As the year comes to a close, many hand-working employees find themselves facing their annual performance reviews. While these evaluations can be somewhat nerve-wracking, they present a great opportunity to improve your financial wellbeing. By highlighting the contributions you’ve made to the workplace during the past 12 months, you place yourself in an ideal position to ask for a raise.
In this blog post, we’ll explore how to negotiate a raise during your annual review. We’ll help you understand why it’s crucial, how to effectively prepare for the conversation, and a few tips that can help ensure success.
How to Negotiate a Raise: Why is it so Important?
Before we dive into the details of how to effectively negotiate a raise, let’s take a closer look at a crucial issue: Why are raises so important? A raise is more than just extra funds in your bank account. It’s about getting fairly compensated for the hard work you’ve done in the past year.
Here are a few reasons why you should never hesitate to ask for a raise:
- Higher job satisfaction leads to more productivity: A Gartner survey of more than 3,500 employees found that only 34% of respondents believed that they were getting paid fairly for their position, geographic location, and industry. But underpaying employees can negatively affect an organization. A content employee is generally a more productive one. People who believe that they’re being paid a fair salary are more likely to feel truly valued by their employer.
- Fair compensation matters: Negotiating a raise during review season ensures that you’re being fairly compensated for your skills, experience, and hard work. A competitive annual raise confirms that your company considers you a valuable asset. Requesting a raise also conveys to your employer that you understand your worth. Regardless of how much you love your career, being underpaid is demoralizing, frustrating, and shows that you’re undervalued.
- Financial wellbeing: Let’s face it, a higher salary can potentially increase your financial wellbeing. A bigger paycheck can help you achieve your financial goals faster, whether it’s paying off student loan debt, contributing more to your retirement account, or securing your future through investments.
What You Should Know Before You Ask
Now that you understand why negotiating a raise can be beneficial to the advancement of your career and your wallet, here are a few tips that can help:
- Know your worth: Research the ideal salary range for your experience level, position, industry, and location. Websites like Glassdoor, LinkedIn, or PayScale offer valuable insights into what other people who hold similar roles are earning.
- Keep track of your achievements: Maintaining a professional journal is especially helpful when review time rolls around. Throughout the year, make sure to document any accomplishments, praises from co-workers, and noteworthy contributions that you made to your company. Include the date and specific project, highlighting how your efforts helped the organization.
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Practice, practice, practice: Before meeting with your manager, make sure to rehearse the key points you want to discuss. You should also prepare responses to potential questions, rebuttals, or arguments, just in case they arise. Remember to practice staying calm and professional.
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Timing is everything: It’s important to choose the right moment for the negotiation. Ideally, this should be toward the end of your annual performance review, when the subject of compensation is already on the table.
How to Negotiate a Raise Effectively During Your Annual Review
Negotiating a raise isn’t just about asking for more money. It’s a nuanced conversation that must be approached the right way. These tips can help:
- Begin the conversation on a positive note. Make sure to express your appreciation for the opportunity to discuss your salary.
- Highlight your achievements and skills, along with the compensation data you’ve gathered to support your request for a raise. When it comes to these types of discussions, soft skills matter. Remain polite, and avoid responding emotionally. Present your case and state the facts.
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Be open to feedback. Does your manager feel that your work performance during the past year isn’t worthy of the raise you want? Are there areas where you could improve? Did you fail to carry out certain job-related duties? If so, make sure to actively listen to their feedback without becoming defensive or confrontational.
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Stay flexible and remain open to future discussions. It’s important to listen to your employer’s perspective and remain willing to compromise if necessary. Even if your raise is denied at this time, the conversation opens the door for future negotiations. You can also explore other benefits, such as extra vacation days, more flexible hours, or professional development opportunities.
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Follow up on the conversation: If your annual review doesn’t result in an immediate raise, ask your manager for the best time to have a follow-up discussion. This demonstrates your commitment to the company and interest in professional advancement.
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Don’t be afraid to ask for advice. If you’re still feeling unsure about how to negotiate a raise or feel uncomfortable with the process, seek out advice from a professional mentor, preferably someone with a bit more experience than you. How did they negotiate raises in the past? What negotiating strategies and techniques worked for them? What didn’t work?
Negotiating a Raise: Working Your Way Toward a Brighter Financial Future
Negotiating a raise during review season can be a pivotal moment in your career and financial journey. It’s an opportunity to highlight the recognition and financial reward you deserve for your hard work and accomplishments. And remember, it’s about more than just money; it’s about recognizing your worth and investing in a better financial future.
Working with a CERTIFIED FINANCIAL PLANNER™ professional can help you develop the right strategy to reach your financial goals, from tax-saving strategies to retirement planning and more!
Schedule your free consultation today!