The process of handling raises differs from company to company.
Some companies have fixed raises, and they have a process for extraordinary raises. This process has to be executed, and approvals have to be collected. If you are with a bureaucratic company, this process may be quite complex. Either way, your job is to figure out the obstacles, and assertively follow up the progress of your quest.
The other extreme case is when there are absolutely no rules. This happens in smaller companies, where salaries tend to be lower, but flexibility is maximal. Alternatively, if your perceived status is very high, and your role is unique enough, you might be able to dictate the price of your services. If you are one of the five experts in the world who is capable of handling the after-effects of the explosion of a nuclear power plant, and all five of you are needed for an emergency, money will not matter.
The absence of rules does not mean that the sky is the limit. Treat this condition only beneficial for the absence of formalities, processes that bind your manager. You still have to do your best to increase your market value, and you still have to negotiate.
Most companies nominate a key person for handling the budgets of a department. They are responsible for distributing raises based on the suggestions of leads and managers, and some public or private heuristics. In extreme cases, even if the budget is spent, there is limited room for requesting additional budget in order to handle an emergency situation.
Let us clarify what an emergency situation means. Suppose you are a very important person, whose contribution is literally irreplacable in the company. If you leave, an important project of the company will be significantly delayed. Suppose you are earning $80.000, and another company is offering you $95.000. This is a take it, or leave it situation for your company. If the company needs your services badly, they will be ready to pay you at least $92.000, if not $95.000, as they will still make money on your contribution, and business continuity will not be under threat.
Be aware that the above paragraph only describes the process of emergency situations. Note that waiting for a counter-offer upon receiving an external offer is a weak solution, often originating from low self-esteem. There is almost always a cleaner solution, that has an equal expected outcome.
Pay attention to one more important aspect: the financial year. Some companies get new budget constraints before a new financial year. Time your request whenever you sense that there is some money left to accomodate your request. Your chances are the best a couple of months before the start of a financial year, as the budget owner has the time and flexibility to use any unused money left from this year’s budget, or he can plan your raise in advance, and possibly ask for more budget on time.
Some companies have a fixed month to administrate all raises. If the financial year starts in January, it makes sense for the company to handle all raises in January and in July. Other companies operate with possible raises every quarter. Know these months, as worst case, you may end up with a waiting time of five months, unless you want to create a hard time for the budget owner.
Do your best in solving the problems of your manager. Don’t create problems by overlooking important budget constraints, unless in case of an emergency.
As you should have already established some communication channels in your company, chances are, it will be easier for you to find out when to ask for a raise.
If you are unsure, depending on the company, it may be a correct solution to ask your lead about this.
Treat the transaction of asking for a raise as a trade. You offer services in exchange for money. As you increase your career capital, you can get away with charging more. Your career is a business, where your employer is your client. In fact, think of your employer as a VIP client. They purchase your services in bulk, and they should receive VIP service in exchange.
In business, prices are shaped by demand and supply. Employers purchase your services in bulk, because they are looking for someone to cooperate with in the long run. Many companies pay up to five figures for replacing a professional candidate. Even if your replacement is just as skilled as you are, it takes time until a new hire gets up to speed. Therefore, it often makes sense for employers to give incentives to employees they want to keep in the long run.
In some cases, employers reward effort and loyalty with extraordinary raises. I have had the privilege of wittnessing this phenomenon. Some companies proactively reward talent.
Other companies react to your requests. As a business, you have the right to set your prices. However, just announcing that from 2017, you are going to increase your prices by 15% will rarely be successful. This is not the way of communication employers are used to, and this is not the way how you should treat your VIP client either.
First of all, without helping your team succeed, and establishing a feedback loop, chances are, your managers will not be in a position to judge your career capital.
Second, you might ask your manager what is important to the company in the near future. Prepare an irresistible offer based on the feedback you got. Don’t hide that you are looking for a raise, and maximize your chances by announcing what you are planning to offer in exchange. Show flexibility by adding that you are open to making changes to this plan in case your manager finds that other things are more important.
Negotiations are always balancing acts. Assertiveness helps a lot. You are assertive when you represent your own interest, while considering the interest of others. In other words, you create win-win situations.
Being submissive is problematic, as you might not even get to a performance review. Being submissive means that you consider the interest of others more important than your own interest. After all, it does not matter that you are looking for a raise. What really matters is that you don’t bother others. Being submissive is the least successful approach.
Aggression is also problematic, as you may burn down bridges that you may want to use in the future. I have heard of people demanding raises, or claiming that they deserve a higher salary. This approach is wrong. Your managers may cooperate with you for a while, but your aggression will act against your career prospects. I highly recommend learning to be assertive instead.
There is a chapter on assertive communication in The Developer’s Edge – How to Double Your Career Speed with Soft-Skills. Use this link or click the below image to purchase it at a 33% discount until December 19th, Monday midnight.
In some cases, you don’t have to overcomplicate this step. If your compensation package is clearly below market value, and there is no clear reason why you shouldn’t earn more, a clear, unbiased study about your worth in the market may be enough to help support your cause. I still highly recommend giving your best, helping your leads, and establishing feedback loops.
Last, but not least, if the company is not in a position to give you a raise, don’t hold yourself back. Still give your best, and don’t fall into the trap of limiting your performance in order to “punish” the company. Remember, the company you work for is your VIP client.
Sometimes companies are biased when talking about salaries. The recruitment team often has many points of reference about people working in their company. If the average salary in the company for a given position is $65.000, and the market average is $72.000, the hiring managers may not even know that they are paying below the market average.
The smaller the company, the more flexible salaries are. In case of big companies, policies about raises, starting salaries, and bonuses often tie the hands of the HT team.
It is your job to research your market value. The more accurate and the more unbiased your research is the better. Include multiple sources in your research document. Some sources are:
- payscale.com is one of the best resources you can get. Once you fill out their form on your current position, experience, qualifications, and skills, you will get a detailed salary report showing you the median salary, the top 20% mark, and the top 10% mark. You will also find out the percentile your salary is in.
- glassdoor.com gives you a lot of salaries. If your company is big enough or you are lucky, you may even find the salary of your colleagues.
- stackoverflow.com gives a competitive advantage to jobs with a specified salary range. I have always found valuable and verifiable information there
- Other job boards also have open salaries.
- Google is your friend. Especially for offers in the top 20 percentile, I tend to use google as a job search site. For instance, if you want to find out if you can earn 80.000 euros as a Java developer in Munich, Germany, use the search expression “Java developer munich 80000”. At the time of writing this article, page 1 of google gave me links to eight different job sites, with Java developer and senior Java developer postitions that pay up to €80.000. Some of the indexed results may not be available anymore, but they can still be used in your salary research document.
- Conversation with your colleagues. In some cultures, salaries are taboo. In others, people speak about salaries openly. Some companies force you to sign a clause in your contract forcing you to keep your salary a secret. Others publicly list everyones’ salaries. Depending on the circumstances, I have always found partners for information exchange. The more you know about salary levels, the better your judgement is. After all, you are not a CEO, and you are not working in HR or finance, so you are at a disadvantage when it comes to data available to you. Conversations about salary exchange generally does not hurt anyone, provided that you choose an emotionally intelligent and mature person for discussing salaries. Use these discussions only to formulate hypotheses about what is possible inside the company. Don’t expose other peoples’ salaries, and never formulate an argument around other people earning more than you.
Technically, you could talk to recruiters to get additional reference points. However, I advise against doing this, as you may easily end up with an offer even if you don’t want to get one. Recruiters are often very pushy, and they will do their best to earn their commission. The downside of talking to recruiters is that they possess exclusive rights on you, should you apply to a company they submitted your resume to. In other words, they will make your services more expensive in the first year.
Once you finish gathering data, prepare a small salary research document. Use the PayScale template as an example, and include a verifiable link to it so that your employers will be able to regenerate the data if they chose to.
Include a couple of other links that you have found. These links should validate that all ranges of developer positions are available that serve as examples for the PayScale data.
Don’t overdo it, you don’t want to come up with twenty pages of references. A simple A/4 page containing PayScale data, some Glassdoor results, and some other job ads will be enough.
It is likely that you won’t need the salary research document at all. However, bring it with you once you make the pitch, so that you can hand it over if your lead wants you to.
It is a successful strategy to be open about your research, and sticking only to the necessary information. You may even mention numbers in your research once you get to it. It makes sense to hand over your research document by asking your lead if he is interested in using your research document to inform HR about market trends.
This is the end of the three part series on getting raises. Chapter 6 of The Developer’s Edge is about negotiating raises and promotions. Click here to get the book for at a 33% discount until December 19th, or read the first two chapters for free.