A few years ago, you might have been grateful just to have a paycheck—even if it wasn't as fat as you deserved. Today, you finally have the upper hand again when it comes to asking for a raise.
You can thank the rapid improvement in the job market in the last year for that. Unemployment is expected to drop to 5.4% by the end of this year, and 57% of companies say they are worried about retaining workers, up from 20% in 2010, according to PayScale.com's Compensation Best Practices Report.
That's putting pressure on employers to boost compensation: 82% plan to increase salaries for current employees this year, up from 73% last year, according to CareerBuilder's latest jobs forecast.
"Workers should be feeling pretty good about their chances for getting a raise this year," says CareerBuilder's Mary Lorenz. Music to your ears, right?
The average worker should see a salary bump of 3%, according to estimations from Mercer’s 2014/2015 U.S. Compensation Planning Executive Survey. But those who are top performers or have in-demand expertise could see their paychecks rise even more. The average boost for the most valued employees will top 5%, according to Mercer.
To go from a so-so raise to a big bump up, here’s what you need to do:
Get on Your Boss's Calendar
Don’t wait until performance-review time, typically in the spring, to ask for a raise. Not only will you have more competition from coworkers then, but budgets will already have been decided—which will make it harder for your supervisor to get you more cash even if he or she believes in your cause.
Assuming you and your company have had a good year—the latter also being a must—schedule a meeting with your supervisor ASAP before your window for the year closes.
Sure, even the most confident of workers may find it intimidating to call a meeting with the boss and ask for more money. But the odds are good that your boldness will pay off: A recent PayScale survey found that 44% of people who asked for a raise received what they asked for, and 31% more still got a raise, just less than they requested.
Collect Some Evidence
In the meantime, to help make your case, gather accolades from the past year.
Pull together emails of praise from higher ups, ask happy customers or clients to write testimonials for your work, and make a list of your major accomplishments, quantifying them as much as possible. Bottom-line-focused supervisors will especially want to hear about how you've boosted revenue or cut costs.
Put a Number On Yourself
"It's important to go in with a number in mind," says CareerBuilder's Lorenz. "You should know your value and be able to go in with an idea of what you think you deserve and be ready to explain why."
Your ask should be based around what others are getting, since you'll shut down the conversation fast if you request a boost that’s out of the ballpark.
Start by seeing where your salary falls compared to others in similar jobs with the same skill set and years of experience, using sites such as PayScale.com and Glassdoor.com. Keep in mind that top performers may earn 10% to 15% more than these averages.
Put your findings in perspective by determining what's realistic at your company. If you have a manager you're close with, a higher up mentor, or a friend in HR, ask for insight on salary ranges for people at your level or on how much the company is budgeting for raises this year on average. If you're a top performer and can prove it, you should feel comfortable asking for more than the average.
Make Your Ask
You've got your proof and your number, so you're ready, right? Not quite. Ideally, you'll want to do a run through of the conversation with someone, since practice will make you more comfortable when you're in the moment.
You might start the conversation something like this: "Hey Jane, my department had a really great year in 2014, and I was hoping to get your feedback, talk about ideas going forward, and discuss my compensation."
Then, dig into your successes. Since your boss may not realize all that you've accomplished, you should make him or her aware by pointing out a few key highlights from the "to-done" list you made. You could say, "I don't know if you're in the loop on everything I've accomplished this year, so I just wanted to point out of few of my biggest successes..." Bring up the testimonials where relevant.
Talk not only about your achievements but also about what you are going to tackle next. Your boss is more likely to reward you if you’ve got a plan for what you will do for the company, not just what you did.
Have a Plan B
The best outcome is a permanent boost in your salary. But if that’s not possible, ask for a bonus. One-time rewards, including spot bonuses and project completion bonuses, are on the rise as more companies worry about retaining employees, the WorldatWork Survey of Bonus Programs and Practices 2014 found.
Spot bonuses typically range from $2,500 to $5,000.
Be aware that income taxes can lop off up to 40% of the bonus, so ask if your company will “gross up” the reward so you actually get the whole amount.
Be Ready to Jump
You’re not always going to get what you want. If budgets are tight or layoffs are looming, your manager’s hands may be tied.
So you may have to leave to get that raise. But the good news for you is that even in good times, the biggest pay jumps come when you switch to a new job.
Job switchers simply have more leverage when negotiating salary, especially since the number of employees voluntarily quitting is at its highest since April 2008, according to the Bureau of Labor Statistics' quits rate measure.
That leaves employers with a lot of empty positions to fill, and they are showing their eagerness to put bodies in these slots: The average wage growth for job changers rose from 4.3% at the start of 2013 to 4.5% at the end of 2014, according to a report by the Kansas City Federal Reserve.
So whether you stay or go, the chances are good that you'll make more money in 2015.
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