At some point during your career—in fact, probably multiple times—you'll be in a situation that calls for a talk with your manager or a prospective employer about your compensation package, that bundle of offerings that tells you what the company thinks you're worth.
It may be that you've taken on more responsibility over a year's time, and you're feeling the need to get some financial recognition for it. It may be that several co-workers have left the team, and you're realizing that you're going to be doing their work for the long haul, not just as a temporary fill-in.
It may be that you've researched industry salary data and learned that your comp package is out of whack. Or perhaps you're about to start a new job and you know that the best time for the company to show you the love is when they want to hire you—not once you've already agreed to go work there.
Also, remember that sometimes a company—whether a current employer or a prospective one—can be flexible about things other than cash, such as vacation time, flex time, and working from home (see BusinessWeek.com, 3/11/07, "Telecommuting Now and Forever"). A word of caution, however: Such arrangements are often "off the record," and might go away if the manager who agrees to them does.
Whether you're hitting up your current boss for a bump in pay or looking to leverage a new opportunity, thinking ahead and planning your approach will be key to getting the compensation you're after. As with all career-related matters, you've got to be smart about it.
But in this case, you've got to be extra smart. One bad move could damage your chances of getting what you want. Who's going to pay a premium for someone who doesn't appear to be at the top of their game?
Here's a look at some of the common mistakes employees make when they're seeking a raise:
• Picking the wrong time to speak.
Hands down, the best time to approach your boss with a special request is just after he or she has praised your work. If you're thinking you're due for an increase, the moment just after your manager says: "You know, Stan, I'm so impressed with the way you've been handling the call center these last few months," is the perfect time. If you don't get that lucky opportunity, schedule a one-on-one with your manager in a private space where interruptions can be minimized.
• Making it personal.
You want to talk about your value to the team, but you don't want to lay a guilt trip on your boss,á la "It doesn't seem like you appreciate me." Instead, focus on what you've accomplished for the company and how much money you've brought in, helped to bring in, or saved.
• Speaking in generalities.
"I need a pay increase" is too general. Be specific about what you want, whether it's a 10% pay hike, an extra week of paid vacation, tuition reimbursement, a 15% of salary performance bonus, or the ability to fly business class. In case your first request doesn't work out, have alternative suggestions ready.
Some of the biggest mistakes people make when negotiating at a new job include:
• Getting low-balled because of your previous job.
Yes, everyone thinks they are underpaid—but it's possible you actually are! Maybe you were promoted at your previous company, meaning you didn't get the same money as an outsider coming in would have, or maybe you worked there a long time, getting only the standard 2% to 4% cost of living increases instead of the bigger bumps a change of employer would have brought.
Also, some industries pay better and have cushier perk packages than others, which you need to consider. Don't assume a new employer will be as stingy as your previous one. Remember, you deserve to be paid what you're worth, and the chance to get that is probably one of the reasons you're making a move.
• Not having a realistic idea of what you're worth.
The salary you'd like to make isn't necessarily what you should be making. While switching employers can be a chance to boost your salary, you need to know what's in the ballpark. Ask HR what the salary range is for the position you're interviewing for.
• Negotiating after you've already reached an agreement.
Yes, the best time to ask for what you want is when the company has indicated that they want you. And everyone knows that part of the "fun" of negotiating is the back and forth. And yes, you can do more than one round.
But once you have accepted someone's terms, it's bad form to come back and say: "You know, I really think I need more money/vacation/staff and just can't accept the job otherwise." Guess what—you already accepted! Should a company not rescind its offer—but trust me, it probably will—you are starting off on the wrong foot.
Regardless of whether you're looking to get a boost where you are or you're going elsewhere, remember that these are business decisions on both your end and the employer's. That means do not—repeat, do not—get emotional when negotiating. Your doing so will at best give the other side a leg up. At worst, it will make them think less of you, and that's not going to work to your advantage when you're trying to establish your worth.
Stick to comments like: "I believe" or "I think" or "I'm confident that" instead of "I feel." Better yet, use hard facts that will speak for themselves: "I saved the department 20% on production costs;" "The new technology platform I implemented has allowed us to cut tech support costs by 50%."
It can be hard not to get emotional, however. Beyond being merely a practical matter of survival, security, and solvency, compensation can be a matter of self-esteem.
After all, if your compensation is indicative of how you're valued by your employer, it stands to reason that less-than-great compensation is demoralizing. It's hard to feel excited about work and feel good about the work you do if you feel unappreciated.
If you find yourself feeling that way, then it's time to look to get more out of your job—financially and otherwise. Failing that, it's time to look for a new job. (If that's what it comes down to, take a look at "The Way to a Winning Résumé" and watch this video about online job searching.)
Someone once defined negotiation as a process by which both parties walk away equally dissatisfied. The flip side of that is both parties walk away equally satisfied. That's a worthy goal to shoot for. Take a look at our slide show for more details on negotiating pay and perks—and start planning your approach.