Negotiating a Raise (Part 4 -- What NOT to do.)

In the last few posts, I've been talking about ways to think about your salary and how to determine what you should be paid. Today, I'm going to talk about a few topics to avoid when discussing salary with your boss.

Let's look at some tactics that I've seen employees use and talk about why they aren't effective.

"The cost of living has gone up, so I need more money."

While it is important that you be able to provide a certain standard of living for your family, you have to remember that the value that you provide to your employer isn't necessarily tied to the cost of living. It is common for some employers to give "cost of living raises", but they certainly don't have to. If it has been a number of years and no one in the company has received a salary increase, you certainly could ask for this, but cost of living is something that affects everyone equally and so this is really an argument that your company's standard is too low in general. This may be true, but unless you are voluntering to be the union rep for your co-workers, this argument won't get you a raise.

"It's been years and I haven't gotten a raise, so I deserve one now."

You get paid for the value you bring to your company, not for the number of years of service you have provided. Significant tenure with a company may have helped you learn a number of skills that could add value to the company (as we talked about in part 3 of this series). If that is the case, then stick to those facts. (For example, "Over the last two years, I've learned how to do customer implementations and I often fill in for our implementation staff.") But it's the skills and eperience you've added over those years that your employer will pay for, not the number of years. This is one case where time doesn't equal money.

"I'm the only person in the company who knows how to do X, so you better give me a raise."

First, shame on your employer for creating a single point of failure and letting it be you. Second, shame on you for allowing it to stay this way. Saying this to your boss is basically a threat -- nobody likes to be threatened. It also indicates that you are not a team player and really only looks out for yourself with little regard for the company and your co-workers who must depend on you for the company to continue to function. If it sounds like I'm being harsh, you're right. There is no place for this kind of nonsense in any company.

If you find yourself in this position, you need to point out the issue to your employer and either offer to train someone else, offer to create documentation on this task, or suggest another solution that doesn't depend only on you. Helping your company solve this sort of problem, makes you much more valuable than being an employee who hordes information and won't teach others because they somehow think it adds job security.

"I am the best person in my department, so you should pay me more than everyone else."

This statement breaks a couple of rules. One, its really none of your business what the other people in your department make. Two, your salary isn't determined by comparing how well you perform compared to others. If you really do outperform other people in your department, gather some statistics and use those to cast a positive light on yourself without dumping on everyone else in your group. For example, "Over the last year, I have consistently processed an average of 25 help desk tickets per day. That's 40 percent of all the help desk tickets in our group."

"I work harder than anyone else in my department."

This statement has all the same problems as the last one, plus it focuses on the wrong thing -- how hard you work. Focus on the value you deliver instead of how hard you work.

"So-and-so is making $X, and I should be making at least that much, too."

Whether "so-and-so" is a cousin, friend, or acquaintance, this doesn't really mean anything to your employer. You need to focus on the value that YOU deliver to YOUR company. If you are talking about a coworker, be warned -- it really isn't a good idea to talk salary with your co-workers. Trust me, no good can come of it. Remember, your pay is based on your market value and the value you provide to your company. Using the data from one other person to determine what you should be paid would be like a politician declaring he was going to win an election based on the result of polling a single person. It's just one data point -- and it may be irrelevant anyway.

"If you don't pay me $X, I'm going to quit."

This is equivalent to the classic line of "take this job and shove it..." It's a threat. It's poor business etiquette. And it burns a bridge. If you truly believe you should be paid more, but you can't come to terms with your employer, perhaps it is time to move on to another job. But stating it like this does nothing positive. If you are going to quit, do it politely and if your employer really wants to keep you around, they might offer you more money, but don't count on it.

Remember, when discussing salary with your employer, stick to facts that are relevant to your value and the value you provide to the company. What do you think is the best way for you to express your value to your employer?

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Negotiating a Raise (Part 3 -- Your Value to the Company)

At the risk of sounding like Lumbergh from Office Space, today we're going to talk about the value you can add to your company above and beyond the things listed in your job description and how you can use this to add dollars to your paycheck.

In a recent post on project management, I talked about how start-ups usually have a small number of very focused people who all pitch in to make sure that everything gets done. As a company grows, jobs tend to get more specialized. Everyone doesn't do everything any longer. This is a necessary evolution in the life of a company, but sometimes employees go a little too far in this direction. The last thing any manager ever wants to hear from an employee are the words, "That's not in my job description."

Often, there are tasks that need to be done or tasks that should be done that aren't really part of any job description at a company. One great way to make yourself more valuable to a company is to make those tasks part of your job description. Of course you need to make sure you get all of your regular work done too. But if you see something that needs to be done, and you can do it, pitching in to get things done makes you that much more valuable.

If you are one of those underemployed people I talked about in part two of this series, adding value is a great way to help make your replacement value closer to your market value. (Read part one to learn about your market value.)

Another factor to added value is the amount of experience that you may have at a particular task or piece of technology. Most companies have some sort of esoteric process or technology that really isn't used anywhere else. The people who know this technology very well are more valuable to a company than anyone else out there who has an otherwise similar skill set.

One thing to beware of here is the temptation to horde knowledge. Being the only person who knows how to do some specific task or run some certain piece of technology constitutes a huge risk for a company. If you think that not training anyone else or making management aware of this problem means you have greater job security, you're wrong. From a manager's point of view, you look like someone who is not a team player and someone who can't be bothered to help the company manage a serious risk. The best thing you can do is help your company manage this risk by offering to train others, create documentation others can follow or suggest an alternative solution that doesn't require such specific knowledge.

Another great way to add value is to learn a new skill that can be used at your job immediately. Learning a new skill that makes your more marketable and adds to your market value, but doesn't necessarily make you more valuable to your current employer.

Here's a great example. One company I worked for, needed a back-up person to handle some implementation tasks, but we couldn't quite justify the cost of hiring a new employee. Another employee volunteered to get the training needed and be the backup until we had enough business to justify hiring a new person. That added value.

As a manager, I have always thought about added value when determining salary increases. It's not something you start thinking about the day before you ask for a raise though. It's something you need to think about every day of your career.

In the next post, I'll talk about some things not to say when asking for a raise and then I'll wrap it all up in one final post on the subject.

In the mean time, I want to hear about how you add value to your company as an employee. I'd also like to hear how managers think about added value in their employees. What's the best example you have seen of added value in your career?

photo credit, Karyn Rachtman

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Negotiating a Raise (Part 2 -- Your Replacement Cost)

Yesterday I wrote a fairly lengthy post which touched on a few ways to determine your market value -- the first part in this series on negotiating a raise. Today's post will be a bit shorter, though the topic is no less important: What would it cost your boss to replace you?

We all like to think of ourselves as unique individuals who are utterly irreplaceable. In business, however, everyone is replaceable. Everyone. The only question is how much would it cost in terms of hiring a replacement, training that replacement, the opportunity cost of pulling in another resource to fill in until the replacement is ready, the potential cost of any customer or revenue impact, etc.

Most employers will try to minimize those costs as much as possible by having employees with redundant skills and not allowing revenue or customers to become too tied to a specific person. The main issues to focus on are the salary of a potential replacement and the cost of training that replacement.

Hiring a replacement is going to cost the company the market value of a person with the right skill set. This is sort the reverse of my last post on determining Your Market Value. In this case, you want to determine the market value of someone else who can do your job.

Determining this figure can be a bit tricky, but you can use many of the same techniques from Part 1 of this series. You just have to factor out any special skills that may increase your value, but which aren't required for your job. For example, if you are bilingual, many employers will pay a premium for this which increases your market value. But if your current job doesn't require that skill, then you can't factor it into your replacement cost.

As much as you may want your market value to be really high, its actually in your best interest to have the market value of your replacement be about the same as your market value.

Think about it this way. If you are paid much more than your potential replacement, this means that you are underemployed. You aren't using all of your skills in your current position and should probably be doing a different job. You are getting paid too much and your employer could probably replace you with someone who makes less. Your prospects of getting a raise are probably not very good.

If you are earning drastically less than your potential replacement, this means that your employer is taking advantage of you whether they know it or not. You could be earning more at another job. Maybe it's time to think about a promotion.

People tend to find themselves in this scenario early in their careers, especially in technical fields. Straight out of college, you are unproven and an unknown quantity. This equals risk to an employer. After a very few years of hard work and proving yourself to your employer, your market value tends to go up fairly quickly.

Sometimes employers count on this, and hire young people with the intent of training and nurturing them in their careers knowing that their pay will increase dramatically over the next few years, but also counting on getting increasingly more and more work and expertise out of that person.

If you find yourself in this scenario, you probably should be asking for a raise. Your replacement cost is high.

That covers the salary of hiring your replacement, but what about training? In high tech companies -- especially ones that use highly specialized technology -- it often takes three to six months for a new hire to become effective. In cases like this, an employer has to count on shelling out up to half a year's salary with little or no return on that money when hiring a new employee. That's a pretty big incentive for your employer to try to keep you from leaving the company.

That doesn't mean that you should ask for a raise of up to half a year's salary. But it does mean that you should be paid at the top end -- or maybe just a little over -- the market value of your potential replacement. If on the other hand, your job requires little or no training, then you can probably only command a salary in the lower or middle range of your potential replacement's value.

In the next post, I'll explore one last topic that can add dollars to your next raise -- your value to the company. After that, I'll give you a few topics to avoid and wrap it all up.

Until then, spend some time thinking about your replacement cost. Just like your market value, your replacement cost is an important factor any discussion about salary.

What does your replacement cost tell you about your salary? About your career?

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Negotiating a Raise (Part 1 -- Your Market Value)

Negotiating a raise is often stressful and confusing. It shouldn't be. In this series on salaries and raises, I'm going to talk about some tips on how to view your salary, what you should be paid, and how to talk to your employer about it. And if you are an employer, you should be using the same criteria to evaluate the salaries of your employees.

In this post, I'm going to explore the concept of your personal market value. This is the first thing you should think about when negotiating your salary. Your market value is what you could realistically get paid if you switched jobs today.

One sure-fire way to find out your market value is to go on a few interviews. Just going on an interview doesn't mean that you have to take a job. It can, however, give you a good idea of what types of jobs are available and what the salary ranges are.

When you go on an interview to help you determine your market value, you should keep a few things in mind. One, it's probably unethical and unproductive to talk to direct competitors of your current employer. They may just want interview you to try to extract information about your current company anyway. Two, make sure you talk about specific job duties and responsibilities. This is an important consideration when comparing one job to another. Three, when asked for your salary requirements, you should tell your interviewer what you want, but then ask if your figure is in the right ball-park and have an honest discussion about it. Don't argue. Listen to what they say and try to understand their reasoning about it.

Going on an interview periodically can give you valuable information. This practice should not be viewed as disloyal by either you or your employer. In fact, you should discuss what you learned with your employer. If your boss is smart, he or she will welcome the discussion or at the very least approach it with and open mind.

If its not practical for you to go on an interview, some other things you can do are: call a recruiter, a job placement agency, or the career counseling department of a local college. Any of those them can give you an idea of what people like you, with your experience, can make in your region of the country.

It's also a great idea to foster a mentor relationship with someone outside of your company. Salaries and raises are great topics to discuss with a good mentor. There are a lot of people out there who have been around the block a few times and who are interested in helping younger or less experienced people become more successful in their field. If nothing else, try to find someone in your field who you respect and who is willing to discuss your career with you periodically over coffee. Ask around. You will be surprised at how many people would love to give you advice.

There are also a few things that are NOT effective when trying to determine your market value. These generally include taking shortcuts. Just like most things in life, the value of the information you get corresponds to the amount of effort you put into getting it. If you try to take a shortcut and just read a website or ask a few friends, the information you get will likely not be nearly as helpful as the knowledge you gain by doing the footwork on your own.

If you have good friends and a loving family, they probably think very highly of you and are pre-disposed to tell you that you deserve more money, that you are the greatest thing since sliced bread, and that if your boss doesn't give you more money then you should tell him to take this job and shove it where the sun don't shine.

While they may be right, that really doesn't give you any helpful or specific information to use when talking to your employer. Talking about salaries with friends can also sometimes lead to hurt feelings.

Another common short-cut is doing salary research on the web. A lot of websites publish minimum, maximum, and average or median salaries for different jobs. These sites are not a bad place to start your research, but they aren't always the best way to determine YOUR market value. They often take their data from a region of the country that overlaps, but doesn't exactly correspond with the region you are searching in. It's also difficult to make sure that your job title means the same thing as the title listed on those websites. In other words, just because you have a certain title, doesn't mean that you do the same job as someone else who is getting paid more at another company.

A few final words on asking for raises in general. You also have to take the financial state of your company into account when talking about raises. It may not be financially feasible for your boss to give you more money right now. If you can help your boss understand your market value, but there is no more money to be had at the moment, you then have to make a decision about whether to stay or whether to move on. You shouldn't wait forever, but patience and loyalty are often rewarded.

Part of your job is to help your employer understand your value to the company and what you should be paid. If you have done this well and continue to deliver value to your company, any good boss will fight to pay you what you deserve.

In upcoming posts on this subject, I'll explore some other things to think about when negotiating a raise:

• Your Replacement Cost
• Your Value to the Company
• Things NOT to Say When Negotiating a Raise

In the mean time, tell me what you think. How do you determine your market value?

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