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How to negotiate a salary raise
The sun always rises in the east, the only certain thing in life is paying taxes, and people don’t always get the salary raise they deserve. I’d like to help you with the latter.
This article focuses on the role of your annual performance review in negotiating a salary raise in your current job. I won't go into negotiation tactics in this post as I'm saving that for a separate article coming up in the next months.
Why performance reviews matter
How you structure your performance review — which usually takes about an hour — has a direct influence on your potential salary raise. Generally speaking companies will provide anywhere between a 1% - 10% annual raise depending on how well you've performed. That makes your review one very important hour.
To put that into context: if you were to pick up an extra 3% salary increase on a median Dutch salary you're talking about an extra €1100 per year in direct gross income, increased employer contributions to your pension and next year's salary raise in percentages will equal a higher number in absolute euro's. All I'm trying to point out is that it's worth investing some effort into that one conversation.
My advice is based on two assumptions:
You are indeed great at what you do and a top-performer
You're not moving into a new job/position. If you've been promoted or taken on materially different responsibilities you shouldn't settle for a regular raise
Follow these guidelines and by the time you have your next performance review, your negotiation skills will barely even matter. The decision to give you a raise will have slowly and surely been made over the course of a year.
#1 - Don't accept a mediocre review
We've probably all had a manager in our life that turned reviews into awkward monologues filled with vague and hollow statements about your performance.
Just because your manager has difficulty conducting a structured review shouldn't withhold you from adding a bit of structure to it yourself. There are two things I recommend making sure take place as part of your review process:
Ask your manager to provide concrete examples when feedback is given.
Document the feedback and the outcome of the review conversation somewhere.
Poor managers have a tendency to prepare for reviews in the 15-minutes prior to the meeting, which means they're likely to provide feedback based on recent events only, or worse, provide feedback based on their own subjective feelings.
Asking for concrete examples will help separate the feedback that has merit from the random and unsubstantiated assumptions, which will help you:
Understand better what to actually improve about your performance
Nudge the goal-setting part of your conversation in the direction of the improvement points that have clear examples of what to change
It doesn't really matter where the review is documented just as long as it is. Part of the strategy is referring back to the goals in your next review which is why it's imperative they were documented and not verbal commitments only.
For this article I decided to run a performance review with myself to show you an example of what minimum documentation could look like.
#2 - Set clear goals for the next 12 months
Here's the key to the game I want you to play.
Once you and your manager have reviewed your current year performance and start looking at the next year ahead, ask your manager this:
“What goals can we set in order for me to achieve an outstanding performance review in 12 months and the maximum salary increase?”
Practice that sentence out loud in front of the mirror if it makes you nervous, because it shouldn’t. What you’re asking for is perfectly normal. How are you supposed to deliver exemplary performance if you don't know what that performance looks like?
The goals you set together need to be documented or else you'll never be able to prove 12-months down the line that you did everything that was asked of you.
Secondly, every goal you put on paper needs to be SMART (Specific, Measurable, Achievable, Relevant, Time-Bound). If your goals don't match these criteria, you're going to leave room for ambiguity and discussion as to whether or not you completely achieved the goal. Let me give you a quick example to illustrate:
POOR goal: help other teams work together more effectively with the marketing department.
SMART goal: help other teams work together with our department more effectively by organising four company-wide one hour workshops on successfully collaborating with the marketing team.
The POOR goal leaves it unclear at what point you've done enough to complete it. The SMART goal leaves no room for discussion; either you achieved it or you didn't.
#3 - Revisit your goals once a quarter
Goals are like Pokémon, you gotta catch ‘em all.
The tactic here is to slowly but surely add a checkmark behind every goal that you had set up together with your manager. All you do is ask:
“Looking at the goals we set up earlier this year, how do you feel I'm doing at the moment. Can you tell me which of these you feel I still need to work on?”
Don’t wait for your midterm review to start asking this question, but ask regularly so you receive a more constant loop of feedback. Monthly one-on-one meetings are a great opportunity to do so, but at minimum make sure to check in once a quarter.
As a side-effect of reviewing your goals, your manager will slowly get into the mindset of acknowledging you are doing exactly what he/she confirmed would earn you the maximum salary increase at the end of the year.
#4 - Add value to core company goals
Every commercial business has one metric that all managers answer to: profit.
Find creative ways to contribute to the bottom line of the company and you'll find that you'll be making it much easier for your manager to give you a raise. Remember that he/she is probably negotiating team salaries with the CFO, so it helps if people in leadership recognise that you understand what the business is ultimately about.
I hear you thinking: “but I'm not in a sales position Wytze”. Well, you don't have to be.
In fact, the further removed your position is from sales, the more relevant this point becomes. You'll probably need to step outside of your job description to make a meaningful contribution and that makes it easier to get positively noticed.
You could contribute to the bottom line in so many ways:
Introduce a new lead from your personal network to the sales team
Review the online tooling your team uses to save costs for the company
Join a sales team meeting to ask how you in your role could help them achieve better results and inform them of relevant information from your work domain
Use your personal LinkedIn to share news about company products
If your company's leadership team works with OKRs or a similar goal-setting framework to outline the company strategy for the year — take notice. They'll probably list other core company goals besides revenue/profit that you can integrate into the personal goals you set with your manager.
#5 - Great performance needs to be seen
Everybody dislikes ass kissers, but the reality of life is that you need to claim credit for the great things you achieve. This is your own responsibility.
I used to be disgustingly good at this while in school studying to be a hotel manager. During our practical course in the Housekeeping department I'd use the walkie-talkie to casually inform my manager that I noticed a mess in the hallway on my way back from cleaning one of the rooms, decided I would clean it up and might be back later because of it. My actual cleaning skills were nowhere near perfect, but I received the highest grades because my manager kept thinking “this guy understands it”.
The easiest and most under-utilised way of keeping the right people informed of your achievements is to volunteer to present an update on the project you're working on during an all-hands company meeting. I can tell you first-hand that leadership is extremely grateful towards employees stepping forward, so you'll effectively be doing yourself two favours: helping them out and reminding everyone of your achievements.
#6 - Treat your manager as your friend
It can be tempting to try and play hardball with your manager about salary raises you feel you deserve, but I speak from experience when I tell you: be careful.
Your manager is the person defending your salary raise to the manager above her. She's going to fight harder for you if you give her the impression you're both on the same team trying to accomplish the same results.
Consider your manager an ally in helping you develop the best career possible under your current employer.