While Leadership Expert Blog mainly discusses modern leadership issues, I think that if there is a demand for information on a different topic that affects the working lives of readers, then it also deserves a dedicated post. Pay rises or salary increases are one of these topics. I receive at least 2 unsolicited queries a week from visitors asking for tips on how they can bump up their pay packet. This article attempts to answer these questions!
Why do you go to Work in the Morning?
Before we jump straight into a range of techniques, let’s step back and take a look at why you are where you are. No, this isn’t padding, this is important. I want you to think deeply about why you are working for your current employer. Are you working there because you like the environment, love the people you work with, enjoy the job? Or alternatively, is the good salary the only thing holding you to that business? The answer to this question will put you into one of two categories of people. You should implement wage-increasing strategies that is relevant to your situation only, don’t pick and choose from both.
Type A: The Diversified Employee.
A diversified employee finds many elements of their job satisfying and sees pay as only one part of the reason why they work for their employer. It will take a significant increase in pay (20%+) to lure this employee away from the company. Other sources of satisfaction could include relationships with collegues, a sense of purpose within the organisation, good working hours, other perks of the job or a cosy sense of familiarity.
Type B: The Ship Jumper
A ship jumper finds that their wage is without doubt the domineering reason why they choose to remain at their employer. The ship jumper is either largely unattached to their company, or has perhaps slowly grown weary of one place and feels like a change of working environment is in order. The ship jumper is not necessarily disloyal, but it is fair to say that quitting their job crosses their mind far more often than a diversified employee.
To put it in other words, a diversified employee feels routed into the organisation and would need considerable motivation to leave, while a ship jumper wonders whether there are sufficient reasons for them to stay.
A Brief Introduction to Wages
To outline a common context here, let’s produce a quick framework of what drives the level of wages you receive. The exact state of these factors will result in the output (your wage level). Some of these factors are controllable (and will be the subject of several of our techniques later), while others are largely uncontrollable and will always impact upon your salary, either continually depressing or uplifting your salary.
Uncontrollable Factor 1: Profitability of the Company/industry
Lets assume that you are not the CEO of your company, and are otherwise not single-handedly capable of shaping the profitability of the industry it inhabits. While shareholders and top management will enjoy the majority of bumped profits from a good decade of business, it’s employees will indirectly enjoy these too. A company with higher margins will be prepared to pay more to retain key members of staff, or can afford to embark on employment policies as mentioned below. On the other hand, a company in severe financial difficulty will not entertain requests for salary increases while the bankers are loudly rapping their knuckles at the door.
Uncontrollable Factor 2: Employment Policies
Industry-leading companies in today’s world seek to ‘attract and retain the top talent’ in order to boost their competitive advantage. This can sometimes lead to higher wages being offered. A good example is Aldi’s recent graduate job offerings which promise a £40k salary plus company car. Such a package is above and beyond the standard retail manager’s salary, however Aldi are making a clear effort to attract the best in candidates.
Controllable Factor 1: Profit Generation
How much profit do you generate as an employee? For example, average lawyer in Magic Circle law firm Allen & Overy generates on average, £370,370 in fees for the firm. Of this figure, at least £150,000 will be bottom-line profit. Against this backdrop of profitability, law firms will be encouraged to pay their employees a higher wage. Why? Because any of their employees could leave to setup a rival law firm and obtain 100% of those profits if they so wished.
Controllable Factor 2: Perceived Broadness of Role:
Does management see a role as very narrow, fixed, and easy to define? The easier a role is to pin down, the easier management will find it to pay the minimum amount that still remains “competitive” against similar businesses. The more blurry the lines between several roles, the more room there is to earn a ‘premium’ on what you do.
Controllable Factor 3: Productivity & Competence
Naturally, a company tends to pay employees higher for producing higher quality work. An employee that slaughters sales pitches and aggravates customers will find the search for a pay rise very difficult, as they have apparently done little to deserve it. With this in mind, the techniques below assume that you are a reasonably competent employee.
Controllable Factor 4: Level of Training
Training doesn’t just create skills, it creates scarcity. A cohort of qualified accountants leaving their professional examinations are now in an exclusive group. The exclusivity of their skills restricts the supply of employees to the market, and ensures that employers must pay a generous salary to fulfill their all-too-necessary accounting function.
Controllable Factor 5: Years of Service
While it cannot be said that in today’s world, all companies reward the loyalty of employees, some companies still employ this old fashioned but ever-appreciated courtesy.
Controllable Factor 6: Inside Knowledge
Employees with inside information or commercially sensitive knowledge are an asset to a company. However, disgruntled leavers with such insights are a significant liability. With this in mind, businesses react more sensitively to the needs and requests of employees that hold such experience.
Controllable Factor 7: Relationships with clients and suppliers
It isn’t just collegues that sorely miss employees when they’re gone, but customers, suppliers and even regulators too! The relationships an employee can build within their role literally create value for their business, and this will often be reflected in the wage of the worker. From a different point of view, professional organisations also fear that employees will take clients with them if they were to leave, and this also increases wages.
Controllable Factor 8:Popularity and Networking
Merit is certainly an important element in your ‘worth’ as an employee, but being friends with the person who must place a price on your head is even more effective! An employee’s network will also help boost several other factors indirectly. For example, being on good terms with management means that an employee is more likely to hear about new training that head office is offering, or will give them an opportunity to broaden their role by suggesting initiatives to bosses.
Pay Rise Techniques: For Type A (Diversified) Employees
Type A employees enjoy their jobs, and wish to obtain a pay rise without damaging the benefits they already enjoy. If you believe you’re a diversified employee (read ‘Why do you go to Work in the Morning?’ above if you don’t know what I’m talking about), you may wish to employ the following ‘softer’ strategies.
Technique 1 (Easy): Training
Now, I want you to imagine the training elements of your CV. Have a think about how long would it take someone, starting from scratch at the age of 16, to achieve the level of training and experience you have. The longer it will take, the higher the premium you may command. This in part describes why surveyors, architects, doctors, lawyers and accountants receive good salaries. All of these careers involve a minimum of 3 years intensive training under contract, and rigorous exams, taken after further education in school and obtaining a good degree classification. This in all will require a minimum of 8 years to achieve, including several successful interviews and a sequence of exam passes.
Of course, training doesn’t stop the moment you achieve a qualification. Leadership training from leadership classes or other leadership courses will also count towards such a factor, so long as it yielded tangible and observable results.
Action Point: Proactively request training. Many large organisations run training sessions each month that you don’t even realise happen, but would be happy to take you on if you only asked. Perhaps you could become the office expert on planning or design software, or perhaps become the health and safety officer. Both of which will likely lead to a marginal increase in your salary as well as your future prospects. If you ask often enough, your manager may even begin looking for training on your behalf. If you belong to a small company, you may want to look into training courses provided by external companies, and put forward the idea of you attending, alongside a solid business case for you doing so.
Technique 2 (Advanced): Blurring Roles
Blurring the lines between your (standard) role and other roles to create a ‘hybrid’ job is a subtle and effective technique. While promotions are not always within easy reach, management will not hesitate in giving you extra micro-responsibilities if you ask for them. After a couple of years of volunteering in such a way, you will have a job role so ingrained in many different areas, that it will be very hard to pin down your job title. Distinguishing your job title from other colleagues is an essential part of this strategy.
Step 1: Identify cross departmental or other roles that can be added to your list of responsibilities. Perhaps leading the weekly meeting between accounting and marketing is a good example. It is important you choose roles that are important business-centric roles, and not too administrative in nature. Administrator style employees naturally build a list of extra responsibilities (buying the milk, organising the Christmas party, cleaning the office, running health & safety campaigns) that further ingrain their role as an administrator, and do not effectively accomplish the task of blurring. Tasks that involve leading, or at least supporting a critically important process are perfect.
Step 2: If you particularly enjoy one of these tasks, then attempt to widen your responsibilities in this area, while moving responsibilities for your earlier tasks to assistants or other staff. This is to be done formally, through discussion with your line manager, who will expect such pro-active behaviour from career-orientated individuals.
Step 3: Request a change of job title. At this stage, do not present the idea as a promotion, as this is not what you are doing. You are merely trying to distinguish your official role from that of your former colleagues. Hence, you should merely request for a change of title in the interests of properness and accuracy. “I’m not really just a bookkeeper anymore, as I split my time between accounting and preparing sales letters, so I think my official job title should reflect this“.
At this point you are probably expecting me to recommend you ask for a pay rise. Well, simply asking is not necessarily going to achieve any results in this case. In fact I think the blurring of roles, despite its complexity, is more of a facilitating technique that improves the effectiveness of all the other techniques. As an ‘individual’ employee, managers will be much happier to negotiate with you, safe in the knowledge that the decision will not create a precedent which will multiply the effect several-fold. This on its own will have a dramatic effect upon the success you achieve through the other methods. It will also help you build a more varied working experience, and give you a real chance to prove your abilities in areas other than your core responsibility. See ‘Getting Noticed‘ below.
Technique 3 (Moderate) : Getting Noticed
As we mentioned above as controllable factor 3: productivity and competence has a significant effect on your pay grade. In some companies, this process is clearly visible and formalised through set pay rises for certain gradings of performance. In other organisations, this effect may be more indirect, and come in the form of promotion or infrequent & individual pay rises.
If you haven’t quite spotted it yet, performing well, and being rewarded under the above systems, are not the same thing. The latter requires management to actually acknowledge your high levels of performance, and is not simply solved through exerting plenty of effort into your role. I could write an entire article about ‘getting noticed’ in your company (which I’m sure I will one day!), but I’ll include my favourite tip in this segment.
The biggest mistake people make when trying to be noticed, is to spend too much time perfecting the little tasks, down to every detail. In reality, what catches the eye of your manager is if you proactively work on new projects, improve the way you carry out an existing task, or generate ideas to help others do the same. These activities are never very pressing, and this is why so many hard working employees fail to do them. Whereas the pressure from a phone call, a deadline or a meeting is immediate, there is little pressing need to do so ‘out of the box thinking’ or start side-projects. This is why you need to be very clear and stern to yourself. At the start of the month, set yourself a goal. Perhaps you’d like to create a ‘getting started’ guide to help new employees settle in faster. If this is your goal, then ensure that you set some time aside to work at it at least once per week. While the deadlines and meetings will ensue, if you have blocked off some time in your calendar, you have a much better chance of completing these attention-grabbing and value-creating projects.
Pay Rise Techniques: For Type B (Ship Jumper) Employees
As a ship jumper employee, you are in two minds as to whether you future is with your current employer. Try using these techniques to push for a pay rise and give your employer that extra chance at retaining you!
Technique 1 (Moderate): Asking for a Pay Rise
It’s cheeky, it’s ballsy, and in many cases, it’s common. Asking for a pay rise may be the most obvious method of boosting your salary, but in most cases it probably isn’t as effective as it could be.
The real key point to remember when asking for a pay rise, is to ensure your case is backed up by a solid business case. Managers, especially in tough economic climates, will not lightly hand out extra wages simply to keep employees happy. The days of purely motivating through the wage packet are over, and companies now prefer to grow an attractive and retentive culture, provide cheap perks and offer the promise of a good career, rather than simply increase your wage. Doing so is cheaper, and creates a more fulfilling place to work, and asking for a pay rise is challenging this new status quo. Hence, the most successor askers will be those who highlight how much value they have created for the company above and beyond what was expected of them.
Technique 2 (Hardcore): Demanding a Pay Rise
Demanding a pay rise can take many forms, but the type I’m discussing today is where the following ultimatum is thrown to the employer; ‘Deliver a pay rise, or I’m leaving the company‘.
This is a very extreme method to use in the search for a pay rise, and I’d warn you to not to engage with it lightly. Some readers may be thinking ‘It’s not that extreme, as you could always decide to stay with the company if they say no, so you can’t loose out.’ However the problem with revealing a bluff in this sense, is that you have practically destroyed your credibility within the organisation, and you may be seen as a ‘taker’ or someone who takes advantage of companies to squeeze the most out of them.
So, on the assumption that you are only using this technique if you indeed are indifferent about leaving the company, here are a few tips to help improve your chances of success:
Have a job offer from elsewhere to wave in front of management’s face.
Be armed with the facts. Research wage levels paid by other companies for similar roles. Are you underpaid in comparison?
Be ready to list reasons why you’d prefer to stay with your existing company at a higher wage level, than leave the company for another job. This at first seems intuitive, but you have to remember that as soon as you talk of leaving the company, management may be rather offended. Therefore while you are trying to convince the company that you are valuable and worth paying a premium to retain, you also have to convince them why it is still sensible to have trust and faith in you. Otherwise, the relationship may be damaged irrevocably.
So, I hope that in this article, I have not only given you a few ideas for techniques to try yourself, but that I’ve also given you a framework to use to think about what other strategies would improve your chances of earning a pay rise. A technique that improves any of the controllable factors will yield benefits, but some factors will be much easier to change that others!