How to ask for a pay rise in a tough economic climate

Asking for a pay rise in a tough economic climate can feel like a lost cause. But savvy workers are thinking outside the box to create a win-win for employer and employee. Here are their top tips.

Asking for a pay rise in a tough economic climate can feel like a lost cause but savvy workers are taking a pragmatic approach and thinking outside the box to create a win-win for employer and employee.

Hays’ latest Salary Guide found although a pay rise was the number one priority for more than half of workers and 90 per cent of employers planned to oblige, the value of their pay bump was unlikely to meet expectations this financial year.

Two thirds of employers (65 per cent) intended to offer an increase of 3 per cent or less, barely covering inflation in the general cost of living.

Meanwhile, just one in 20 employers (4 per cent) planned to offer 6 per cent or more - down from one in 10 employers (9 per cent) last year.

Stillwell Management Consultants head of organisational psychology consulting Alexandra Rosser said there had not been widespread wage growth for a few years.

“One of the factors would be a bit of political instability – until those sorts of things are resolved, organisations won’t feel confident making projections so things are put on hold,” she said.

“Overheads have also become more expensive so if electricity, water, gas and rent are increasing, as they have been, something has got to give in terms of your overall cost portfolio.”

Is it time you ask for more money? Picture: iStock

IT’S ALL ABOUT TIMING

Approach your manager at a time that is suitable from a company perspective and from a personal perspective.

“If they are letting people go in your team or area, the timing is not going to be good,” Mrs Rosser said.

“It’s not to say you can’t do it but you need to really think through your pitch and approach.”

Hays managing director for Victoria, Tasmania and ACT Tim James recommended giving your manager warning that you want to talk about salary.

“You can’t just brush against someone in the hall and say ‘hey, can I grab you for five minutes and have a conversation about my career and salary?’,” he said.

“Do it in a way that is appropriate and a way that is going to make sure the topic is considered in the way you want it to be.

“That way, whatever the outcome, there will be some sort of positivity.

“It can’t be an ambush.”

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PUT YOURSELF IN YOUR BOSS’ SHOES

Mrs Rosser said it was important to acknowledge any organisational constraints before making a request for more money to avoid looking insensitive.

Mr James advised asking yourself ‘What are the things that might mean it can’t happen’ so you can see through the eyes of the employer and be ready to respond accordingly.

“Have a mature conversation through the lens of both parties,” he said.

The latest Hays’ Salary Guide revealed the industries in which employers were most likely to offer a generous pay rises of 6 per cent or more in the coming financial year were advertising and media (15 per cent of employers planned to offer this), IT and telecommunications (11 per cent), construction, property and engineering (7 per cent) and professional services (6 per cent).

Ensuring you are prepared before a negotiation can make all the difference. Picture: iStock

KNOW YOUR WORTH

Do your research to find out what other people are earning in a similar role to yours.

Handy resources for this sort of information include SEEK, the Hays’ Salary Guide and the Federal Government’s Job Outlook.

Mrs Rosser advised workers to make sure they were earning at least the market’s going rate.

If they wanted more than that, they would need to think hard about the case they planned to put forward.

GO ABOVE AND BEYOND

Particularly if you want to ask for more than the going rate, you need to show you are delivering beyond the expectations set when you accepted the role or at your last review.

Mrs Rosser advised thinking about any additional projects you have taken on, if you are acting in another position or if you have organically taken on a leadership position.

“What will really make your argument strong is if you can demonstrate in measurable terms the value you have brought in – cutting costs or increasing revenue or the number of new clients you have brought in,” she said.

Mr James said soft skills should not be overlooked, either, as more employers saw them as at least equally as important as technical skills.

He said the “skill of learning” was one soft skill that was increasingly valued in progressive companies.

“Employees and applicants that have the aptitude and ambition to learn are attractive to employers because that means future-proofing their organisation,” he said.

Show your boss why you are worth the extra money. Picture: iStock

THINK OUTSIDE THE BOX

If you have asked for a raise but there is no money in the budget, that does not have to be the end of the conversation.

Mr James and Mrs Rosser both said there were increasing instances of non-financial benefits being offered in lieu of cash.

In your next negotiation, consider asking for:

THE ABILITY TO SALARY SACRIFICE - this would allow you to pay for items such as cars and computers out of your pre-tax income, reducing your taxable income and ultimately meaning more money in your pocket.

A COMPRESSED WORK WEEK – create a long weekend by spreading your weekly hours over fewer days. For example, switch from five eight-hour days to four 10-hour days.

TRAINING/DEVELOPMENT – this could be anything from paid leave to attend a professional workshop through to a fully-sponsored university degree

EXTRA LEAVE – this could be a day off work on your birthday or on religious holidays, or just a bonus day each month or quarter. SEEK’s Laws of Attraction data shows additional leave is the most desired “additional benefit” in Australia, with 24 per cent of workers saying they look for this when choosing an employer.

GREATER FLEXIBILITY – you could ask for the freedom to work from home one day a week or to start and finish earlier to allow for school pick up duties or afternoon hobbies.

VOLUNTEER LEAVE – this is becoming increasingly popular, according to Mrs Rosser. You can negotiate to dedicate time out of your work day to a cause close to your heart.

COMPANY CAR/PHONE/LAPTOP – it is a way to save money without a direct pay rise.

If there is no budget for a pay rise, workers can negotiate to work some days from home. Picture: iStock

PREPARE FOR ALL OUTCOMES

If your request is granted, be ready to suggest a fair increase.

Mrs Rosser advised being aware of anchoring bias, in which the person who puts forward the first number influences the other person’s amount.

On the flip side, if your request is knocked back, she recommended taking the response with grace.

Generally, it was not a good idea to quit your job on the spot if a pay rise was not granted.

“If you have got specialist skills, your performance is excellent, and there is a supply and demand differential in your area and in your role, the possibility for (making more money elsewhere) is higher,” she said.

“But generally speaking across most industries, it’s pretty similar.

“I would only recommend that if your skill set is really in demand or you are being drastically underpaid and being taken for granted.”

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Originally published as How to ask for a pay rise in a tough economic climate