Take the guesswork out of asking for a raise!
Asking for a raise is one of the most stressful events in the workplace. This is a guide to help you know exactly how much you are worth, so you can ask for the raise you want and have the numbers to back you up!
Overview: Think like you own the company
Take a new approach to analyzing your worth
The single most important thing to remember when asking for a raise is to think
like you own the company. If you owned the company, what would you base raises on? A common misconception people have is that if they have been at a company for X years then they deserve a raise. This is the incorrect way to look at getting a raise!
As an employee, your job is to help the company do well. This means that you are there to create as much value as possible for the owners.
You don't Deserve a job. You have to make it worth the owner's while to keep you employed. If the owner doesn't feel that you are providing enough value to the company, you should be worried about keeping your job instead of getting a raise.
For this method I am outlining to work, you have to throw out the following thoughts, they are destructive and won't help you get a raise productively, which is our goal.
Instead, we are going to look at the following factors, in order to send you into your raise meeting in a position of strength:
As an employee, your job is to help the company do well. This means that you are there to create as much value as possible for the owners.
You don't Deserve a job. You have to make it worth the owner's while to keep you employed. If the owner doesn't feel that you are providing enough value to the company, you should be worried about keeping your job instead of getting a raise.
For this method I am outlining to work, you have to throw out the following thoughts, they are destructive and won't help you get a raise productively, which is our goal.
- " I should get a raise because I've 'put in my time' "
- " I think (name of co-worker) makes more than me but I work harder "
- " I need to have a raise so I can afford to buy X "
Instead, we are going to look at the following factors, in order to send you into your raise meeting in a position of strength:
- How much value you provide the company
- How much are peers in your industry compensated (Total Compensation, not just salary!)
- Your ' Personal Margin' . For every dollar the company puts into you, how much have they gotten out?
- Revenue streams you generate or maintain. Are they growing? Shrinking? Are new streams being brought online?
Videos on getting a raise
Here's a sampling of videos on getting a raise from YouTube.
automatically generated by YouTube"
Step One: Determine your 'hard' value to the company
If you don't know if you make the company better you can't ask for more money!
Step One: Determine a 'hard' value that you are worth to the company.Sit down and make a list with 4 columns titled the following:
- Revenue Generated
- Costs Reduced
- Liability Protected Against
- Dollar Value
For the next week, keep track of all the work you do. All of the work you do should be able to be filed under one of the first 3 categories. Keep track of any numbers you can! Revenue billed, dollars saved, new revenue generated etc. and include it next to the event in the 'Dollar Value' column. This data will allow you to eventually determine your actual worth in the company!
An easy way to do this is to ask yourself a few simple questions when you perform a function at work.
- "I just ___________ . Is this work the company will bill for and generate revenue from?" If so, file it under your Revenue Generated Column. If you know the amount billed, include it. Otherwise, guesstimate.
- "I just ___________ . Does this reduce the amount of money it costs the company to operate?" If you do something to reduce costs or lower spending, put it in the Costs Reduced column and write the amount you saved the company in the Dollar Value column.
- "I just __________. Does this help the company stay in compliance with a company policy, law, or regulation?" Put these in the Liability Reduced column. If you have a dollar value for this, great! If not, don't worry, your work still has a value. In Part 2 of the series, we will go over how to calculate a dollar value for this column.
Do What you Love
If you are not happy in your Job a Raise won't make it any better!
Don't get a raise for happiness, find a job that makes you happy then earn as much as you can doing it!
48 Days to the Work You Love
Dave Ramsey loves this book. Find out what you want to do that you love.
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Get a Raise in 7 Days: 10 Salary Savvy Steps to Success
Looking for some more research? Pick up a solid book on getting a raise.
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Get That Raise! (Entrepreneur Pocket Guides)
I think the title is pretty straightforward on this one.
Amazon Price: $12.95 (as of 12/21/2009)
Step 2a : Calculate your Liability Reduction Value
If Necessary, here's how to do it.
The easy ways to calculate your Liability Reduction value
This is usually a factor if you are involved in the administrative side of the business such as doing the accounting, HR, billing, document management, etc. There is a value to the work you do even though it doesn't directly generate revenue or reduce costs for the company.
This is usually a factor if you are involved in the administrative side of the business such as doing the accounting, HR, billing, document management, etc. There is a value to the work you do even though it doesn't directly generate revenue or reduce costs for the company.
- Call up the local temp agency. (Not the one your company currently uses!) Get a quote for a per hour price for someone with the amount of experience you have. Calculate how many hours you worked on the Liability reduction during the week and multiply it by that price.
- If there are any fines or penalties associated with jobs you did to reduce Liability, take the daily fine rate for each job in this category and count it once. (Note: Method two could be wayyy off base if the fines are very high, I personally recommend using the first method. This is just an alternative way to look at it.)
The Experts Weigh in
Here are links from the experts across the web on getting a raise.
- Clever Ways to Get a Raise
- A feature article written by
Jack Chapman, author of Negotiating Your Salary: How to Make $1000 a Minute.
No one knows more about salary negotiation than Jack. - How To Get A Raise: Stress Value, Not Need
- How to Get a Raise: No one likes to ask for a raise. But no one likes working for less than they are worth, either. Here's how to ask for a raise and increase the chances you'll actually get it.
- The Top 10 Ways to Get A Raise at Work
- The Top 10 Ways to Get A Raise at Work
Category: Careers - Originally Submitted on 11/18/96 but still applicable today. - How to Get a Raise
- What to do and what not to do to get the dollars and perks that you want and deserve.
Step 2b: Determine Your Annual Value
How much are you worth to the company?
Now we will use that data you have so diligently collected to determine your annual value to the company.
You should have a journal filled out with all of the work you did for a week. This work will have been divided into three groups : Revenue, Cost Savings, and Liability Reduced. I am assuming that you are able to at least provide rough estimates of the revenue you are generating and the cost savings you are producing. However, Liability Reduction can be tricky to calculate. For Help, See Part 2a to get some ideas.
Estimate your annual Value
Add up the Dollar Value of each of these items. This is your estimated weekly value.
Multiply this value by 52. This will be your estimated annual value.
Note: If the past week was exceptionally good or bad, consider keeping the journal for another few weeks in order to get a better estimation.
Example:
During the week you had the following totals:
$4,000 in revenue from work you produced.
$800 in annual savings by switching to generic brand soda in the office.
$90 in Liability reduction by filing a party permit for the company barbeque. (The permit cost $10 and the potential fine was $100)
Your Total Weekly Value Generation would be: $4890
This Results in an Annual Value of: $254,280
Don't get too excited yet! We still have to determine how much you are currently costing the company!
Estimate your annual Value
Add up the Dollar Value of each of these items. This is your estimated weekly value.
Multiply this value by 52. This will be your estimated annual value.
Note: If the past week was exceptionally good or bad, consider keeping the journal for another few weeks in order to get a better estimation.
Example:
During the week you had the following totals:
$4,000 in revenue from work you produced.
$800 in annual savings by switching to generic brand soda in the office.
$90 in Liability reduction by filing a party permit for the company barbeque. (The permit cost $10 and the potential fine was $100)
Your Total Weekly Value Generation would be: $4890
This Results in an Annual Value of: $254,280
Don't get too excited yet! We still have to determine how much you are currently costing the company!
Step 3a : Why your cost to the company matters
You don't work for free! But there's more to it than just your salary....
Now that we've done the fun part of finding out how valuable of an employee you are, now we will face the butcher bill and see how much the company is already paying you! I think you'll find it's higher than you think.
Your true cost to the company is way more than the paycheck you take home every week. I am going to try to cover most of them but I'm sure I will miss special circumstances that apply to everyone. When thinking about this, just remember, any perk you have is included in this cost.
Your true cost to the company is way more than the paycheck you take home every week. I am going to try to cover most of them but I'm sure I will miss special circumstances that apply to everyone. When thinking about this, just remember, any perk you have is included in this cost.
Some Additional Resources on Getting a Raise
Here are even more high quality resources you can use to bag that next raise.
Step 3b : How much do you actually cost?
Time to Whip out those Calculators....
Write Down the following numbers:
Add 5-9 together and you have your rough annual cost to your company.
Example:
Assume:
Which results in:
Big Difference there!
- Your Annual Salary (before taxes)
- Your Annual Salary * 0.0625 (Your company pays for half of the FICA and SS taxes. this is approximately an additional 6.25 % of your salary that they pay to Uncle Sam.)
- If you get an employer match on your retirement, write that amount down.
- If you receive any kind of profit sharing or bonus dollars, write that down.
- Add up 1-4
- Multiply your total by 0.22 . This represents your other benefits that you recieve including cafeteria plans, health, life, dental, etc. This is a national average, if you know your exact benefit package value, you can put that here instead.
- A value for the overhead that supports you. Your bosses' time and anyone else that helps or guides you is a cost to the company as well. If they are helping you, their time is not spent directly creating revenue or reducing costs. An easy way to do this is to take #5 and #6 added together and multiply it by 0.40 (40%). This is assuming your boss spends about 1/4 of his time managing you, and makes more than you (but not obscene amounts more)
- Any other perks you receive not covered above. Including car allowances, a larger than normal number of vacation days, etc.
- Take 5+6+7+8 and multiply it by 0.20 (20%). This represents the profit you make that goes to the owner(s) of the company. Remember, profit is the whole point of this little capitalistic adventure called a job!
Add 5-9 together and you have your rough annual cost to your company.
Example:
Assume:
- $35,000 in salary
- 3% employee Match
- 5% in bonus/ profit sharing
- $2,000 / yr. in other perks
Which results in:
- $35,000
- $2,187.50
- $1,050
- $1,750
- $39,987.50
- $8,797.25
- ($39,987.50 +$8,797.25)*0.40 = $19,513.90
- $2,000
- $14,059
- Total Annual Cost: $84,357.65
Big Difference there!
More advice on Asking for a raise from the Blogosphere
Part 4: Compare your current Salary to your peers
Make sure you look at the total package.....
Now that we have found out most all of the information we can internally, it's time to find out what your peers are making.
Things to remember when comparing your job to others:
Things to remember when comparing your job to others:
- Years of Experience is important to some extent, but your performance to date and your expertise in the area will matter far more.
- Read the job descriptions carefully for other jobs! Parts may not apply to your situation.
- How much freedom do you have in the workplace? Make sure this jives with the job description.
- We are looking to come up with a salary range for you, not an exact number.
- Find 4 or 5 posistions that are similar than yours ranging from one you are clearly overqualified for to one that is a little out of your reach right now.
- Use salary data to determine a fair range using these posistions.
Where to find your Salary Range
Some helpful sites to assist you in developing a personal salary scale.
- www.Worktree.com
- An Online Job Search Aggregator.
- Salary.com
- Search by job title in your zip and get a salary range.
- Payscale.com
- Create a custom job profile and have a free compensation comparison
- Craigslist
- What was once known for trading things on the cheap is quickly becoming known for posting hip jobs that understand the younger generation.
Step 5: Prepare for your Raise Meeting
Some Words of Advice for the dreaded Raise Meeting
You know how much you make the company (approximately)
You know how much you cost the company (approximately)
If there is not a lot of difference in these two numbers, It is probably not the best time to ask for a raise. Get your value up and then run the numbers again.
You have a rough idea of your market value. This is not set in stone, and should only serve as a point of reference at best.
If you think you have a valid case for a raise, remember these words of wisdom "There are only two answers: Yes and No" If you don't ask for a raise, how will you know if you can get one?
DOs and DON'Ts for the Raise Meeting:
You know how much you cost the company (approximately)
If there is not a lot of difference in these two numbers, It is probably not the best time to ask for a raise. Get your value up and then run the numbers again.
You have a rough idea of your market value. This is not set in stone, and should only serve as a point of reference at best.
If you think you have a valid case for a raise, remember these words of wisdom "There are only two answers: Yes and No" If you don't ask for a raise, how will you know if you can get one?
DOs and DON'Ts for the Raise Meeting:
- This is a serious meeting and treat it as such. It should not be had off the cuff in a hall way or as a passing mention at the water cooler. Schedule a meeting with your boss, sit down, and present your case in a clear, concise manner.
- DON'T: Go over your Boss' Head
- DON'T: Focus on how long you have worked there unless it is relevent for some certification or other milestone that justifies a salary increase.
- DON'T: Take anything said personally. Your boss is a business person as well who wants to do what is best for the company.
- DO: Stay Calm!
- DO: Emphasize your Value
- DO: Emphasize the difference in value you create and what you cost the company
- DON'T: Lose your cool or react negatively if the meeting doesn't go well.
- DON'T: Treat it like the end of the world
- DON'T: Put it off forever
- DO: Talk about your Accomplishments
- DO: Talk about how hard you would be to replace
- DO: Talk about your goals for the future
Recent News on Jobs and the Workplace
The most recent news on Jobs and the Workplace from across the web.
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- robert robert Nov 11, 2009 @ 3:42 pm
- this blog post is pretty much useless. All of this huha about counting up how much each person makes for the company and costs to the company is unrealistic for most employees. Most employees work in a given position that has a set salary range with certain built in pay increases based on the amount of time that a person has been there and a very general evalution of the person's job performance. Most likely if you have been in a position for a certain amount of time your worth to the company far out weighs your liablitiy(otherwise they would simply get rid of your position). Despite this you still have to pay for the mistakes the company has made in other areas. Furthermore in many positions your immediate boss has little say in your pay other then giving you an amount in a set range. The person that has set that range is many times far away in another part of the country and the company is probably unwilling to change that range unless there is a very good reason to do so.
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- http://www.mobilephones.name http://www.mobilephones.name Aug 25, 2009 @ 5:28 pm
- Very good lens on how to get a raise
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- 100-mortgage 100-mortgage Aug 25, 2009 @ 5:25 pm
- Great lens, did you get the money in the end? hope so!
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- Aug 13, 2008 @ 7:52 am
- This lens sounds very useful for people and I rated 5 stars for your valuable lens.
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- Aug 13, 2008 @ 7:48 am
- Your blog is beautiful. Thanks for providing useful information to us. I like it.
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