Thursday, February 17, 2011

Asking for a Raise/Negotiating

The power or negotiating is important. In fact, in all my studies on financial independence it's the signal number one way to save more money. If you make more money you have more to save. Surprisingly most people do not negotiate salaries.

If I took my first job offer without negotiating I would be getting paid 18% less than I do now before bonus. Factor in my bonus and it is closer to 20%. All I did was counteroffer, not once, but THREE TIMES.

When I announced my departure at my previous job, I met with the partner in charge of retention. He asked me what I was making and I told him after a little prodding. He looked at me and told me to leave because I was making more than any of my departed peers, and I would find out I was earning more than people with three to four years of additional experience. I was an average employee who did exceptional research in regards to negotiating my salary, and it paid off.

At the end of the day I read a book on negotiating and a couple blog posts. So for approximately 3 hours of research I got a 50% increase in salary with bonus. Worth the time if you ask me. What you make now determines what you will make in the future, in fact I have never had a job interview or held an interview where the candidate's current salary wasn't discussed. There are ways to tactfully dodge this question. You will rarely ever see a huge jump in pay because your hiring employer incorrectly assumes you are getting paid slightly less than you are worth.

Once you find a job you like it's important to periodically review your salary structure. Winning the wage game is the result of incremental raises over time. If you are in your current job here are some reasons you should be getting a raise:

-You are assigned new responsibilities
-You take on someone else's workload because they left/got fired and you feel like you can do the additional work long term
-You don't have an annual review with a raise or your raises aren't structured
-You get moved to a different office or location
-You believe you are outperforming your peers

The bottom line is that no one is going to do this for you. Companies rarely throw extra money at employees if they don't have to. If you are adding value and are worth keeping around then you should be compensated for that. If you aren't adding value, then you should be working somewhere else.

If you want a raise here are a couple of tips:
-Make a list of how you have contributed (tasks, value, etc.)
-Know how long it has been since your last raise
-Know what people in your position at other places are making (google "find salaries", check job postings)
-Don't accept the first offer unless it was what you were expecting. A negotiation is a two way street.

If you want more information here are some posts that go more in depth. Additionally, if you have job specific questions feel free to contact me.:

-Managing your career
-How to negotiate better than 99% of people
-Don't reveal exactly how much you make
-Negotiating Your Salary

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