work sharp!