I think there are three big points that sometimes people miss when they haven’t been managers themselves. Part of your manager’s job is to keep you employed at the minimum salary that it will take to keep you employed. This is the biggest factor that all managers will consider when negotiating raises with their employees.
Negotiating a Raise with a Manger
This is just reality. Companies overall are driven by profit, and for a lot of companies it’s their operating costs that can really drive that profit. Not being able to keep salaries in check can become a huge problem in industries that are constrained in their revenue making ability. As a manager, you are expected to represent the interests of the company, and for better or worse, the interest of most companies is to generate profit for either their owners or shareholders/investors, not to share all profit with the workforce.
This is important to keep in mind because it can help you clear up the dynamic between where you, your boss and the company stand. While your boss may like you, appreciate you as an employee, and want to keep you around, he/she will know that there is a limit as to what they can do to keep you, because there is an expectation that they are putting the company’s interests above theirs.
Salary Raise Negotiations
The only way to be able to put legitimate pressure on an employer is by being willing to take a better offer, and that starts with having one. When I say “offer in your back pocket”, I mean that you and only you knows that you have that offer. The goal is to be able to walk into a negotiation with a clear idea in your head of what it will take to keep you (say, 10% raise), and to be willing and able to walk away if you don’t get that. The only way to be able to walk away on the spot, and as a result to negotiate with the appropriate level of conviction, is to have an existing offer to literally walk away.
How Much Should Employees Get Paid?
And part of that philosophy is valid, i.e., you should be doing more than just giving more money to your employees, and some of your ability to retain them should hinge on that. Put a different way: if, as a manager, the only way you can retain people is by paying them more money, you are probably a really bad person to work for. For most people with good managers, one of the big negatives of taking another job is knowing that there is a chance that your next manager won’t be any good.
Managers have to invest a good amount of time, goodwill and political capital to get an employee a raise. Unless you are the CEO, arguing for an employee to get a raise or promotion (especially off-schedule ones) takes valuable resources for a manager. It’s not like you can go into your boss’ office and just get one done on the spot. Most companies are going to require multiple layers of red tape to get there, and in general, will require you spending some of your probably limited “goodwill” budget on it. Thinking of it a different way, for every raise that you are able to secure for one of your direct reports, there’s another one that you won’t be able to get.
When do Managers Give Raises?
Because of that, managers will tend to a) stick to doing promotions and raises during performance evaluation periods when possible, b) only push above and beyond what HR/upper management wants to do if they feel they need to in order to keep some of their top performers around.
That means that if you are someone who wants a 3% raise off-schedule, it’s not going to happen. Not because you aren’t worth the 3%, and not because 3% is a lot of money to the company, but because the level of effort required to get you that 3% raise is not proportional to the probability that you will leave if you do not get a 3% raise.
How to Increase Your Chance of a Bigger Raise?
If you want to increase your chances of getting those bigger raises, the best thing you can do (other than kicking ass at your job), is to figure out a way to plant the idea in your boss’ head that you do expect a significant raise/promotion when the time comes. How you do it depends on you, your industry, your boss, etc., but there is normally a way to bring up the fact that you are doing a great job, and you want to understand what is the plan for compensating that.
Since they require great performance, end of big projects, intermediate performance reviews, and any conversation where you doing your job well is the topic of conversation are great places to bring this up.
It may sound like “I’m glad to hear that you appreciate my work. I wanted you to know that I put a lot of time and dedication into my work to ensure that I give you the best possible results. With that in mind, I wanted to know what I need to do to make sure that I am in position to get promoted”
You want to bring this up as something that you put on yourself (“what can I do?”), but really use it as an opening for your boss to either tell you “I think you’re doing a great job and this is when I think we can talk promotion” or “I don’t think you’re ready yet and this is why”.
The answer really doesn’t matter as much as the seed that you have planted. The seed that you have planted tells your boss “hey, this person is concerned about their compensation”. The reason it is important is because it gives your manager time to plan out their strategy for doing whatever it is they need to do to give you a raise IF they think you deserve on AND if they think you are a risk to leave if you don’t get one. And that gives you the best possible odds.
How to get a raise if you are underpaid?
To those asking “I am underpaid, have been for a while; how do I get a raise?” Sadly, there is a very decent chance that your only way to get a raise is to leave. Organizations that underpay, tend to do so knowingly. If you challenge that, you will most likely get a spiel about how lucky you should consider yourself to work here, or get a carrot dangled in your face.
As I mentioned earlier, your best bet is to go get another offer for two reasons: Firstly, you need an exit plan. Secondly, you need to know what your market value is. Once you have that, it’s a lot easier to make that decision.
I think that a lot of people stick to a job because they take on the mentality of “how do I get my current employer to pay me what I’m worth?”, which sometimes is a losing proposition. What you should be asking instead is “how do I maximize my long term income?”, and that will be a combination of taking the right short term moves and positioning yourself for bigger long term moves.
Mangers Know that they are Underpaying
Often times, a manager knows they are underpaying someone they want to keep, but have no recourse to keep them. When you become a manager, you will one day run into an employee who you know you cannot keep. Period. They are just too good, rising too fast and have too marketable of a skillset for your company to be able to handle them correctly. In part because most companies are just not willing to promote people faster than a certain cadence (normally 1.5-2 years), but more importantly because people that rise too fast will always be seen through the lens of “is that sustainable? Can I believe that small of a sample set?”
If you have an employee that is able to make strides in his first 3 months at the job and is taking care of things that even people who have been there for 3 years can’t do, would you promote him after 3 months?
Probably not. You’d probably wait and see if he can keep it up for at least a year. Let’s say this person is a true rockstar; at the end of that year, this person has now exceeded expectations again, and though they were ready for a promotion to Senior X in month 3, maybe they are now halfway to being qualified for being Manager. Even if you are well ahead of the curve and promote them after a year, you have now found yourself behind the growth curve of that employee. And at that point, it’s impossible to recover, because that employee will likely continue to grow faster than you promote him.
So what happens? Sooner or later, another company comes along which has a) an opening, b) the budget, c) enough desperation that they are willing to hire someone slightly above their fighting weight just because they see potential. And then you find yourself as a manager trying to counteroffer a 35% raise and a two-level promotion. And you know at that point that a) you can’t do anything about it now, b) you probably never stood a chance, c) even if you do fight this one off, you will have to fight it again soon enough.
What to do if you are not getting promoted?
If you are one of those employees, the ones that rise faster than they are promoted, I have three pieces of advice for you:
- Don’t take it personally You are not getting promoted because you’re breaking some of the unspoken rules of HR and you just don’t fit their mold. Odds are your manager wants to keep you, but they know they can’t, and that will probably come across as not trying. Rest assured that if you are that good, they know, you know, the company knows, but they also know that they have a very limited number of options that won’t create political nuclear war from developing inside the organization.
- Move often. If you are truly one of these people, you will suffer if you stay at a job more than a couple of years. The only key is that you can’t just chase money – you have to chase better titles, situations and companies. No one will judge you for leaving a company after two years if your move was warranted by a big promotion, or moving to a bigger player in the industry, or just landing in a better group with a better reputation. People will judge your resume if they see you take parallel jobs every other year, because they will know that you are just chasing money.
- Avoid under all circumstances to burn bridges. The same person that thought you were so good they couldn’t keep you around may be the first person to come calling when they think they have an opportunity that does match your resume, especially when red tape is not as much of an issue because you are being hired from the outside. Leave on good terms, be polite, try to help on your way out. Every good impression you make while leaving could become the difference maker in your ability to reconnect with an important “in” for a future job opportunity.