How to ask for a raise

When you’re looking for ways to improve your financial situation, it’s easy to find personal finance information on cutting expenses and limiting luxuries. But while it is a good idea to cut unnecessary expenses, it’s just as important (arguably more important) to find ways to earn more money.

There are three main options for increasing your income:

1. Get a raise at your current job
2. Get a new job that pays more
3. Get a second job or side hustle to earn extra money

We’re going to talk about the first (and the simplest) option: getting a raise.

However, simple doesn’t always mean easy. It’s normal to feel anxious or awkward to ask for a pay raise. Asking for a pay raise is normal, and while it can be intimidating, it’s an essential skill to develop. Plus, if you’re doing a great job, your boss knows it, and may even wonder why you haven’t asked for a raise already.

To help you get a raise at work and improve your financial situation, we put together these compensation review tips.

One key idea to grasp when you’re learning how to negotiate a raise is to know what you’re asking. Do you expect a full promotion to a new title, or simply a raise within your current role that reflects your work and performance?

In normal circumstances, if you want a full promotion, asking for a 10% salary increase might be a good target, yet if you’re looking for a performance-based raise where you stay at the same level, a 3-5% pay raise is reasonable. However, a recent Morneau Shepell report found that Canadian companies project an annual average salary base increase of just 1.9% for 2021.

Before jumping in to ask for a raise, it’s important to be in touch with current salaries. What does your role pay in other companies?

With sites like Glassdoor, PayScale, LinkedIn, and other salary guides, it’s never been easier to research salary trends and see what other companies pay people in your role. While doing that research, make note of the specific benchmarks, goals, and responsibilities for your job title. If your responsibilities and workload exceed what your position and job title suggests, make sure to bring it up.

When it comes to learning how to ask for a raise, one of the first things to consider is when to ask. Asking at the wrong time could mean you just won’t get a raise, even if you deserve one.

Before approaching your boss to negotiate a pay raise, ask about company policies regarding standard raises and promotion cycles. It’s also a good idea to determine whether your company has formal review cycles. For example, your company might only issue promotions in January and July. If so, find out the approximate date of your performance review. That gives you the opportunity to let your supervisor know you will ask for a raise, even if the date is a few months away.

Often companies set aside a certain amount for raises, and supervisors must decide how to allocate their department portion to employees. The sooner you get on your supervisor’s radar for asking for a raise, the better. Here’s a sample script of how to introduce the topic:

I appreciate your trust in giving me a lot of responsibility here, and I’ve met/exceeded all my goals. I’m wondering if my performance is more in line with a higher level/role. Can we discuss how well my salary reflects my performance here?

Consider your meeting to negotiate a raise as a sales meeting, but in this meeting, you are the product, and you need to know your talking points for the presentation. And as with any presentation, you need to plan, prepare, and practice before the real thing.

Make a brief outline of what you’d like to cover when you meet to negotiate your raise. Include key points, including:

• Your successes to show your value from a “dollar and cents” perspective
• Your performance compared to your set goals
• Your compensation compared to industry standards
• Your compensation compared to your performance

If you’re struggling with how to ask for a raise without sounding awkward, demanding, or defensive, write out a script and practice what you will say to open the discussion:

I love working here and I would really like to keep working here for the long-term. That said, based on my performance/ additional responsibilities/market salaries, I believe my current compensation no longer aligns with the value I now bring to the company.

Sometimes, despite your best efforts, the answer to your request for a raise will be “no.” And sometimes this is due to circumstances outside of your performance. For example, the financial health of the company, current national or international economic conditions, and industry/sector-specific forces can all impact your company’s ability to offer a raise.

That’s why it’s important to consider what you’ll do if your boss says “no” when you ask for a pay raise.

First, make sure you understand the reasons you didn’t get the raise. Are those reasons within your ability to control? If so, work with your boss to build a specific plan to help you earn the raise or promotion you want.

Alternatively, you might realize you have already maximized your potential at the company and it’s time to move on. If factors other than your performance play a role in the raise/no raise decision, you’ll need to decide whether you’re willing to wait until the company situation improves, or if now is the time to start looking for a new job.

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Negotiating a raise at work becomes easier if you plan, prepare and practice for the discussion. Present your case clearly, concisely, and confidently. Consider all positive and negative feedback to look for opportunities to improve, and for signs that it might be time to look at other employers.

And remember, everybody deserves to be paid what they’re worth.