The secret guide to receiving a pay rise.
28 January 2016: Asking your boss for a raise can sometimes be a daunting task, however, with these simple steps, it’s no longer hard to ask for a raise.
When should I expect a raise?
Raises are normally awarded once a year but that depends on the stance of the economy and your employer's resolve. Raises can also depend on the demand for employees. Tech and finance industries are very competitive and are very raise-friendly. Since the decline of the economy, annual raises have become less common. Despite this, there are a few conditions that will help you secure more than just standard pay rises. If you always have your A-game on, you can make a convincing argument for why you deserve an earlier raise. If you’re in a competitive industry like finance, you can make the case for the demand for quality workers. The last condition is if you work in the food or retail industry.
Timing is everything
This seems like an obvious cliche but it’s true. Get the timing right when you ask for a raise since it can determine whether or not you get the raise. Consider what time of year your company grants raises. The company you work for may decide to offer raises at the end or beginning of the year. Sometimes there is no set rule on when a raise is granted at your company. Try asking around and get knowledge from people who have been given raises. Alternatively, take a look at the employee handbook and see if the company has laid out any guidelines to raises in their policies. Ask your manager how you would go about asking for a raise. It is always ok to ask but make sure you do it with timing. If your manager is really busy or is in a meeting, it’s probably not the best time to ask for a raise.
How to ask for what you want and get it
Know your manager’s personality. After working for your company for some time, you will have an idea of how your manager likes to be approached. If your boss is a straightforward person who doesn’t like to dance around the subject, it would be best to make an appointment with a clear subject in mind. Send an email or calendar invite saying you would like to sit down and discuss your salary. On the other hand, if your manager has a bit more of a nuanced approach, suggest a weekly status meeting where you can bring up your salary once you have started the meeting. When making your case, be upfront about what you want and explain why you deserve it. A raise is the recognition that you are more valuable now than you were - your skill has improved and you’ve accomplished more. Take note of your accomplishments, what your peers have praised you for and new tasks and responsibilities that you’ve taken on board. Use that information as a foundation and reason for why you deserve the raise.
How much should I expect from a raise?
Before deciding how much of a raise to request, do some homework on the company’s budget. You should be aware of the company’s budget and should request a raise that suits the budget. For example, if your company budgets for a 5% up stick, asking for a 10% raise will seem inappropriate and over-the-top. You also need to consider what the market is at a company of your size, for your skill level and your geographic area. Sites like Payrise Calculator and Pay Calculator are too general to work out an appropriate raise. Talk to people in your field, check with recruiters and scouring job postings that include salary will provide a range of ideas to help you figure out your sense of market value.
Do not threaten your boss
Threatening to leave unless you get a bigger paycheque is very dangerous territory. The majority of salary increases are based on a merit system. If you threaten your boss by telling them you have another job offer, your manager will not receive that well. It tells the manager that you already have one foot out the door. So even if they decided to give you a pay rise, they would know that you had thoughts about leaving.
What could I do with that extra bit of cash?
Now that you have that pay rise, what should you do with the extra cash? Although there is the temptation to live the lifestyle that suits your new income level, perhaps it would be better to continue living like you never got the raise and invest the money into other avenues.
Fixed interest and shares
Fixed interest investments like government bonds, term deposits or cash are good ideas for investors that are more cautious and don’t have a large amount of capital. There are a variety of managed investment funds that deal with assets which can provide a stable profit over a period of time. A 2011 Census data found that a 5% pay rise would mean an extra $3,900 in the bank for the average household in Australia. This may not seem substantial, but when it comes to shares, it could make you a lot of money. It may only take a few thousand dollars to invest in some shares which could give you a significantly higher return. However, if you don’t know what you’re doing, it is wise to contact a stockbroker or compare your options.
Build up your equity
Your home is an investment. As time goes on, your property may be worth a lot more than what you originally paid for. This could be the key to unlocking your comfortable retirement. Consider using your pay rise to make extra or larger repayments on your mortgage or home loan.
Build your super
Superannuation is one of your largest savings goals and it has one purpose: funding your retirement. So with the extra cash that you get with your pay rise, you might want to make extra deposits into your super account so you have the retirement you always want. All these ideas are investments so you have to be aware that there is a degree of risk to it. So before you rush into the stock market and other investments, you may want to talk to a financial adviser for more information and how other investments could work for you.