Strategies to Persuade the Boss to Pay You What You're Worth
You work hard, build new skills, and become essential to your company's operations - yet you feel you earn less than you deserve.
It may be a question of knowing how to ask, says author Michael O'Malley.
His book, "Are You Paid What You're Worth?" (Broadway Books, $15) covers the pitfalls of trying to convince the boss that you're worth more than your current paycheck.
A former academic who now works as a compensation consultant, Mr. O'Malley says your best shot may not be a pitch for a raise in base salary but for rewards once reserved for top executives - stock options, bonuses, and other performance-based perks.
"More and more employees are being included in various bonus programs," he says. "Stock options are no longer centered in the executive suite."
If your company's stock price is strong, stock options (which are the right to buy stock shares at a specific price, usually below the market value) offer "one of the only ways for an employee to become truly wealthy, especially if the company has a bright future," he says.
The willingness of a company to make such offers depends on its overall compensation philosophy, says O'Malley. He advises workers to learn their employer's approach before starting negotiations.
When it comes to negotiating base-salary level, O'Malley finds that "the No. 1 mistake people make is not being active in the process."
He recommends beginning any such request with a discussion about your value to the company. After covering specific ground about your accomplishments, try to let the other side come up with a number. It may not be what you want, but you know it's the worst you'll do, and it becomes the floor for further negotiations.
"Most people aren't as good as executives at raising issues subtly," he says. "You want them to concede a position because they really think you're worth more."
Furthermore, he says, employees shouldn't be shy about investigating job possibilities elsewhere, even if they would prefer not to switch firms.
"Every now and then, see what's out there, and use it to your advantage. If you're a disinterested party, it only strengthens your position."
Ultimately, though, O'Malley says that for employees to get a raise, they must take career risks and assignments that increase their value to the company.
Those who do are likely to reap an average annual salary increase in the range of 9 to 12 percent, he says, although raises are not likely to be that large every year. "It's like the stock market," he says. "Taking risks is rewarded."
While stock options and bonuses can be a boon to employees, other trends are not as beneficial.
To slow the trend of job jumping, employers have developed a growing fondness for contracts - a device O'Malley compares to those used by movie studios in the 1930s and 40s or professional baseball before free agency.
Employers want to lock up talent and expertise and have embraced noncompete clauses, restricting the ability of employees to work for direct competitors.
Other contractual restrictions on the rise include confidentiality agreements. These prevent employees from sharing corporate secrets with future employers. Nonsolicitation agreements ban the solicitation of one company's customers after moving to another company.
If your employer favors such contracts, says O'Malley, find an attorney and try to negotiate something in return before signing.
O'Malley's Tips for Bigger Bucks
* Try, try, and try again. Persistence often works. After several rejections, an employer often feels compelled to yield.
r Don't just complain that your colleagues earn more. This sounds like whining. Instead, argue that your pay doesn't measure up to your performance and accomplishments.
* For raises that are consistently above average, develop knowledge and skills that are unique and essential to the company. Make sure your boss knows about them. The harder you are to replace, the stronger your hand in negotiations.
* Discuss your value to the company with your boss openly. If you think that you're underpaid, it helps to point that out. You may get the raise you want - or you may find that the company isn't as pleased with your performance as you are, and find out how you can do better.
* Introduce issues besides money into pay negotiations: Job responsibilities, choice assignments, and benefits can allow more wiggle room in negotiations by allowing trade-offs.
* Don't show too much enthusiasm when negotiating or when offered a job or raise. Emotional detachment is a good technique because it implies - without saying so directly - that you could leave the company if you don't get what you want.
* Use caution about explicitly threatening to jump ship. Having another job offer is a viable last resort - but threats often damage relationships in the process.