Although some people love a bargain, work is not the place to sell yourself short. Here’s what you need to know to get the most from a salary negotiation.
The Australian workplace landscape is changing, and between skill shortages, shifting labour demographics and economic growth, no one can afford to sit still. Although remuneration isn’t the sole reason for choosing or leaving a job anymore, it definitely plays a role in attracting and retaining talent.
The majority of Australians – nearly 60 per cent – are more confident about the job market this year compared to 2015, according to Robert Half’s 2016 Salary Guide. This can affect salary expectations, as both employers and employees are more aware of the market value of good work, and candidates are more inclined to accept and stay in jobs that offer competitive salaries. What’s more, 44 per cent of Australian office workers plan to ask for a pay rise in the next 12 months.
Stats like these show that human resource professionals need to be prepared to not only ask for a pay rise themselves, but to also know what to do when they are inevitably on the other end of a salary negotiation. Here are some tips about how to make a salary negotiation a little less daunting for all parties involved.
As an employee
When it comes to negotiating your own salary, many people don’t know where to begin.
“I think the biggest mistake people make is they go in thinking that their manager will automatically recognise their value, so all they have to do is ask for a pay rise,” says business coach Terri Billington. She recommends that instead you should formulate what she calls a pay pitch. “You need to create a plan that shows your value and what you contribute – or will contribute – to the business, rather than just asking for more money.”
If you’ve never had to sell yourself during a salary negotiation, there are three components to a great pay pitch, says Billington:
- You need to show the additional responsibilities that come with the wage increase.
- You need to show how these added responsibilities will help grow the business, whether that’s in increased productivity, output or some other measurable return. “It can’t just be about lifestyle,” she says. “There has to be some reason why the business will benefit from giving you more money.”
- Get it in writing. “All salary negotiations, while conducted in person, should be backed up with writing.”
Timing and delivery are everything when it comes to salary negotiation, she says. Business budget season or before the new financial year are the best times to pitch a wage increase, as that gives employers an opportunity to assess how the pay rise will fit in with projected business development and income. Plus, it gives you an opportunity to identify how you will continue to help the company grow while adding value to the organisation.
If you’re unsure about how much to ask for in a salary negotiation, Billington recommends looking to HR job boards for comparable roles and titles. “Do research within your industry and location as well,” she says. “It never hurts to see if you can contact employees at similar organisations to yours who are working in similar roles to see what their salary range is.”
There are some human resource specific guides you can refer to as well. Robert Half’s 2016 Salary Guide puts the range of human resource coordinator and human resource administrator salaries between $45,000 and $65,000. The 2016 Hays Salary Guide found that human resource salaries go up from there, peaking at about $280,000 for HR directors at large companies. There are also salary variations between human resource specialties, company size and even location.
However, don’t expect miracles: the average salary increase last year was a very modest 3 to 6 per cent. With this in mind, Billington does warn against stretching your request too far. “If your request is way above the standard wage for your role, you might be asking for a lot,” she says. “You need to be aware of what the business can accommodate.”
No matter what amount you are asking for, be open to negotiating. You might not walk away with your ideal amount in pay rise, but something is better than nothing. Studies also show that negotiating a few thousand dollars more can add up to potentially millions more in total earnings over the course of your career – so don’t let it scare you.
As an employer
This past year has been kind to businesses. Almost two-thirds of respondents to the Hays survey experienced increased business activity, and 70 per cent expect growth to continue into 2017. But despite this, cost consciousness remains front-of-mind for many employers, especially now with government uncertainty. The same survey found that 16 per cent of employers offered no salary increases during the 2015-16 financial year.
If you planned on taking a hard-line approach, remember this: 19 per cent of employees would look for a new job if denied a salary increase, according to Robert Half. The biggest piece of advice Billington has for employers is to be flexible and not automatically dismiss a pay rise request. If the employee has a compelling case, but more money is not an option, think beyond dollars and cents and consider offering the employee other incentives that will help further their career. Training programs, flexible work arrangements or more annual leave are all attractive options that are also kind to a company’s bottom line.
There are other options for employers as well, she says. “If the business isn’t doing well, recommend that the employee come back to you at a later date with their request,” she says, though she does add that employers shouldn’t string employees along by constantly dangling a the carrot in front of them. “It should be within a defined length of time.”
Another tactic is to ask the employee to prove themselves by meeting them halfway. The employee will receive a portion of the pay rise they requested during the salary negotiation, and if they can show the value-added during a probationary period (usually three to six months), then the rest of the pay rise will be given to them.
How do you conduct your salary negotiations?