According to Salary.com “Only 37% of people always negotiate their salaries—while an astonishing 18% never do. Even worse, 44% of respondents claim to have never brought up the subject of a raise during their performance reviews.”
It’s safe to say that most people do not negotiate their salaries and the impact this can have on your lifetime earnings is massive.
20, 30, or 40 years ago negotiating was not that common. Everyone just believes that they were lucky to have these good paying jobs and a good company. The companies themselves had all the control. But today is different, people are starting to have more control. You don’t owe it to your employer to get paid less than what you are worth. If anything, your employer must pay you what you are worth if they want to keep you in this competitive market. Great employees stay because they are treated well and pay is a huge part. You no longer need to just accept what you are given, you have the opportunity to negotiate and fight what you are worth.
Let’s look at normal pay vs asking for a raise one time vs a raise everytime:
Note: No raise still goes up the standard 35 a year. The 1 time raise is asking for a $10,000 raise year 1 then doing the standard. The yearly raise is asking for $10,000 each year.
Year 1 it may look like getting a raise is only a slight difference, but if you look beyond that it is very impactful. Asking for a raise just 1 time, helped person 2 make $54,000 more over a 5 year time frame. Then asking for a raise every year made a $116,500 difference. And this doesn’t even take into account the 401(k) match increase or any other benefits that could come from the raises.
Just like everything else in life, the reason these raises become so important is because of compounding. All the extra money you receive this year will be more money you receive each of the following years that can be built upon.
I have found that most people neglect negotiating their salary because they do not like confrontation. And I get that, the conversation won’t be fun. But you deserve to be paid what you are worth and if you don’t bring it up, no one will. You have to stand up for yourself.
Most people know that at the end of the year for your business, pretty much everywhere has employee reviews. This is where you can find out a lot about how you did, your value, etc. And at this time, the company knows how much money they have to spend on payroll, but the problem is that at this time they have allocated a large portion of this money already. So it may be advantageous to have this conversation 1-3 months before your annual review. Put it in their minds early so they can make sure they have funds available to give you a raise.
I get it, asking is not easy, it requires confrontation, but it’s going to be okay. Your boss has been in your shoes before, & they aren’t going to fire you because you stand up for yourself and have a case for why you should get a raise. Remember, the worst they can say is NO.
The best way to negotiate is by assessing the market. Go look at what your role is being paid at small companies and large companies in your area and then provide this data to your employer.
Show them real data.This can help build your case and show what you should be paid. Then on top of that back this up with the work you do and the value you provide. It would be helpful to have a list of your accomplishments and what impact that had on your company to show your worth!
Another good option is to go out and look at other jobs on the market. Go through the interview process, get offers, and come back and show your boss what those offers are. I wouldn’t advise bringing these offers and saying you are going to leave or else. But you could bring them and say “I want to stay, but this is what the market shows I am worth. Could you guys try and get close to matching this offer? I love working here.” If they don’t, their loss. You deserve to be paid fairly. Also, know that it is way cheaper for them to pay you a raise then to hire and train someone brand new, this should be in your mind as a confidence booster.
At the end of the day this is all about being prepared, coming in with data, presenting your case, and knowing your worth. Most people do not take the time to negotiate. But you must! Employers want to pay you the least they can to keep you there.
The last thing I will add is you should also negotiate when you take a new job as well! Don’t just accept it the second you get it. This is a great time to also negotiate, they have proven they want you there.
I hope this helps you negotiate your salary and benefits in the future!
Financial Advisor