The Big C
Of all the professional conversations you have every year, discussing (and negotiating) your compensation is one of the most important.
Companies pay for market data to establish appropriate compensation for roles they are sourcing. However, there are multiple market data vendors, and each set of market data is different. While we tend to think of data as accurate, factual, and absolute....the truth is market data is subjective and changes with each vendor. Companies will choose to pay for the market data that is most beneficial to them - meaning the market data that is most valuable to them. And value to a business means getting the best quality for the lowest price. Most employees probably don't know that. Did you know that before today, or even the last time you had a comp convo with your boss? Probably not - and it probably changes how you view market comp now. I hope it does.
Market data is built off of what other people accepted as their compensation for similar roles in your area. It's not based on how valuable the role is to the company. It's subjective, and not a true indication of real value. It only paints a picture of what people accept for certain roles. That's it and that's all. This is an important distinction to make - the value that an employee adds to a company is usually the most important reason to increase compensation from a company's perspective. And that value can be measured by data that you bring to the table. Not market data.
While companies may have the upper hand going into these conversations, holding bought market data that is favorable to their own specific financial needs, you can still bring your own data to the conversation and be persuasive in your request for increased compensation. Being prepared and having a strategy is incredibly important to your success in this conversation. But most important is timing. You should always ask for a pay increase:
- After a professional success; a documented "win" for you and the company
- At year end or during performance and comp reviews, but only with verifiable proof of how you've added value and are successful with your role.
If your struggling with feeling comfortable having this conversation, arm yourself with good strategy. Some strategic points to consider:
- Make sure your timing is appropriate.
- Have documented examples of why you deserve a raise
- Base the conversation on provable data, not emotion.
- Come equipped with your own market data, i.e. pay for similar roles at other companies. You can get your hands on this easier than you think.
- Provide evidence of how you've added value to the company (in other words, where you've saved or earned the company money)
- Manage expectations
- If you get a no, be prepared to ask for specific milestones and a timeline that will qualify you for a pay raise. (Examples: What do you suggest I work on to be eligible for a pay raise? When do you anticipate being ready to provide a pay increase for my work? What qualifiers are you looking for to increase my pay? - be sure to ask open ended questions, not yes or no)
In closing, I want to stress how important it is to be your own cheerleader when it comes to compensation. Women are significantly less likely to ask for a pay raise than men, and Men are significantly more likely to receive a pay raise when asked than women. Women in particular are at risk of being undervalued in their roles due to this delta. This is not to suggest that men don't struggle with asking for an increase in pay. It's a difficult topic for many people, but being armed with your own data, provable examples of success, and a solid strategy is key to increasing your compensation.