Negotiating a raise
How to know when you should ask for a raise
by Josh Doody
It’s common knowledge that the way to get big pay increases is to change jobs. But is that really your only option?
The answer depends on how your company handles raises and promotions. Some companies are very rigid when it comes to pay increases—merit increases are almost always in a well-defined range, and promotions come with predetermined raise amounts depending on how many pay grades you advance. Other companies are much more fluid and have fewer restrictions in place when it comes to employee pay.
So it’s possible you’ll need to change jobs to get a big raise, but it’s also possible you can get a pretty big raise by staying put and playing your cards right.
First, let’s set a baseline for raise sizing:
In my experience, these ranges are pretty accurate, but they may vary depending on which industry you’re in and other factors.
Most companies have an annual merit cycle, sometimes based on the calendar year, and sometimes based on the company’s fiscal year. The merit cycle often ends with performance reviews, a small merit increase, and maybe even a bonus. Most employees assume the best (or only) time to get a raise or promotion is during that short period at the end of the merit cycle.
In fact, this is often a bad time to hope for a big pay increase because the merit increases (including promotions) are often budgeted ahead of time, and that budget is shared by a team, department, or even the entire company. That means many people are vying for their piece of a shared budget. If you get a big raise, it means someone else will likely get a small raise, or no raise at all. This puts a lot of pressure on managers to try to distribute their piece of that pie evenly across their team members so that everyone gets something and is at least somewhat happy.
The result is that it’s often extremely difficult to get a big raise or paid promotion during the regular merit increase period.
So what can you do? Your best option may be an “off-cycle” raise or promotion. These are often handled as one-off events, which means they’re not necessarily pulled from a fixed pool of money, and they’re evaluated individually from a finance perspective.
A well-timed request for an off-cycle raise or promotion can often give you the best shot at a nice pay increase because you’re not competing with everyone else in the company for a fixed amount of money. Instead, you can make your case as an individual who has earned greater pay or a better title.
Off-cycle raises and promotions carry the added benefit that they usually don’t affect your on-cycle raise potential. So, you’ll usually still be eligible for whatever merit increase you would have already been eligible for during the regular merit increase period.
Learn more about how to ask for a raise in an email:
Still, there are some companies where everything is pre-determined, including raises and promotions. At these companies, it can be extremely difficult to get a big raise.
For example, I worked at a company where it was expressly written that a one-pay-grade promotion came with a 4% raise, and a two-pay-grade promotion came with a 7% raise. Of course, 7% isn’t “nothing”, but it’s not exactly a big payday, especially considering the big jump in title and responsibility.
At that company, I realized my potential earnings were more or less predetermined, and the only way I would get a big pay increase was to leave and go to another company. So that’s what I did.
I’ll leave you with a few specific things to help you determine if you can get a big raise without leaving your current job. You can usually ask your manager about these things, or you may find information in your company’s employee handbook or from coworkers who have recently been promoted.
This should help you determine if you can get a big raise by staying put, or if you may need to start looking elsewhere.
I'm Josh Doody, a professional salary negotiation coach who helps High Earners negotiate their job offers. On average, High Earners improve their first-year compensation by $47,273 with my help.
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