How do you get something other than the standard 2.5% year end raise (merit increase) that everyone in the firm is getting?
How do you negotiate a big year end raise?
I’ve got a big secret for you on how to get a bigger year raise than your peers. It’s one that literally makes career coaching pay for itself. But before I get to that, let me provide a bit of context on what is going on behind the scenes at year end.
Unless you are reporting directly to the CEO/owner of your firm or are at a very small company, chances are your boss has been assigned a pool of money to be doled out for merit increases and bonuses to her entire staff.
If she has a staff of 10 each making $100k and the merit pool is 2.5% for the year, she just got $25,000 to assign to the salaries of those 10 people.
This means that she has to give less to some poor performers to give some great performers more than 2.5%. Yikes.
So, she has agonized, thought once, twice, spoken to her boss, and in the end they have come to an agreement on how the salary increases are going to be allocated.
It’s all final (or at least very close) when you go into your meeting with her to discuss your performance and year end raise.
What this means is that if you come into her office with a bullet point list of 10 reasons why you deserve a year end raise, you aren’t going to get it.
Even if you deserve it!
Why? Because the decisions had already been made long before your year end raise conversation ever happened.
And your boss raising the issue of suddenly needing more money with her boss just isn’t going to happen as a result of your 10 point list of how awesome you are.
The secret to getting a big year end raise is recognizing that:
Career coaching tip: Getting a year end raise is a campaign, not an event.
What do I mean by that? I mean that you need to start planting the idea of you needing more money in your boss’s head 3-6 months before the year end review is scheduled.
Consider this personal example from much earlier in my career:
I took a position once in which I was paid a $40,000 signing bonus that was earned out over two years.
I considered this bonus part of my salary ($20k/year) due to the fact that I had to earn it over two years. As the second year ended, I had a different boss than the person who hired me.
I assumed he knew about the bonus and would be adding $20,000 to my annual salary. WRONG!
I explained the problem to my new boss in our annual review. He agreed with me, but I had to WAIT A YEAR to get that $20k added back to my salary as part of a special budgetary exception.
If I had asked him 3 or so months earlier, this would not have happened. So, there you go, a $20,000 lesson. (And by the way, a massive ROI on career coaching had I known to hire a career coach.)
So what does this mean for you?
If you are looking for a significant year end raise, let your boss know way before reviews start so that she can do what she needs to do to secure the funding.
The idea isn’t to be a nag, but to use psychological principles over the long haul to get results. Here are some techniques I recommend to my career coaching clients that you can use over a period of months to position yourself for a raise:
Reciprocity – Imagine you have worked unusually late/hard on a project. When you get the thank you from your boss, you may want to graciously ask her to remember you at year end.
Liking – Make sure your boss likes you. One great way to do this is to stop by her office near the end of the day from time to time. Make small talk, ask about a project, get her ideas, whatever. The point is to build the relationship.
Commitment & Consistency – If you can get your boss to somehow commit to taking care of you at year end, (or even just form a view of herself as generous with her staff) she will be more likely to act in that way when the time comes. (Just don’t forget to remind her of that commitment from time to time.)
Scarcity – Tread very lightly with this one, but subtly mentioning that you keep getting approached by headhunters on LinkedIn is a good way to signal that you are valuable.
Social Proof – Get other people to say good things about you to your boss. This isn’t always easy to coordinate, but if your boss’s peers (or boss) think highly of you, it is going to help.
Of course, I’m assuming that you are deserving of a year end raise and can objectively prove it. If not, sort that out first.
When the time comes for the year end raise negotiation
Finally, try to think about all the forms of compensation that may come into play: salary, bonus, equity/stock options, vacation, office location, etc.
It may be that you can’t get yourself any more salary but you can get a bit more vacation and a move to an office with a window…. which is much better than nothing.
Again, this is best done as a campaign. Put together a calendar, make sure you hit one or several of the above techniques each month, and prepare to get a year end raise.
Oh, and in case it isn’t obvious, you have to ask well in advance of year end.
If you need more guidance on your career and how to accelerate your next promotion, schedule a complimentary career coaching conversation with me here.