Negotiate your salary to help with inflation
With 8.6% inflation—a 40-year high—many people are feeling the pinch in their wallets as the cost of food, gas and rent rises. If you haven’t received a raise in the past year, it may be time to negotiate a higher salary.
Inflation is a great negotiating tool because it’s an objective standard, says Andres Lares, managing partner at Shapiro Negotiations Institute, a negotiation consulting firm.
“It isn’t me asking for a raise for an arbitrary reason, such as ‘I’m a very good worker,’ ” he says. “Your boss may or may not agree. But inflation is well documented. If you made $150,000 last year and you’re making $150,000 now, you’re effectively making less money [when it comes to buying power.]”
Ben Cook, CEO of the salary negotiation consulting firm Riva, tells his clients, “If you didn’t get an 8% pay raise this year, you got a pay cut.”
“Assuming you didn’t do so poorly that you deserve a pay cut, it’s time to ask for a raise,” he says.
But it’s easier said than done for most people. Asking for a raise feels like a confrontation, Cook says.
“Most people don’t like confrontation,” he says. “The cost of not negotiating is hard to visualize. It doesn’t feel like someone taking money away from you, but it’s money that you don’t earn. It is, in fact, the same thing.”
Cook says many people leave jobs unnecessarily because they didn’t give their current employer a chance to improve their compensation.
Instead of avoiding an uncomfortable conversation, consider these strategies that can make the situation easier.
Plan what you’re going to say
The first step is to prepare. It helps to write out a script. The goal isn’t to read it word for word; it’s to get the key points firmly in your mind, Lares says.
“The conversation is emotional and can quickly get derailed,” he says. “Manage the emotion by knowing and practicing what you’re going to say. By the time you get to the actual meeting, it will feel like you already had the conversation, making you a lot more confident. It is perhaps one of the most powerful aspects of negotiating people overlook.”
Start — but don’t end — with inflation
Inflation is a great excuse to have the conversation. Lares suggests starting by saying, “I want to chat with you about a raise. Inflation has happened over the last year.” But the entire conversation should not be around purely inflation. “It still comes down to do they want to keep you,” he says. “While they’re paying you partly to make up for inflation, it’s also because they think you’re going to be a productive member of the team moving forward. Be very clear about that.”
Come in with facts
Have as many objective points as possible when you ask for a raise. Instead of just blaming inflation, get real numbers. The U.S. Bureau of Labor Statistics calculator can show how higher prices are impacting your wallet. For example, $150,000 in May 2021 now has the buying power of $138,145.
“Tell your boss, ‘I’m essentially making $12,000 less right now than last year,’ ” Lares says. “This demonstrates to the other party that you thought it through.”
Also, come in with statistics that communicate your value to the company. For example, make the point that you generated $X in new business, had 100% employee retention in your department, acquired X number of new clients or filed X number of billable hours.
“The more specific you are, the more confidence and conviction that relays, which is really important,” Lares says.
Look for the win/win
Instead of issuing an ultimatum like “Give me 20% or I’m walking,” approach your boss with an attitude of collaboration.
“You want to be polite and respectful,” Cook says. “Remember, companies don’t negotiate, people do. You’re talking to your boss. Your goal is to get your boss to advocate for you. Know why your boss will spend internal political capital trying to get you more money.”
Cook adds that negotiation should be a joint problem-solving exercise. “Remember, the company isn’t out to get you,” he says. “You share the same end goal. You’re coming up with creative solutions that meet your needs and advance their interests. It should be a win/win conversation.”
But be prepared for a ‘no’
It’s possible that your request will be denied. When someone says “no,” however, it’s important to determine if it’s just a no for the moment.
“The biggest mistake that folks make is internalizing the ‘no,’ ” Lares says. “They see it as a reflection of their perceived value, which may or may not be the case. It could be many other factors in play, such as temporary raise freezes.”
When you hear “no,” the next step is to table the request with the idea that you intend to bring it back up later. Lares suggests saying, “I understand it can’t be done at this moment. But when can we address this again because it’s really important to me?” Then put that date on your calendar to make sure it doesn’t slip through the cracks.