The Negotiator Magazine

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NEGOTIATING PAY INCREASES

Individuals already employed by firms must frequently negotiate future compensation increases. They need to ask themselves the best way to bargain for the terms they wish to obtain. Too many employees make the mistake of asking their superiors for raises based upon their personal needs - they wish to purchase a more expensive house or have children entering college. Company officials are rarely moved by such entreaties, because firms are not charitable organizations. They exist to make money for their shareholders. They don't advance their profit-maximizing objective by giving their employees raises to cover new homes or college tuition; they instead give workers raises based upon their contributions to the firm.

Individuals seeking pay increases need to provide their managers with reasons the company should want to improve their compensation levels. They should cite the amount of new business they have recently brought to the company, the improvements they have made in existing systems, or their successful implementation of new programs. They should prepare for their interaction as thoroughly as they would for any other important bargaining encounter. They should gather relevant information from coworkers and friends at other companies, and from business sources regarding compensation levels for similar positions.

If their firms have regular performance reviews, they should raise the issue of compensation increases during such a session. If they are not scheduled for such a periodic review, they should try to select a propitious time to ask for the desired increase. If their manager has been particularly focused on other matters, they should wait until things calm down if possible. It can be beneficial to wait until the firm has announced positive financial information indicating increased revenues. They should try to schedule a personal meeting in the manager's office, so they will have that person's undivided attention. It is difficult to discuss a pay increase with someone who is simultaneously taking phone calls or conducting other unrelated business at the same time.

In the meeting, the persons seeking a raise should mention the work they have been successfully performing, and detail their current capabilities. They should also mention any skills recently acquired through training programs or advanced education. Have they accepted additional responsibilities that have made them more valuable to their firm? Are they willing to assume additional responsibilities if this would enable them to advance within the organization? These are especially important considerations for persons who are presently being paid what comparable employees are earning.

People who learn that similar employees at this company are earning higher salaries should casually mention this factor, since most firms try to maintain equitable compensation levels among comparable employees. They may not realize that someone has fallen behind, and take action to correct this situation. This factor may be especially relevant for someone who failed to negotiate his or her initial salary and thus began behind others who took advantage of the opportunity to do so.

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September 2005