The Good, the Bad, and the Ugly: When Employees Ask for a Raise

We hear a lot about how critical it is for women to ask for raises. But, asking is only the first step. Most businesses require managers to exert effort to fund even the most well-deserved employee compensation increases. I’ve been managing employees since 2006 (longer, if you ask my younger siblings!) Here’s the good, bad, and ugly I’ve experienced when my employees have asked for a raise.*

Let’s start with the bad. “Allison” worked on my team during the economic downturn in the late 2000’s. Allison was a detail-oriented employee who was meeting the expectations of her entry-level job. She wasn’t a rock star, nor was she dragging the team down. However, at that time our company was struggling as the housing market and banking sectors were imploding. Allison requested a salary increase, after receiving a passable performance review.

There were at least three things that Allison messed up:

  • Her request was really a demand. How you ask for a change in compensation matters. Allison’s tone was, “Pay me more or else.” A more productive, fact-based tone would have started the discussion off without sounding like an ultimatum.
  • She didn’t have the performance to back it up. Allison had just received a review that identified her as adequately meeting her performance standards. Focusing on her areas for improvement, and building a plan to improve those in pursuit of a salary increase, would have been more effective.
  • She asked for salary (and only salary) at a very difficult time for the business. This was the late 2000’s. Businesses like Lehman Brothers, which was founded in 1850, were going bankrupt! Allison didn’t bring any other negotiables to the table, and I certainly wasn’t inclined to suggest any to her.

Allison didn’t get the raise she demanded at that time. Instead, we focused on her development plan and ensuring she was getting the feedback and opportunities to improve her performance in her current role.

Now, the ugly. “Heather” was a lower-than-average team member who seemed to excel in getting in her own way. Her work was inconsistent in quality, and team members struggled to work productively with her. She was constantly comparing her performance to others that joined the business at the same time, and would regularly bring up the expenses and lifestyles of others.

When Heather approached me for a raise, it was in a rambling speech that included remarks like, “...everyone in DC was born with a silver spoon in their mouth,” and “I can’t afford to live the lifestyle I want on my current salary.” Her reasoning seemed to be that given the excess she saw around her, and the cost of living in downtown DC, our company owed her a raise.

Anchoring your request for a raise on your own personal financial situation or lifestyle is a huge mistake. First, it isn’t germane to the conversation - which should be performance and business based. Second, it’s likely to backfire. In this situation, I saw Heather’s negative attitude in a very unvarnished manner, and we later had a candid career discussion that resulted in her resignation, which I happily accepted.

Finally - the good. “Nia” was a strong performer who pro-actively managed her career, by asking for feedback on how she can improve, seeking additional responsibility, and supporting her peers. In a conversation before her upcoming performance review, Nia shared her salary history and compared it to her current responsibility set, which had expanded since she accepted the role. She also compared her salary to more junior hires on her team. They were certainly making less than she was, but not that much less given their difference in responsibility.

I told her I understood her request and would do some research on her behalf. First, I asked HR to benchmark her salary to other higher-performing employees in her role. Next, I met with the other decision makers that would need to weigh in on the decision, and with their support negotiated an increase with our company’s compensation team. Nia’s request required me to do work on her behalf, but her clear and well-reasoned case inspired me to expend the effort and political capital to support her.

You can tell what Nia did well; she was a stronger performer who came in with a business-grounded request. For example, I had access to her salary history, but she brought me the data and presented it in compelling contrast to the more junior team members. She concisely summarized the added responsibilities she had taken on in one summary document.

After this effort, Nia received a sizeable salary increase. This helped her in two ways - obviously, her regular take-home pay increased. But, because she had a bonus available where she could earn up to a certain percentage of her salary, her overall compensation pool increased.

Wouldn’t you prefer to be Nia, compared to Allison and Heather? Even Nia could have improved her ask by identifying more negotiables (beyond salary). But, she created the case that compelled management to take action. Have you had an employee ask you for a raise? Were they the good, the bad, or the ugly? Or, have you been the asker? (In which case I hope you were the good!)

xoxo, Ms. Financier

*Names and identifying details have been disguised, but each story is real. You seriously can’t make this stuff up.

How to Ask for a Raise in 4 Steps

Many of us assume that if we work hard and are effective, salary increases and career opportunities will follow. However, the reality is that doing well in your current position is necessary but not sufficient to grow your wealth.

In this post, we’ll explore the four steps to asking for a raise. This is particularly important for women, who face a pay gap relative to men. Growing income is one of the two levers to building wealth, so let's do this!

First, define your business case. Do not pass go, do not collect $200 until you have clearly defined why your achievements merit a raise. If you’re gunning for a pay increase, you need to document the heck out of the business value you deliver to your employer.

Your comparison point is your current salary. What and how have you earned more than that? Consider things like extraordinary effort, taking on new processes or tasks, implementing solutions that saved the company money, or introducing services that result in more repeat purchases.

Don’t freeze up in this first step. Don’t minimize your achievements. Reflect on the value you contribute and think creatively. If you're unsure about the quality of your business case, a savvy friend, family member, or mentor can pressure-test your thinking. They may see more impact in what you’ve done or help you think about it differently.

Use the “Situation, action, result” format to create your business case. For example, “The new client survey process I designed helped client service levels,” isn’t specific enough.

Try: “In 2016, client service satisfaction was 5% lower than 2015, which hurt Alpha Company’s revenue and reputation. I designed a new client survey, trained our customer service staff, and implemented the measurement system in order to capture client feedback in the first 30 days of their contract. This allowed our client service teams to identify service risks earlier, which improved client service satisfaction scores by 15%. This improvement contributes an estimated $1.2M in annual revenue.”

The first sentence describes the situation, the second describes the action, and the last sentences describe the result. Do your best to quantify results, and be okay with making informed estimates. Businesses are built usin estimates and models to inform decisions! Your case for a raise is no different.

Second, identify your negotiables. You've got the case for your pay raise. Now what? You need to come to the table with what you want. The good news is that technology is your friend in this effort. Just a few years ago, we had to rely on general industry studies, government data, or asking colleagues (yikes!) to benchmark our salaries. Today, pay data is increasingly accessible. Online sources like the Fairygodboss salary database provide more precise data on what your role is worth.

Decide the exact amount you’re asking for, and then increase it by at least 10%, because women don’t ask for enough. Then, prepare at least 3 other non-salary items that you will negotiate for, in addition to your pay increase. I recommend asking for the salary increase and one other item at a minimum as your “first ask.” Then, you’ll have 2 other items in your back pocket to introduce if you don’t get the full increase you’re requesting.

What else could you ask for? More paid time off; Better expense account - things like taxi service to/from work, flight upgrades, airline lounge memberships; Administrative support or a summer intern; Funding for conferences or classes for ongoing education; Working from another office location on a regular basis (say, you’re based in DC and you want to work from the London office once a quarter).

Next, practice! Once you have your business case and negotiables, practice with a savvy friend who can role-play your boss’ reaction. Prepare for objections like:

  • “We don’t have budget at this time.” Ask follow-up questions to understand when and how budget could be freed up, and confirm that budget is the only barrier.
  • “I’ll need to speak about this with my boss or HR.” Ask what your boss’ boss/HR needs to see, and how you can help prepare that case. Suggest speaking directly with other decision makers.
  • “Your last raise wasn’t enough?” Clarify that this ask doesn’t come from a place of ungratefulness, but business value. Reiterate your business case and understand whether your boss supports your request.

Your goal in the discussion with your boss is to understand if she agrees with and supports your case. If not, confirm what she needs to see in order to support you in the future. Practice “closing” the conversation to ensure you leave with clear next steps to continue the discussion.

Finally, ask (and ask again). Set time with your manager and ask! Don’t wait for the next review cycle. When your case is ready and you’ve practiced your pitch, confidently approach your boss with the business case for why you have earned a raise. Take careful notes and be prepared to continue the conversation - I find it is rare to come to an agreement in just one discussion. Follow-up in writing with a summary of the discussion and next steps, to ensure you and your boss are on the same page.

A “no” or “not right now” with defined next steps is progress. A study of Australian workers found that women were 25% less likely to receive a pay raise when we asked for it. I’m not convinced this study is globally representative, but be prepared to persist with your case. You will need to own the next steps to secure that raise over time, if need be.

With that, I wish you very good luck. And, I look forward to sharing my experience on the other side of the table - when my employees have asked for a raise. I’ll share the good, the bad, and the ugly! What other advice do you have for securing a raise? If you used this approach, how did it work for you? I look forward to hearing from you.

xoxo, Ms. Financier


Resources:

Women Don't Ask: Negotiation and the Gender Divide, by Linda Babcock and Sara Lashever

Ask For It: How Women Can Use the Power of Negotiation to Get What They Really Want, by Linda Babcock and Sara Laschever

High Performance Negotiation Skills for Women, Lecture featuring Professor Leah Thompson, Kellogg School of Management