Negotiating Your Next Salary Increase
The past two years have been tough on the IT profession. In many ways, we’ve seen it take a few steps backward when it comes to the number of available jobs, job security and financial rewards. The economy is certainly to blame, yet as it slowly rebounds there are plenty of rewards for IT professionals and certainly plenty of new opportunities emerging.
This month’s column is a continuation from where we left off last month. Salary increases go hand in hand with performance reviews. In a tough economy, these can’t be taken for granted. This month’s column will prepare you for this delicate discussion with management and offer a broadened perspective when it comes to salary increases.
When was the last time you had a performance review that didn’t include a pay increase of some sort? Certainly not in my career before Sept. 11, 2001. Prior to that, we all had the expectation that a good review would result in a good pay increase. With the demand for IT workers at a four-year low, this certainly isn’t the case today. Many organizations have frozen wages over the past two years, leaving IT professionals seeking a pay increase with little alternative than to jump ship if their organization did not offer one.
Average Pay Increases
The average pay increase in the United States is about 3 percent to 4 percent and is often considered a cost-of-living increase. Anything above that would be considered a merit increase. The higher your performance rating, typically the higher the merit increase.
Preparing Your Case
Preparation is key, especially in difficult times. The components to preparing your case include:
- Knowing the whys.
- Tracking your performance.
- Knowing what you’re worth.
- Preparing yourself.
- Knowing the options.
Knowing the Whys
Before you can clearly articulate to your manager why he should increase your pay, you need to be clear yourself. Consider these questions:
- Why do you want more money?
- Why should your employer pay you a higher salary?
- What benefit can you provide in return for more money?
- What would be the consequences of not getting a pay raise?
- Would you be prepared to leave if you didn’t get the pay raise?
- Would the company care if you left, or would they be happy to let you go?
Your management will undoubtedly ask you to present your case for a salary increase. These are typical questions that will come up in that discussion. To better prepare, try writing out your answers in bullet form as a way of preparing concise and compelling responses.
Tracking Your Performance
You must also be prepared with hard facts on your performance. In last month’s column, we presented a tool to help you track your accomplishments throughout the year in order to easily recall accomplishments around review time. The Performance Tracker is a spreadsheet that allows you to track completed projects, the performance goals they map to and the business results or impact. You can find this tool at www.certmag.com/0803/techcareers.
In addition to the Performance Tracker, anecdotal feedback can also be very effective in supporting your salary increases. You should also track e-mail or any other communications that include:
- Customer praises.
- Peer kudos.
- Management commendations.
- Customer surveys or evaluations.
- Compliments from users in other departments for solving their problems.
- Empirical data that you can collect on your performance.
Knowing Your Worth
Often, we fail to keep our salaries competitive with what the market will bear. Knowing what your skills and competencies are worth on the open market can help you make a compelling case for salary equalization. Salary equalization is the process of aligning current salary with the going rate for the same job in the same industry in the same geographic area.
To get a fair perspective on your worth in the open market you should use several different salary calculators. Consider the following resources:
- CertMag.com’s Salary Calculator (www.certmag.com/salarycalculator)
- Dice.com Salary Calculator (www.dice.com)
- Salary.com (www.salary.com)
The same job may pay a different salary rate depending on the geographic region of the country (or world). There are different factors that influence this, including market saturation for your job role, cost of living and overall micro-economic conditions. To increase your credibility with your manager, it’s important that you focus your research on your own geographic area.
There are other influencers that may impact your increase. Certification Magazine’s IT Salary Survey demonstrated that different certifications warrant different wage increases. For example, the Certified Novell Engineer (CNE) and Microsoft Certified Systems Engineer (MCSE) certifications average higher first-year increases than other certifications.
In addition to this, your technical environment may play a factor in the size of your pay increase. For example, those working in a UNIX environment receive higher-than-average pay increases as do SAP, UNIX and Oracle developers.
Whenever salary impacts job satisfaction and you decide to approach your manager for an increase, you should be prepared in the case that you are turned down. Are you prepared to leave the company? Alternatively, are you prepared to go back to your job after suffering such a devastating blow to your ego?
If you feel underpaid, first consider whether you want a new job or simply more money. While a new job can be enticing, there are distinct advantages to remaining with your existing employer.
It may happen that the only way that you can get management’s attention is by going out and getting another job offering more money. You must then be prepared if the company decides it doesn’t want to match your new salary. This can be especially devastating if you truly enjoy working for your current organization.
Knowing the Options
Salary negotiations will go more quickly if you know your company’s salary grade policy and its merit increase policy. Most organizations have pay structures that offer a low, mid and high end for the job role and pay grade. Do you know where you stand? It may be a company’s policy to pay employees at the midpoint of their pay grade. It may be that the company can’t adjust your base pay but may be willing to give you a retention bonus.
You should also look for ways to shift pay grades. These can include title promotions that may be based on seniority or length of service with the company, for example, jumping from project manager to senior project manager. These may enable a pay increase without increasing responsibilities.
Figuring out how to beat your company’s salary increase policy is also important. Most companies have a set procedure for salary increases to make it easier for managers to conduct reviews. They link standard increases with job performance ratings. But just because the maximum annual increase for your company may be 6 percent doesn’t mean you can’t ask for more.
There are other creative salary adjustments that can be made to help your case. Certainly go after the maximum increase. But when this isn’t enough, you can ask for a lump-sum salary adjustment or one-time bonuses. A lump-sum salary adjustment is a permanent increase in your salary. Bonuses are typically one-time events and may need to be negotiated every year.
In addition, you may also go for semi-annual increases instead of a yearly increase. No one ever