I have spoken with several bosses of companies and startups, and I have made requests for a salary increase myself during my career and in this article, I will explain to you how most of the bosses think about it. 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 income is dramatically affected by every raise you get.
This is because your current base salary has an impact on your future earning potential. Most millennials (or young rookies) are underpaid in their jobs, but few are doing anything about it. You can do it.
If you want to get a raise, you have to get inside your boss’s mind. For that, you need to understand how bosses think. Here’s how to dramatically improve your chances of getting a raise.
1. Calculate your value in the labor market
As an employer, you always try to determine and track the market value of an employee.
Market value : This is what another company would be willing to pay you to do your job. Some jobs are in high demand. Unfortunately for companies, it is difficult to run an agency with several different functions because talent is in high demand.
And the employees know it. It’s not uncommon for employees to receive messages from recruiters offering higher salaries. If you’re lucky enough to have this happen to you, here’s the advice:
Tip 1 : Ask the recruiter very specifically what the salary range is for the position. Then print out her message and take it to your boss at the appropriate time. Ask for the upper limit 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 be too greedy and don’t ask for more than the range communicated by the recruiter.
Even if you are not contacted by a recruiter, you need to determine your market value. You need to calculate what other people in your job are earning in your city. You can do this easily by doing some simple research using the custom salary estimate tool like GlassDoor or the like.
After using the GlassDoor tool, you should research other wage data in your industry. A great way to find this information is to look at studies published by recruiting firms in your industry. In most industries, recruiting firms publish salary guides.
Tip 2: Print GlassDoor salary data and salary reports you find for your industry. Save them for your meeting with your boss. Explain that you used the relevant data to calculate your market value and that you want an increase. Ask for a raise that puts you at least in the 50th percentile of the salary ranges for your job in your city. But don’t be too greedy and don’t ask for a raise of more than 10%. With one exception, if the “value of your business” is remarkably high according to your calculations below.
2. Calculate the value you bring to your business
Value to the business: The second type of value you need to calculate is your value to your business. A lot of bosses and senior executives do the same type of math I’m going to show you now. It’s a little more difficult than calculating your market value, but here’s how.
Try to calculate how much it would cost you to replace yourself. The cost of hiring a new employee is really high in most industries – especially for employees. Depending on your job, your replacement can cost between 2,000 and 25,000 euros. By doing some simple research based on your role and salary, you can roughly calculate what it would cost to replace you.
Tip 3: After calculating what it would cost to replace you, you should record this number, but do NOT give it to your boss. If an employee said, “I want a raise because it would cost € 12,500 to replace me,” any boss would not be happy, because that sounds like blackmail.
BUT, your boss knows it would be expensive to replace you. So use this to your advantage when asking for a raise. It is worth giving yourself a raise just according to the cost to find your replacement. Any boss will give you a raise of more than $ 3,000 if the search for your replacement costs $ 10,000.
The second way to calculate: How much money does your business make from your work? Or how much money have you made your business?
If you work in a law firm, advertising agency, or other field where you have a personal or mixed hourly rate that your business charges for your time, it should be easy. It should also be easy if you are in sales and know how much business you have generated and closed.
If you work in a firm as a consultant, simply multiply your rate charged to the client (ex. 150 €) x the number of hours you work per week (40) = 6,000 € x 50 weeks of work per year = € 300,000. This is the amount your business charges customers for your time. If you earn a salary of 50,000 euros, your business saves about 6 times your time. This is a significant margin and your boss will likely give you a raise when the margin on your time is at least 3-4 times greater.
Tip 4 : If you are a salesperson and earn less than 15-20% commission on your sales, you should ask for a raise. I have personally encountered far too many salespeople who only earn a 5-10% commission. This means that your boss and your business are getting a 90-95% return on your sales. And the vast majority of that return is your business – which means they wouldn’t have that money if you weren’t there. If you’re 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 a commission of at least 15%.
3. Apply for the right amount to increase your chances of getting the raise
Very few bosses will give you more than a 5-10% raise, so you’re less likely to get a raise if you ask for more. I personally think 10% is the ideal amount to ask for, unless you find you are grossly underpaid based on your study of the market and the value of the business. If you find out that you are seriously underpaid (by more than 20% or more), then you can rely on your research and request a raise that allows you to at least touch the market rate for your position.
Tip 5 : If you get paid well below market value, you could realistically achieve a market increase of over 20% just by asking. That’s an incredibly high ROI for just doing some research and asking your boss for a raise.
4. Find the perfect time to ask for a raise
Many employees do not know when to ask for a raise. Or they do it at the wrong time. The moment you ask for it can have a huge impact on whether your boss accepts or refuses.
A Tuesday at 4 p.m. when your boss is stressed isn’t a good time. A Friday afternoon before a holiday is not a good time. Most Monday mornings aren’t either, because your boss doesn’t like Monday mornings. So when is the right time?
The three best times of the year to request a raise are the annual appraisal interview (schedule it on a Friday), the end of your company’s fiscal year if the company’s financial results have been relatively good (you can check these two points by asking HR), or right after an important life event (like the arrival of a baby!). Here’s why :
During your annual interview, your boss is already thinking about you and your worth. If you come up with a study of your market value, you are much more likely to get a bigger raise. By the end of your fiscal year, your boss is already thinking about next year, and if the business’s performance has been at least fair to excellent, you are more likely to get a yes.
Finally, bosses are people too and some of them will have a soft spot for you when you go through an important event in your life (especially when you are starting a family). If you are going to have a baby, talk to your boss. Say you want to get a raise so you can start planning for your child’s education and want to make sure you can cover the extra expenses associated with the birth of a child.
Tip 6 : Research shows that the best time to ask for a raise is Friday morning (after your boss has had his coffee, of course!). So Friday morning around 10 or 11 is a safe bet. The reason is that your boss is like you and is excited about the weekend. Psychological research also shows that people tend to be more generous in the morning before noon.
5. Ask for your raise
I was chatting the other day with Sébastien, a friend who runs a marketing acquisition agency. I am transcribing more or less what he said to me:
“I have directly managed many employees to start my business. And you know what ? Of all the people I have managed, how many have asked for a raise? Just one. Only one of my employees asked me for a raise. I still can’t believe it. Do you want to know the truth? I would be prepared to pay a lot of them more if they asked. I want them to be happy and to stay in my business. They are of great value to me. Most employees don’t know that they are likely to have the upper hand and that they are worth more to their boss than they realize. ”
With the right data at the right time, you’re much more likely to get a raise. Hope this will work for you. Let me know if and how you got a raise in the comments below. Good luck !