Think you’re not getting paid what you’re worth? Feel like it’s time to move on and realize your immense value? Looked around and wondered why your peers seem to have more…?
Here I’ll discuss concepts around pay and valuing yourself, and if you discover you’re underpaid, what to do about it! To ensure balance, read on to understand the risks around being paid too much.
Firstly, you need to understand how the market will value your skills:
Find relevant salary data. A number of recruitment businesses have data for markets they operate in; these tend to be tailored to their specialty markets and 9 times out of 10 are free! Caveat here - some recruiters may not have sufficient market breadth (they gather the data by averaging how much people in any given skillset earn) to be able to establish a sufficient median. Effectively they’re not providing accurate data; at best it is one company’s pay range and, at worst, a guess.
Ask people that are doing the role what they’re getting paid. Duh. Most people are pretty honest, as long as you put it in context; “why are you asking me”. The trick here is to go to more than one company and ideally one that has similar traits to your own (i.e. if you work for a government department and go and collect data from consulting companies only your case when going to ask for the raise is going to be flimsy. And probably not approved). Be careful about asking your colleagues, I’ve seen many an employment contract with a “don’t ask don’t tell” policy on remuneration.
Scan advertisements and call recruiters. You may need to attend a couple of meetings with people before they’ll divulge that info, but if we’re talking $10k per year then that’s gotta be worth it?! Two things that you need to be cognisant of here:
- It’s not uncommon for the top end of the range to be advertised or, even worse, slightly outside! This range will only ever be reached if you’re the ‘perfect’ candidate (Perfect = the candidate who brings everything required to the role, and maybe more). Are you that person? Remember we’re trying to build a watertight case here; think like a trial lawyer - if your case has holes then it’s never going to be approved.
- If the recruiter is talking about what others in the business make it could be false economy. There’s a premium paid for [great] people who have established a history and deep experience base within one company; I’m talking 5+ years here, a solid product/personnel knowledge, and valuable IP. If you’re one of these people then you may fall into my ‘outliers’ category - your premium over the market could be up to 50%. In the words of one CEO clients “my top two guys produce as much as the next 8. But they’re unmanageable”. If you’re an outlier then you will command some such premium.
At a push, find out what contractors are getting paid per hour, multiply that by 1840 (hours in working year), and then that by 0.75. This method is by far the least accurate but it’s a wet finger in the air.
So now you know what the market is paying for your skills, it’s time to consolidate your case and capture all the wonderful things you’ve done. Create an achievements register, resisting the voice that’s telling you it’s vain (It’s not - you need to remind your boss how important you are to her business). What are you looking out for? Hard achievements are better then vague and fluffy claims. For example:
- I improved the workflow process around xxx and the result was a reduction in build time which saved 200 hours per release – around $20,000
- I introduced a communication methodology which saw knowledge sharing increase and the number of outstanding support queries drop by 20% and time to resolution improve by 8% across the board
- I was part of a team that introduced a new product to market that increased revenue by 28% year on year and saw our market position increase from 4 to 2
Now you can borrow these if you want, but make sure they’re corroborate-able; someone’s likely to ask about an achievement so bold…
When and how to do it?
Pick your timing! If the results for the quarter/year/minute have just come in and they’re woeful, you’re unlikely to leave with a palm lined with gold. Get your boss when he’s in a good mood is what I’m saying. Or just wait till its annual review time.
Negotiation Strategy
Present a case, outline the facts and give them time to consider it. If they seem to be in agreement with your suggestion ask them what they think you’re worth. If they immediately come back with a 10 or even 20% increase then the likelihood is that you were being grossly underpaid; maybe hold out a bit longer and see where you end up - “Let me come back to you on that” - or counter - “I was thinking more like 30% Mrs Manager”. Or if that makes you uncomfortable, accept the 20% now and request a further 10% in 3 months (typically upon delivery or achievement of something specific). The opportunity may slip through your fingers though so be cautious of this approach.
Don’t threaten or imply that you may need to look around if you don’t get the raise - unless you’re prepared to. If you do threaten and they don’t give you the raise, and you don’t leave, think about your future prospects within the company; your integrity will now be likely to be in question.
What not to do:
- Don’t fall back to factors which are of little or no consequence to the business - “Oh my kids’ school fees have gone up” or “I want to do some house alterations”. Whilst interesting, neither of these eventuations are likely to have any bearing on a business decision.
- Try to avoid generic market discussions such as “salaries have risen by 5% in the last 12 months in the FMCG market” – this is your case, not the market’s.
- Only use the cost-of-living increases as a last measure; these tend to rise by a maximum of 3-5% in any one year – this may be what you’ll end up with!
Overpaid?
Be wary of getting overpaid; management’s expectations will rise in line with your pay and you may end up with golden handcuffs - a future desire to leave but a market unable to reach your package and lifestyle requirements. If your colleagues know, you may create some resentment and difficulty for yourself down the path and, lastly, if your market or business changes or struggles you may be the first out the door.
I hope all this has been useful, go forth and earn what you’re worth!