Uncensored Money Season Four: The Right Way and the Wrong Way to Ask for a Salary Increase
Melissa Browne: Ex-Accountant, Ex-Financial Advisor, Ex-Working Till I Drop, Now Serial Entrepreneur & Author, Financial Wellness Advocate, Living a Life by Design | 12/07/2023
Show Notes
Mel has been an employer for over twenty years. So in this solo episode, she shares her insights and tips about the right way, and the wrong way, to ask for a pay rise. And if you’re in business, these tips are equally relevant to how you set your prices, and increase them, in your business.
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Transcript
Today it's a solo version of The Uncensored Podcast, and that's because I wanna talk to you about something that I have been directly related to for the last 20 years. And that is people asking me for pay rises. I've been an employer for over 20 years, and what I know for sure is that there's a wrong way and a right way to ask for a pay rise.
There's also a wrong time and a right time, but what I know, and the research backs this up, is that women are asking less and are receiving less when it comes to salary increases. So today I want to dive into the research and talk about why that is, as well as sharing my insights from the employer side of the desk so you can perhaps understand how your boss or manager might be thinking.
And if you're in business and tempted to switch off, a lot of what I'm talking about today could be interchanged with price increases. So I don't want you to turn off just yet. But before we dive into this, I wanna make this super practical. So I'm going to give you my step-by-step how to ask for a price raise successfully. And in the show notes. We're going to give you a guide as well, so you can take that and apply it. So make sure you go and look for that as well.
But before I do, I really wanna talk about the research and that's because I think it's really important to understand the psychology behind perhaps why we're not asking for pay rises or how we're asking for pay rises.
And you might not realise this, but nearly two third of women said they when they were surveyed, they have never asked for a pay rise, compared to 48% of men. This is a survey undertaken last year, and when they do ask for a pay rise, they are less likely to receive it. Just one in five, so 21% of women were successful compared to 31% of men, so 10% less. That's massive. So we ask less and we have less chance of receiving it. And think about how that might be. When we think about language and how women in businesses call their businesses their baby or describe it as 'just' or 'only'. When we think about the emails we write and how there, there's so many 'sorrys' and 'pleases' in there and how we might even ask for something by saying, ‘if it's okay?’
Language is everything. And I want you to think about how that language could potentially be part of the reason why this is. But there was a great book written by Linda Babcock and Sarah Laschever called Women Don't Ask. And in it, they said that women don't ask. They don't ask for raises and promotions and better job opportunities. They don't ask for recognition for the good work they do. They don't ask for more help at home. In other words, women are much less likely than men to use negotiation to get what they want. And I don't know about you, but I don't like asking for help. It's been massive in business for me to learn to ask for help and to understand that's not a weakness.
And it's really hard, I think, when you're competent or when you are used to juggling balls and just getting things done, to know that it's not a weakness to ask for help or even just to ask for what you need. Even if you think in the bedroom, really it wasn't until the sexual revolution happened that we actually realised that it was okay to ask for what we need in bed. And I know people still to this day are not doing that. Oh my God. Can you imagine if Lawsie was part of this conversation? I should have included her, right?
But is it any wonder whether it's housework at home, whether it is like for me, I'm organising a trip in October. I'm freaking organising everything, and it's occurred to me that I should ask my husband to do something. But you know what? I just grab it and do it. I don't ask for help. So we are less likely to negotiate and to get what we want, so we're conditioned that way. Women expect life to be fair, and despite often dramatic evidence of the contrary, many of them persist in believing that it will be. This is according to Babcock and Leschever and it's not just them that are saying this. There are countless academic studies that show that men negotiated their salaries much more often than women did. I'm only giving you one example of a study above, but there was one such study, it was conducted amongst Carnegie Mellon graduates. So that's a university in the US. And what they showed is that students who had negotiated increased their starting salaries by 7.4% on average, which just happens to be the difference between men and women's starting pay. And what they found really interestingly is that women were far, like dramatically less likely to negotiate that starting salary than men would. That employers will rarely offer to pay more than they have to, but they will sometimes yield to the demands expressed by some of the applicants or especially star employees, but will be happy to pay less if no demand's made. And if you think about that, if you have an initial difference in a starting salary, what happens is that tends then to accumulate over time and become large differences, and then that gap will potentially follow you from job to job. And each new job salary will somehow be based on the previous one. And I think what's really interesting is according to countless academic studies that have tracked this, but including this Carnegie Mellon graduate study, that whatever their age, women tend to just accept what they are offered and not to ask for more. Whereas men tended to initiate negotiation more often and two to three times more often. There are many more explanations among which the fact that girls have been brought up to value relationships more and taught that it was their responsibility to preserve their relationships. Women worry more than men about the impact their actions will potentially have on their relationships according to the survey respondents, and it can prompt them to then change their behaviour when asking or make them reluctant to ask for what they want when it comes to salaries. Which I found extraordinary because as they said, if you're not asking for it at the beginning, and if the men were more likely to ask, then that gap is just going to become larger and larger. But the other thing that I found really interesting is that they highlighted the fact that women's fate was determined by external forces until quite recently, until a hundred years ago, practically, no woman had the right to vote in any western country. And even today, most of the world's economic and political power remains major in the hands of men, which if you think about how a girl would see it. If you go to a classroom and say, and talk about the President or the Prime Minister, most girls I want to suggest, think that would be a bloke because of what they see.
So It's then thinking about, well then what's possible? And I think before you negotiate for something, you first must be dissatisfied with what you have. And the rub is that women tend to be satisfied with less. And I think part of that is that 'nice girl' trope that many of us need to abandon that. We don't wanna ask for something, we don't wanna push ourselves forward. We don't wanna seem too pushy or too aggressive. Whereas those same things are actually seen as a good thing by blokes, which is potentially why they have no problem with negotiating. And the reason I wanted to talk about the research and everything prior is because there is psychology behind asking for a pay rise, and it's really important to understand that the research is consistently bringing this up.
That it's not just oh, you know, maybe this could be happening. This is happening. And to understand perhaps some of the psychology behind why. But even if I thought about pricing and pay rises, I've dealt with thousands and thousands and thousands of business owners over my years as working as an accountant, and what I've seen is this 'not enoughness', where if your self-worth is low, then what you are gonna price on your business is going to be lower. That if you don't value what you do, then your pricing's going to reflect that. And I absolutely believe that's true when it comes to salary as well. If you don't value yourself, you're simply gonna be grateful. Rather than thinking about what you are worth, if your self-worth is low, then you are not gonna be thinking I should be asking for this. You're just gonna shut up and take it.
And I was talking to someone recently who was looking for a job and she said that a person had suggested a job to her and she went, oh, I couldn't do that. Whereas what a bloke might think, 'oh I could do most of that and I'll learn the rest'. And I think we need to have that mind view of 'I can do most of that and I'll learn the rest' when it comes to both looking for what we want, and asking for what we want. We don't have to be perfect. And to really abandon this concept of the good girl or the nice girl when it comes to asking for what we want. It's not to say that we're not gonna be nice. Please don't hear that. It's not to say that we don't wanna be good girls. If that's something that's important for you, but that shouldn't come into why we're not asking for our salary increases.
So that's the research and the psychology around why often we're not asking for what we want when it comes to both price increases in our business, but also particularly for pay increases. But what I wanna do now is talk about the reality around looking at the steps that you can take to make sure that you are successful. Cause that's what this is all about, right? It's once you're realising that, okay, I'm going to ask for a pay rise. Cause at the end of this, I want you to be confident with that. But also it's understanding that there is a right way and a wrong way. And I wanna step you through what that is. So let's go.
First of all, it's important to understand that there is a right and a wrong time before we get into the right and the wrong way. If a business is going through a liquidation or a business is struggling financially, that is the wrong time to ask for a pay rise. You might go to the boss or your manager and say, I know the business is struggling and I wanna stay with the business. However, I need to understand what's your path to make sure that the business is doing well. So I know is this a six-month thing? Is this a two-year thing? Is this a three-year thing so I can manage my expectations or if appropriate, look for another role that actually is going to pay me more potentially in another business?
And that's not selfish. That's okay to ask that question. And if I was a boss, I would be really grateful that my employee would ask that, cause then that would also give me the opportunity to say, look, this is where we need to be and this is what I need from you if we are going to get to that. And that way you both have a pathway forward.
Because it doesn't matter if other sectors are getting more, it doesn't matter if other industries or even other businesses within your industries are getting more. If the business you are working for can't afford the pay rise, then they can't afford it. It doesn't matter what inflation's doing, cost of living. If your business can't afford it, they can't afford it, which is where it is asking in that case, what is the pathway to profitability or how long do we think this is gonna be the case? And what can you particularly do to help that? Because it's about understanding, okay, how long am I prepared to give this business if I'm now limited to this salary that I'm on now?
Conversely, if the business is doing well and you've contributed to that, then sure it is appropriate to ask for a piece. Yes, but again, I would move to the right and the wrong way asking for it. What you don't wanna do is just say, oh, I've seen the businesses doing well. I'd like a pay rise. We still wanna work through the steps that I'm gonna take you through so that it is asking the right way for a piece of that pie.
So we've looked at the research, we've looked at the right and the wrong time. Now it's looking at the right and the wrong way. Now the wrong way as an employer, absolutely. Let me just say this is the wrong way. 'I've been here for 12 months. I deserve a pay rise. My rent is going up. I need a pay rise. Interest rates are going up. I need a pay rise'. These things are true and they're important for you. But they're not economic reasons for giving you a pay rise. And I've seen a lot on social media. Inflation's going up. You should be asking for that. What should your pay rise be going up with inflation? For the most part, yes. But not all businesses can afford that. And I also think that if a business hasn't been able to lift their prices, then how are they going to afford to give you a pay increase of inflation if their rent, if their electricity, if everything is also going up? We know that, for example, that pays have been going up by about 4% while inflation's been going up at 7 & 8%. So we know pay rises haven't happened in line with inflation, a lot of the time cause businesses can't necessarily afford that. And I know that's an unpopular view. And yes, there are some sectors that can afford that and companies that can afford that and they should be paying that. But there are some that can't and what it is important to understand though, is you can still receive in pay rises that are commensurate with inflation, depending on how you ask. My argument was that you wouldn't just go in and say, my rent's going up. I should deserve it. I want you to be successful when you ask. And there are much better ways than citing these reasons, much better ways than simply going and having a litany of these economic reasons.
So what I want to do is, as I said, as an employer who was sat on the other side of the desk, I wanna tell you about how it's been successful. The most successful pitch is when they come to me. So that you have a great chance of making sure that you are successful.
So the first thing you wanna do is research your salary benchmarks. So start with doing your own recon to figure out what are people paid within your organisation and what are they paid outside your organisation. So if you've got peers in other in your industry, ask them that are on commensurate jobs or ask people internally as well. Find out what they're being paid so you can get a bit of a case study together. Or there are actually benchmark reports that you can get in your industry potentially, so you can see.
Next, you wanna determine your desired salary wage. You wanna have an idea of what you are asking for when you go in and you wanna set a realistic but ambitious target for your desired salary increase. If you're on 60 grand and most people in your that are being paid for your position are on 70, it's gonna be difficult for you to go in and demand 80.
So you wanna be at a realistic, but ambitious target. And you wanna consider things like your experience, your skills, the industry standards, but also the value you bring to the organisation. Cause I certainly have paid people more than their qualifications certainly allowed, because of the value that they brought to my organisation. So don't think that your piece of paper is holding you back. If you bring great value to your organisation, that is absofreakinglutely worth something.
Number three is you want to document your accomplishments. I reckon this is one of the most important parts, because as I said before, it's not going in as saying, my rent's going up, I need a pay rise. Cause those things are true but for the business, that's not necessarily something that, especially if your manager needs to go to their manager and ask for it, that's not a good enough case study. It might be one of the things, but I would instead be looking at documenting your accomplishments instead. What I would do instead is when you looked at your rent going up, that's gonna go into number two. That's gonna go into your desired salary range, right? Not your reasons that you are citing for that pay rise.
So when I say document your accomplishments, I mean document them. Not just say them, but actually have them written down because it's harder than to ignore black and white. But also if your manager needs to take time away to think about it, it's something that they can re-look at as they are deciding. But also if they need to go away and make a case for you, they then have an argument that you've given them and put around a pretty bow around what you could do. And you wanna be really specific with examples. For example, specific instances where you've exceeded expectations or made a higher impact and where possible include the dollar values of those contributions, particularly if they far exceed your salary or proposed salary increase. And that way it removes the emotion around, I want this salary and makes it super pragmatic and factual around it. It’s like that Pantene ad. I'm worth it because this is the value that I bring to the organisation. It might be efficiencies you've created. It might be the revenue you've brought in. It might be clients you've brought in or contacts you've made. Or the fact that you're essentially doing one and a half person's jobs. You know that. They know that and they've saved that cost. So some of that should be coming to you.
Number four is practice and prepare. So what we don't wanna do is send that document and then go in and mumble it. And we don't wanna be using words like, oh, if that's okay.? Oh, I'm really sorry to be taking up too much of your time. None of that. We wanna go in there like a boss. So practice and prepare. Practice in front of the mirror. Practice with a best friend, practice with someone that you admire in your industry. Practice with your mentor. Rehearse your negotiation points. And think about the objections that your boss or manager might bring you and practice and write down what your responses might be. Anticipate questions and prepare evidence-based, not emotional arguments.
Number five is timing. So when you've done that and you've got your case study together, think about when you are going to approach your boss. If the end of July is your company's busiest time and it is absolute madness there, don't approach them at the end of July. Wait till August. You might send them an email saying, Hey, I'd love to put an appointment in the books in August to talk to you about a possible pay rise. Go for it. But don't ask for that meeting in July cause you're gonna have potentially less of an effect. And your boss is potentially also gonna be annoyed cause they know that this is their busy time.
Also, don't mix personal and business. If you are out having drinks on a Friday night with your manager or your boss, that's not the time to bring it up. If they say something, you might even say, you know what? Thanks for bringing that up. That’s something I wanna discuss. I'm gonna put that as a calendar meeting in our diary next week. But really it's gonna be something that you think about at appropriate times, not approaching the manager in the hallway. It's thinking about when, and then putting that time in the diary, sending an email to say, really like an appointment with you this week so I can have a chat about a possible salary increase.
When you arrive at the meeting, number six, you wanna be on time. You wanna be confident, wanna clearly communicate, make sure you bring that beautiful research in with you. And again, stick to the facts-based arguments. Don't be drawn into the emotional reasons. Stick to the evidence. Clearly articulate your skills, your experience, your achievements. Talk about your performance, highlight your future potential, and how what you can offer the business. Where possible, demonstrate how a salary increase with you aligns with the business long-term goals. The bigger the picture, the better the picture you can paint, the better for you.
And number eight is really important. It's also really important to consider when you go in some non-salary benefits. Cause especially if you've asked for an ambitious increase, your business may not be able to fund that. And if you are vital and if you've put a great case study forward, they're gonna wanna keep you. So think about what non-salary benefits you might be happy at receiving. They might be extra annual leave. They might be flexible work hours. It could be professional development opportunities or performance-based bonuses. So other ways to get you that commission if you reach a certain target.
But also talk about possible pathways to an increase in the future. I had an employee who did this beautifully where we I agreed to a smaller increase and I told her, these are all the metrics she needs to hit in order to look at it again. She goes, so should I put a date in our diary for six months time so we can talk about this again? And I remember being really impressed, going wow. Okay. And I was able to say to her, no, not in six months, but absolutely put it in for nine months. And she did. And she came back to me. In that nine months meeting, she showed me that she'd hit absolutely everything that I'd asked her to and more. And the reason I said nine months is cause I thought, three months you could do this too easily and phone it in. Six months is a good amount of time, but nine months, I'm really gonna see if you committed and you want it. So I thought she did that beautifully well.
But once you've considered those non salary benefits, it is being prepared to compromise you if an immediate salary is not possible, it's finding that mutually beneficial solution, and as I said, doing what my employee did and putting that date in your diary to follow up.
And most importantly, to do that. To follow up. If your boss says to you, come back and this is what I need you to hit. Come back and talk to me in six months time, put the date in your diary for five months and then contact them at month five and say, Hey, just letting you know it's five months since we chatted. This is where I'm up to. This is everything I've done. I'm really looking forward to chatting with you in a month around that potential salary increase. Could we put a date in the diary? Now if I was the boss, I'd go, whoa, okay, that's impressive. And if at that point your boss is still going no, or fobbing you off or really not coming up with that their end of the bargain, that for me would make me realise, okay, it doesn't matter how much I love this organisation. They clearly don't value me and my needs, so therefore it's now appropriate for me to then look for something else. And if they're honest with you, if they genuinely value you, they'll let you know if you are at the limit of where you could go with their business. And again, I've done that with employees. I did it again with someone very recently. This is all we can do for you here with the skill sets and everything that you've got, but I think that you could potentially be earning more than this and you should. So, let's look at how could we rehome you or where your next step might be and do you know what? The good thing is that gives the boss then time to find someone else, potentially have you train them up. And also it's that win-win where they've released someone in the world that loves them. And the number of times that I've had employees come back because they've gone somewhere else and realised, huh, that place wasn't so bad and maybe I'm comfortable with a little bit less and I'll negotiate some non-salary bumps because I loved it there. Or it's just simply that really nice environment where it just makes sense that I wanna leave that in a good way.
So I'd love to know how you go. If you've applied for a salary increase, I absolutely would love to know how you go. And as I said, if you would like these tips, if you want them distilled in that point order that I talked through, head to the show notes where we are gonna put a download we've created called How to Apply for a Salary Increase, and that is our gift to you.
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