In an ideal world, you should never have to go cap-in-hand for a pay rise. After all, any street-savvy manager will intuitively know what you’re worth on the open job market and take the steps to ensure you don’t stray into another employer's arms.
If that sounds a little antediluvian, you’re right - it is.
In a world where employers work hard to lock down fixed costs, you’ll have to fight equally hard to justify a pay increase.
Asking for a pay increase is at the best of times not only tricky, it’s also fraught with hidden risks.
That's why Azzet set out in search of some of the tricks needed to give you the best shot of at least getting a fair hearing.
Get hand
Given that you always want to negotiate a pay rise from a position of strength, there are certain things you need to consider before plundering on in.
Where most people go wrong, says Professor Gary Martin, CEO of the Australian Institute of Management (WA), is when they misread the tea leaves, and/or assume that their employer is obligated to automatically increase salaries from one year to the next – even if only in line with CPI increases.
During the December quarter of 2024, annual wage growth in Australia slowed to 3.2%, the lowest quarterly increase since March 2022.
With wage growth expected to remain low, Martin says employees need to be sure of their value within their organisation and their key achievements before asking for more.
Given that employers are expected to continue to offset future increases in compulsory super with lower annual wages, Martin argues that most employers are hell-bent on maintaining their costs, just to remain commercially viable.
Surging inflation followed by a sharp hike in interest rates, has made operating a small business more difficult over the past three years, with an average of around 10,000 businesses falling over each year.
Do your homework
Unless you want to look foolish, Martin urges employees looking for a pay rise to properly ‘read the room’ and the mood of the business.
He says you really need to do your homework before going ‘cap in hand’ to the boss for more pay.
To begin with, he suggests honestly assessing your role within an organisation.
Despite the exemplary job you might be doing, unless you’re a lion-tamer in a travelling circus, Martin reminds all employees that no one is indispensable.
To second-guess if you have an inflated sense of self-worth, he recommends talking with your peers, and/or a recruitment consultant who specialises in your field.
”Remember, someone who has achieved hard targets is less likely to be considered for a raise if they have been extremely difficult to work with, and has damaged the organisation in the process,” Martin told Azzet.
Put yourself in management’s shoes
Secondly, Martin urges employees looking for a pay rise to read the mood of management, and the basis on which previous pay increases have been made.
For example, he says it’s hard to even broach the subject of increased employee benefits if management simply refuses to talk about it.
Rather than being worthy of a pay rise, some bosses may consider the good job you’re doing as merely adequate to retain that position.
In worst case scenarios, employees that aggressively prosecute their claim to a pay rise may only create the perfect segue for an employer to remove them from the business.
One of the optimal times to ask for a raise, Martin suggests, is after your role has been expanded, and you have executed new responsibilities well, and/or demonstrated an increase in revenue generation.
“If you have been ‘kicking goals’ over an extended period, and you’re not seeing any monetary reward for it, then it might be time to ask for a raise,” Martin says.
“But success might hinge on your preparation, including information on what other organisations pay for similar roles, and any data that shows how you have outperformed expectations for your role.”
What if the answer is no?
However, when discussing salary, Martin warns against backing yourself into a corner.
While you need to build your case for a pay increase in a confident manner, it’s equally important to handle rejection well to ensure it doesn’t compromise future salary discussions.
“It’s also important to be open to non-cash incentives, like additional days' leave or flexible working arrangements, which can make a position more attractive,” Martin says.
“Similarly, never ‘burn your bridges’ by threatening to leave the business if you don’t get a counter-offer to stay, unless you have another job offer on the table, and are more than willing to walk.”
