We know one thing is true: wages aren’t keeping up with the prices that consumers are paying for basic necessities – from groceries to housing and more. The US Consumer Price Index YoY is at 6.45%, compared to the long-term average of 3.27%!
Employees are in a difficult spot at the moment with rising inflation and the concern of layoffs but with prices spiking, if you didn’t receive a significant pay raise this year, you’re actually losing money.
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How To Negotiate A Pay Raise
Andres Lares, managing partner at Shapiro Negotiations Institute on offers the following tips on how to negotiate a pay raise.
Consider Asking For A Raise
Discussing inflation and worker pay is unavoidable at this point but a large number of companies don't factor in inflation when giving out annual salary increases and bonuses. If you haven't asked for a raise in the last year you’re likely kicking yourself which means you are aware of the shift in the market.
Led by layoffs in tech, the employee market has clearly cooled down quite a bit so you don’t have as much leverage. But, depending on the role, your performance, etc. you still may have plenty of leverage.
Inflation is still a thing and keeping an employee is always much cheaper and easier than getting a new one. But, make sure you ask nicely, with empathy. As a potential recession looms, there is more pressure on companies to cut costs and you need to be aware of this as you make the ask.
Script out what you’re going to say and then roleplay in the mirror or with a friend. This allows you to get confident, convey confidence, and start strong.
You can initiate the conversation easily by mentioning after doing some market research and assessing the way that inflation has affected my cost of living, you believe that an increase in my salary is appropriate. It may take practice, but the more you do it, the more empowered you’ll feel.
Simplify the desired end result in your mind, and use that as a starting point to map out the ways that goal is beneficial for everyone involved. Communicate your desire clearly and then highlight your accomplishments (i.e. you've worked at this company for several years, you have successfully managed multiple clients, contributed to the bottom line, etc).
But, use the past as a prediction of the future rather than just looking backward. You aren’t getting a raise for what you’ve done but instead for what you are predicted to achieve.
Be Open To Other Options
Remember employers can negotiate areas such as title, health insurance, 401k contributions, expensing commuting costs, increasing paid time off, etc. This is also very important because otherwise you can quickly get aggressive and negotiate in a fixed manner.
Remember, the key is to negotiate to improve your situation but do so in a way that still at least satisfies your employer. After all, is a one-time 5% raise worth destroying a relationship with an employer? That should not deter you from asking, but it should guide HOW you do it.
About the Author
Andres Lares is the Managing Partner at Shapiro Negotiations Institute and co-author of Persuade: The 4-Step Process to Influence People and Decisions. Lares' expertise ranges from coaching live negotiations for sports clients including Cleveland Browns, Brooklyn Nets, and more, to developing online content for facilitating programs in real estate, advisory, media, banking, and pharmaceuticals.