Tony asks: I’ve been thinking for a while that I should get a raise. I have taken on various new roles within my firm and more responsibilities but however not received a raise for them. What/how would be the best way for me to ask my bosses for a raise?”
Q&A 70 – Asking For A Payrise – Shownotes
Tony has asked two questions, which will be the basis of this and the next episode.
First of all, for this episode, he asks:
I have been thinking for a while that I should get a raise in my current employment. I have taken on various new roles within my firm and more responsibilities but however not received a raise for them. What/how would be the best way for me to ask my bosses for a raise?
(Background information. I’m trainee auditor based in Kingston Surrey on currently 20k. Competed half my ACCA exams so far.)
For this question, and anything related to your compensation as an employee, you need to put yourself in your employers’ shoes. They need to consider a few things to appropriately determine your pay level:
- What value do you bring to the company (monetarily)?
- What is your market rate elsewhere?
- What are the consequences if you leave?
What Value Do You Bring To The Company?
As far as your “job title” of trainee auditor, it may be tough to demonstrate the first point of the monetary value that you bring to the company. For those of you who aren’t aware, auditors tend to have an external charge out rate which the audit firms charges to their clients. This ranges from as low as £50 per hour for some trainees up to £100s and sometimes £1000s for senior partners. At every level, this clearly way exceeds the employees’ hourly wage. I know that when I was as a Big 4 accountancy firm on the graduate scheme, I calculated my charge out rate as being almost 30 times what I was being paid per hour worked based on my annual salary and my number of actual recorded hours.
However, this is standard for the industry. As such, to determine your value (and hence your relative salary) they’ll be looking more towards what the equivalent roles internally and externally are getting paid. This is effectively your “market rate” and links closely into the third point.
How Much Would It Cost To Replace You?
They’ll ask themselves, if you leave, how long (and how much would it cost) to find a replacement for your role. A lot of this will depend on how good you are and the additional tangible value that you bring to the company. You mention that you have taken on new roles and more responsibilities. Are these roles and responsibilities that they would need to find someone else to cover? If so, could your direct replacement do that, or would they need to employ/train others to take over those responsibilities?
For anyone wanting to negotiate their salary, the key to approaching this with your employers is to do the research upfront as if you were them. You need to understand these type of questions that they will ask and either be prepared with answers or, better still, use that as the basis of your argument.
If you can come to a meeting with proof that you are currently not being paid what someone in your role should be, it will be very difficult for your employer to dismiss your arguments off hand. However, if you go into the meeting with the self-righteous attitude of “I’m amazing, I deserve £5k more a year” then it’s more likely that you’ll actually be dismissed.
It’s Not All About Money
Also, be careful to make it clear that money isn’t your only objective here. This can be a difficult thing to phrase, but can have a huge impact. If your employer thinks that the only thing you care about is the number on your paycheck and not how you are helping the company, then they’ll have no incentive to increase that number, as you’ll always be wanting more.
However, if you can phrase your argument to say that you like the extra roles and responsibilities that you have been given and you would like to take on even more and exceed their expectations, they’ll be impressed. You could then follow that up with the argument that you are being remunerated less than your peers for doing the same or more, and that is demotivating. Or equally, there are opportunities elsewhere in the market which would compensate you better for those skills, roles and responsibilities and it would be remiss of you to ignore those for the benefit of you and your family, then it’ll be hard for your employer to tell you to get lost.
So, work out what you think you are worth, write down why and find real proof. Only then should you approach your employer to discuss your compensation package based on these facts. Hope that helps Tony.
We are back on Wednesday to answer Tony’s other question about starting to invest in a stocks & shares ISA compared to putting money into his pension.
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