How to negotiate better pay

Dear Bob …

I am putting together my case for asking for increase in my salary but I am looking for the rights words to open this up to my supervisor. I love my job and the company however I feel I am grossly under paid for what I do, and can back that statement up.

I am looking for a positive approach in this whole matter. Can you assist?

– Underpaid

Dear Underpaid …

When I was in that situation, I sat down with my manager and said, “Right now I have a strong financial incentive to leave this company and work for a competitor. I’d prefer not to have that temptation. Can you help?”

To which he replied, “Can I use that line with my boss?”

I gave my permission, in exchange for which he and I agreed to a series of steps to get me where I thought I needed to be.

– Bob

Dear Bob …

I love the line you suggest but to me it sounds so … threatening. The environment here as far as competition goes is nothing to brag about, so I am not sure how well that would go over.

Do you have other opening lines that are more welcoming?

– Underpaid

Dear Underpaid …

I think the question of whether it’s threatening or not depends on your presentation. Mine was ironic and good-natured (my manager and I got along well) and he understood the point, and that I had worked hard to avoid making it into a threat.

With or without competitors, my opinion is that in most companies your strongest case is that you’re underpaid compared to what the market will offer. Assuming the basic premise is convincing, if you do end up leaving your employer will spend more than it’s currently spending to replace you. Then it will spend the equivalent of one year’s salary bringing your replacement up to speed (if the industry’s standard numbers are to be believed).

That’s a persuasive economic case. Compare it to the alternative approaches to negotiating you might make instead:

• You deliver more value to the organization so it should pay you more in return. It doesn’t work that way, No matter how much value you deliver, if your employer can replace you for the same pay or less, your replacement would deliver more net value. Value is a non-starter in compensation negotiations.

(Value is, on the other hand, important in retention discussions — if your employer loses money on an employee, that employee had better think hard about what to do to change the situation.)

• You are currently paid about what your peers in the industry make, but you’re essential enough to things right now that the company should pay you more to keep you happy. This can work in the short run, but when you negotiate through an implied threat, the company will do everything it can to make you replaceable. As soon as it has succeeded, you’re out.

• It’s been too long since your last raise. The obvious answer: So what? Either you’re paid what the market will bear, or your aren’t. If you are, inflation is catching the market up to you — you used to be overpaid. If you aren’t, go back to the original suggestion — you can leave for more, and the company would then pay more to replace you.

• My kids need shoes … please? This is the Bob Cratchit approach. I trust we both realize why it’s a non-starter.

There are, of course, many different ways to make the same point. You might include mention of how much you like the atmosphere and really do want to stay … it’s just that in some informal discussions it seemed clear you could make a lot more by leaving.

Depending on the relationship you have with your supervisor you might need to start with some aw shucks disclaimers: “I hate to bring this up. I’ve been debating with myself about it, and finally decided I had to at least mention it. I don’t want to put you on the spot, but …” That sort of thing.

Two situations to be ready for:

First, there’s a good chance your supervisor will tell you he/she lacks the authority to do anything. The correct response: “I understand. How does this work, then — do you talk with your manager about it, do I, or should both of us?”

Ask for clarity on the process, and also ask for a commitment on a date for a follow-up conversation. Don’t be confrontational about it — act as if anything else would be peculiar. “When should we get back together to follow up?” is a hard question to either ignore or to take offense at.

And second: Somewhere in here you’ll find yourself in a discussion about salary benchmarks and how your current compensation compares.

You might discover the company is right — your compensation is within a reasonable range. If so, look closely at your position description. If it leaves out important responsibilities (seriously important — don’t nit-pick) then point that out and suggest that a fresh benchmark, based on a more accurate description of what you do, might clarify the picture.

Be prepared for disappointment, though. At the end of the process you might discover you’re being paid fairly after all. Compensation is a matter of supply and demand, with you and those who would also like your job as the supply, and your employer and its competitors for your services as the demand.

– Bob