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Q: I finally got a raise this year ... woot woot. I know, I know ... I should probably be happier than I am. I have been waiting so long for this. But when my boss finally gave it to me, it was a 4% increase.. four percent!?! I feel like I've been working my butt off and now when they finally recognize my contribution, I get a lousy 4% bump. BTW -- its 4% of a very small number to start with - I feel like i'm stuck in quicksand. How the heck can I increase my salary in a meaningful way?
A: I feel your pain. You've hit on one of the most frustrating dynamics we face in our careers and one I don't think most people fully understand.
The cruel irony of corporate tenure is that the longer you're employed with a company, the harder it seems to be to get a substantial salary increase.
You've worked hard, you've been loyal to the company for years, you've got the experience and you know how to get things done in the organization. But when it comes to salary review time ... nuthin. Meanwhile, you watch as shiny new people join the company and deep down inside you just know they're getting paid more than you. Why else would they be so happy? And what's with that Prada laptop case? It better be a knockoff ... Its so frustrating. Then you hear whispers about colleagues who finally got so frustrated that they threatened to quit if they didn't get more money - and voila, they got a big increase. Is that the right move? The nuclear option?
Unfortunately, like many tough situations you're going to face in your career, there is no rule book for how to handle this scenario.
It's really hard to know what to do. And so, most of us do nothing. We keep working hard. We sit in silence. We quietly bemoan the injustices beset upon us. We complain to our husbands and wives. And we never get what we deserve.
Here are the four most important things I've learned about raising your salary:
1. Avoid ultimatums at all costs.
The "pay me or I'll quit" ultimatum is the nuclear option. Its mutual assured destruction. It should only be used when there are no other options available and even then the outcome will almost certainly be bad for everyone. The problem with the ultimatum is that your boss can never unsee it ... like that time you walked into your parent's bedroom without knocking first ... oh dear god no. When you threaten to quit or you resign as a negotiation tactic, you've permanently altered the relationship you have with the company and your manager. So even though it might work in the short term - your boss might give in - you lose in the long term because the bonds of trust have been broken. You effectively held yourself hostage and forced your boss to pay the ransom. There's no fixing that. From that point forward every time your boss looks at you, you'll be the one who bullied her. So when exciting projects come up, new opportunities arise, there will always be this hint of distrust in the relationship such that will make it even hard to get ahead. Some managers just won't negotiate this way at all. They realize that when an employee resigns or threatens to resign that they're already too far gone to save. Moreover, that by rewarding this type of behavior, they set a dangerous precedent for others in the company. This is another reason not to get into ultimatums unless you truly have no other option and you're really prepared to leave the company.
2. Take a longer term view.
Nobody wants to hear this but I'm going to tell you anyways because I learned this lesson the hard way and I want to help you avoid that. When I look back on the early years of my career, I see now that I burned a lot of bridges and a great deal of emotional energy over what was, in retrospect, a pretty insignificant amount of money. I remember caring so much about the difference between my 33,000 salary and the 40,000 I thought I deserved. It really affected me. It had a major impact on my attitude at work, the decisions I made, and ultimately led to a pretty lackluster performance. Eventually I did get the 40,000 I wanted, but at what cost? The thing about income is that your mindset should always be on calculating the expected value of each action you take - you have think about the net present value of the earnings you'll make in your career and make the best decisions to maximize that. And many times that means taking a longer term view - forgoing short term gains to optimize your career path such that it will lead to bigger earnings down the road when you get into bigger salary levels. For example, you could torpedo your relationship with your boss (as I did) to get that 7K salary increase but if it means that 2 years from now when he's at a new company and looking for a new director of marketing that will earn 100K a year ... is he going to choose you? I'm not saying that you should avoid negotiating your salary in the early stages of your career. What I am saying, is that you need to make sure you focus on optimizing your path to the higher income ranges which sometimes means you need to be a bit more patient when the stakes are lower to get to higher stakes faster.
3. Always be working towards a promotion.
You might think this one is self-evident but most people I see are not actively working with their boss towards a promotion. If you aren't, you should be. The fastest path to material salary increase without changing companies is to get a promotion. Annual increases and inflationary adjustments will never change your fundamental salary dynamic. You might slowly earn more but you won't be increasing your income relative to everyone else - you'll just be keeping up. You also won't be changing your salary level which is key to breaking out of the lower end salary ranges and into the higher brackets. Check out myblog on getting promotions for strategies I've used to jump up in my career. The most important thing to know is that you should have a promotion plan at all times and you need to be engaged in an ongoing dialogue with your boss as you work towards achieving it. A promotion isn't something you ask for. It’s not a request. It’s a journey you embark on over many months with your boss as your partner.
4. Don't job hop - make purposeful moves.
Job hopping is a pretty hot topic at the moment. You can read my blog on the subject which explains in detail why I think it’s a flawed career strategy. It’s no secret that the easiest way to get a significant salary increase is to change companies. Internal promotions and increases tend to be incremental, 2%, 4%, maybe 7%. So the prospect of becoming a free agent can seem alluring. But in the long run, jumping from one company to another every 2 years isn't going to get your where you want to go. It might seem like these jumps are the best way to get meaningful salary increases but in the long term there are diminishing returns as your resume starts to raise red flags for hiring managers who don't want to make a significant investment in a job hopper. It might work in the early stages of your career when you can get a nice salary jump at the new company, but it will actually hurt your chances of landing management and executive level roles down the road where the salary bumps will be so much bigger. Job hopping is pretty short sighted but purposeful company changes at key points in your career actually make a lot of sense. My experience tells me that you need to stay with a company for at least 3-4 years in order to take advantage of all the opportunities to learn and demonstrate your ability to develop and grow. You want to work at a place long enough to show a track record of promotions and role expansions to make you more attractive when you ultimately test the external job market. In this way you're probably forgoing some smaller salary bumps along the way but you're positioning yourself for a bigger wins when you inevitably move to another organization.
We all want to earn more money. We want to be appreciated for our contributions. It can be extremely frustrating especially when you've worked for a company for a number years without a material salary increase. I hope by sharing some of the lessons I've learned along the way will help you avoid my mistakes and get the job and the salary you deserve.
Let me know in the comments about your experiences trying to get a salary increase.