Everyone wants a pay raise, but few of us know how to ask for one. I’ve designed pay policies at some of the world’s best-known companies, and I can tell you what you need to know before having that pay conversation.
Level up. Pay works the same at most companies. My industry of compensation professionals are rigorous people, but we are not so creative. We all use the same sets of third-party market data and what we call “job leveling guides.” These guides help us normalize job definitions across the marketplace —for example, a marketing director at a medium-size company might be comparable to a marketing manager at a large company. Titles are less relevant to pay than your company’s job leveling practices.
If your company doesn’t make its guide available, know that it was most likely cribbed from one of the (widely searchable online) templates from vendors like Radford, Willis Towers Watson, or Mercer. If you work in tech, finance, or consulting, you can visit Levels.fyi to see how similar this looks across companies.
All companies large enough to have an HR department use some version of these guides. Find the description and label that best fits your job. For example, the manager level may be described as “manages professional-level individual contributors” and labeled an “M3,” while the senior manager level “manages other managers,” and is labeled an “M4.” Your company likely assigns a custom “grade” to this labeling system.
Use this specific language in your next career conversation to verify your level and rank in what we call the “job architecture.” If you can show that your current job is mis-leveled, a pay raise (and likely a title bump) will follow.
This language also gives you key phrases for working toward your next promotion. By showing that you want to grow in your career, not just in pay, your company will be inclined to help you get there.
Depersonalize pay. When you ask for a raise, you trigger a host of administrative alarms, and often your manager has no unilateral authority to sign off on all the budgets, forms and approvals. You need a simple, data-driven story about why your pay should be increased that helps your manager advocate on your behalf. The best stories focus on internal processes that show how your company’s own practices are leaving your pay behind.
For example, a superstar who rises through the ranks quickly may be dramatically underpaid to peers due to poor company practices. Companies that cap promotion increases at a fixed percent are especially prone to this problem. If the pay grades in your company progress by 15% at each level in the hierarchy, but promotion increases are capped at 10%, it won’t be your performance that holds your pay back — arithmetic will.
If your company makes its pay ranges available and you are low in your pay range yet your performance is strong, you need to show how the company’s own processes are preventing your comparable pay growth. Asking for a one-time “catch-up” increase will highlight the problem and hopefully fix the process for everyone else too.
If your company doesn’t share any information about your pay range, you have a hard path ahead. Know that the data you collect from colleagues in similar job levels or through online searches will never be as rigorous as the data your compensation team has access to and that it is often wildly off base. Using several sources and closely tying your searches back to a job leveling guide is your best option.
Go big to create urgency. If you’re expecting anything less than a 10% increase, keep the conversation focused only on career and bring up pay when it’s time for that promotion.
If you ask for a small raise, your HR team is likely to decline. They know that the cost for you to switch to a new employer is high – time spent on the job search itself and re-establishing credibility at the new company, life disruption through potential relocation and forfeited bonus, stock or vacation accumulation.
If you do choose to leave for a minor pay increase, you will be wished well, but it will be understood that there was something else broken with your employment experience that pay alone couldn’t fix.
For hourly workers in retail, restaurants, and distribution centers, your path to a pay raise is unfortunately much harder. Work environments with high turnover often rely on scheduled pay raises for administrative ease, so legislation and not individual performance often is the most important driver of wage growth.
Extraordinary post-pandemic hiring shortages have not fundamentally changed compensation teams’ approach to hourly pay beyond raising the floor.
If you’re in this group, ask about the career path into management to show you want to grow with the company. Internal promotion rates are the best indicator of potential pay growth; if you find that most of your managers were hired externally, consider this a sign to start looking elsewhere.
When all else fails, whatever your job, you have the nuclear option of presenting an outside job offer. But before you do, find out if your company has a “no counteroffer” practice. Even if your company is willing to counteroffer, know that you may suffer some career consequences because a bad manager might view your actions as a betrayal and begin to disinvest in your career.
Always remember that you and your company have different goals when it comes to pay. While you are trying to optimize pay for yourself, your company is trying to optimize it to keep things fair, equitable and affordable. Without a sharp case for a pay raise, you should expect to hear “no,” and your company will see that as a good thing.
David Buckmaster has led teams responsible for compensation design at Nike, Starbucks, KFC and Pizza Hut. He is the author of “Fair Pay; How to get a raise, close the wage gap and build stronger businesses.”