Recently, the Federal Reserve announced an interest rate hike of 0.75% to reduce overall demand in the economy and slow down price growth. This move isn’t surprising given that consumer prices rose 9.1% in the 12 months ending in June after an unprecedented surge in gas prices. With inflation hitting a 41-year high, you may be considering whether you should ask for a raise at work. The truth is that there’s never been a better time. With prices skyrocketing, if you didn’t receive a significant pay increase this year, you’re actually losing money.
One reason it’s the perfect time to ask for a raise is that employers are still struggling to find top talent, with many increasing salaries to fill open positions. The current labor shortage gives employees leverage in the job market, especially with the rise in remote work opportunities. Companies also know that it costs more to replace workers than to provide them with a salary increase. SHRM estimates that the cost of replacing an employee can run as high as 60% of their annual salary, with overall costs ranging from 90% to 200%. Retaining employees generally results in higher productivity and profit margins for the company. So it’s really in their best interest to keep you from walking out the door.
The question is, how do you approach your boss to ask for a raise amid soaring inflation? The key is to know how much you’re worth and be able to explain why. These five simple strategies will get you started.
Do your homework
Before you ask for a raise, know what a competitive salary looks like for your position. Sites like Salary.com and PayScale offer free salary reports to see how your current compensation compares to similar roles elsewhere. Other reliable resources include Glassdoor and Comparably. LinkedIn is another great resource. Many times, job postings will list salary information. Or you can use LinkedIn’s salary tool to see a detailed breakdown of compensation data by job title and location. While online information is a good guide, there’s no substitute for talking to your colleagues. Start with peers you trust, and then tap into your extended network. And if you know people in the industry who are recruiters or hiring managers, even better.
Address inflation
With price surges outpacing job growth, it’s not unreasonable to introduce inflation in your negotiation. And you wouldn’t be alone. A recent survey by staffing firm Robert Half revealed that nearly 62% of respondents said they plan to ask for a raise this year, with the top reason being to adjust for the higher cost of living. So first, determine if your employer already accounts for cost-of-living increases when giving salary increases. If not, factor that in when you crunch the numbers to determine how much to ask for. You can even use the current market conditions to explain why you feel it’s a good time to revisit what your work is worth.
Consider the timing
Most people wait until performance review time to ask for a raise. Ask your boss about the timeframe when salary increases are determined. Then approach them with your request before annual budget adjustments are finalized. If there’s no official schedule for salary increases, pick a time when you are clearly showing your value. For example, did you just land a high-profile client or close a record-breaking deal? Asking for a pay increase following a major accomplishment is the ideal time. Another argument for a salary increase is that you’re taking on responsibilities beyond your job description. If you contribute significantly more without a pay adjustment, that’s a perfect opportunity to ask for additional compensation.
Focus on your value
Start by evaluating your performance over the past six months or a year. Then highlight how you’ve made your company more profitable or added value to the organization. The stronger your case, the easier it will be for them to say yes. Sometimes your boss isn’t even aware of everything you’re working on, so it’s a good idea to create a presentation they can share with internal stakeholders. That will make it easier for your manager to sell your skills and abilities to the rest of the leadership team.
Be prepared with alternatives
While a salary increase is the best scenario, your employer may still decide it’s out of the question. You should first ask what you need to deliver to get one. Then, ask for something else. One option is a one-off bonus which is generally easy for companies to offer. If that’s off the table, there are other perks you can negotiate for like increased flexibility, additional paid time-off, transportation reimbursement or child-care assistance.
While the negotiation process seems intimidating and uncomfortable, it doesn’t have to be. If you do your research and are prepared with compelling data, you will feel more confident initiating the conversation. You get what you dare to ask for in life, so be bold. If you don’t ask, the answer is always no.