The business world is fantastic. It's also challenging. Over the course of your career, you'll face ethical, cultural, political, and personal dilemmas in the workplace. You'll work with difficult people. You'll find yourself in compromising situations. You'll have to balance who you are as an individual with what your employer asks of you.
Can you stay true to who you are without sacrificing your success? Absolutely YES.
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Money At Work

Coach on Call:  Your Q&A
How Much Money
Should I Ask For And When?

Two of the hardest situations to navigate at work:
how much responsibility to take on without money
and how much money to ask for... and when.


I should've known I could count on you guys to ask me tough questions.  :-)

Check out this Coach on Call request:
"Recently, my supervisor left the company and I am in a position to move up. In the mean time, I have already taken on some of their responsibilities with a temporary pay raise that has yet to be decided. How do I decide what pay to ask for to not sell myself short and not overshoot the managers range?"
Wouldn't it be great if money was one of the most straightforward aspects of your job? There could be some monster data table or chart of VALUE and WORTH that says the more you contribute, the more money you make. The bigger the stakes, the bigger the pay. With every set of responsibilities you take on, you earn "this" much more money. Best of all, those who deserve more money, would earn more money. All driven by mathematical formulas and all very logical.

Yeah. No. So that's not necessarily reality. Compensation is sometimes managed fairly, and other times not. In all cases, it's complicated and influenced by more variables than anyone wants to admit. Companies don't set out wanting to make it hard for well-deserving people to earn fair pay. It just gets tricky over time. The more you understand about the variables in play, the better you can position yourself to earn your fair share. So thank you for this question.

Here's what you need to know.

What Impacts Compensation?

 Why do I suddenly feel like a magician who's giving away the secrets of the trade? I think it's important to understand how compensation systems are designed and what factors influence how you rate relative to your peers. Most companies don't publicize their compensation framework beyond leadership staff, because it's an emotionally charged topic for so many people (including leaders) and because there's significant subjectivity involved in how compensation is managed. It's equal parts science and art.

1. How <Most> Compensation Systems Work. 

Compensation systems are usually built around two key variables:  the "grade" of a position and the "salary range" that's appropriate for each grade. The grading system for positions is a grid of sorts, taking into account the level of responsibility, expected contribution, and potential financial or business impact that each position has in an organization. Companies try to evaluate positions relative to each other and rank them into these grade categories. They may call them grades, levels, classifications, or some other term.

Each grade is then given a pretty big range of acceptable salaries, in most cases with a swing of $10-20,000 between the highest and lowest potential salary. There's also overlap between grades, so it's possible that someone in a Grade 2 for example, may make more money than someone in a Grade 3. This is where the slippery slope starts to come into play.

Not every company has a formal grading system of this sort, but almost all use this type of approach when assigning "value" to specific roles in the company.  In most cases, companies don't publish their grading system to employees and for good reason. It's intended as a guideline only, and raises more questions than it answers. It also makes people think immediately about how they're paid relative to others and there's no good that will come from that.


2.  What Impacts YOUR Compensation.

Where you fall in the range of acceptable salaries for your position is impacted by several factors. Some are tangible (measurable) and some are intangible (more subjective.) As you review this list, you'll see that several factors can play against what appears to be a "deserved" raise as you take on more responsibility.

Your scope of responsibility (particularly if it's a change in responsibility vs. "more" responsibility) is really only one factor that impacts how much of a raise you might get. This is what so many people don't understand. With this insight, you can position yourself on several factors to deserve and earn a raise. Consider the two lists below.

Tangible factors include:

  • Educational background, both degree and institution
  • Years of relevant work experience
  • Years of <good> experience with your company
  • Level of documented performance in prior years
  • Proven skills and competencies (Note the word "proven" for later discussion.)
  • Complexity of your role vs. others in similar roles
  • Span of control and/or scope of responsibilities relative to others
  • The line of business (product/service) that you support
  • Geographic location and cost of living indexes
  • Leadership or influence over others
  • Financial impact or expectations (direct revenue or cost controls)


Intangible factors include:

  • Perceived "value" to your manager, relative to your peers
  • Uniqueness of skills that are important to the business
  • Market supply and demand for your combined skill set 
  • Strength of relationships with customers, partners, investors, etc.
  • Ability to work collaboratively with co-workers, leaders, staff
  • Ability to work collaboratively with human resources and finance
  • Your "PITA" factor (Pain In The Ass) - how easy you are to manage
  • Your steadiness and reliability in delivering results
  • Your commitment and dedication to the company
  • Your support of the company's message, culture and leaders
  • Your success in taking measured risks - with successful outcomes
  • How well you adapt and embrace change
  • How well you physically represent the ideal of the company image
  • How much of a risk you represent as you take on a new role
  • And many more subjective (and fair) factors

3.  Why Do You Care?

Blah, blah, blah... why does this matter? Here's why. I've seen many people fail to get a raise when taking on new responsibilities. Sometimes no raise is given at all while you "prove" you're up to the new role. There are very specific ways to handle these situations that increase your odds of being compensated fairly. A lot of it has to do with understanding how things work (see #2 above) and being mature and prepared in how you approach your request.


How To Request More Money

I've written before about how to ask for a raise. You can read that article here. I encourage you to read it. Today, I'm going to be a bit more specific about asking for a raise when taking on more responsibility. 

When you're given the opportunity to take on more responsibility, and you want to grow with your organization, first and foremost show appreciation. The company is trusting you to take on a larger role and chances are there's risk in doing so whether you realize it or not. Once you've shown appreciation, I recommend these next steps.

1.  Get Context.

Before you ask for money, get real with yourself about how much to push. Review the list of tangibles and intangibles above. Are you a top performer? Do you meet all of the requirements for the role? Are you an obvious choice to take on more - or will you be growing and learning as you go? How will others view you taking on more? Do you have a unique skill or talent that sets you apart from any other candidate? As you look back over your history, how do you measure up against the intangibles list?

Sometimes managers give you more responsibility because you've earned it. You've shown that you can do the job, or you have proven experience you're bringing to the table. In those cases, a raise is warranted and justified. You can easily highlight tangible and intangible reasons why you deserve more. You just have to measure yourself against the right list of considerations.

Other times managers take a chance because you show initiative and potential, but you're not necessarily ideally qualified for the role. You're taking on something new that you haven't done before, which is risky even if you're confident. In those cases, a raise is also a possibility but might have to be earned over time. The trick is making sure you have a commitment to how you'll earn it.

The more mature your thinking is around context, the more likely you are to get a raise. Use the list of variables to your advantage. Reference them to highlight your value or, alternatively, start creating more value now that you know all the variables that matter.


2.  Ask The Question: Yes or No.

As hard as it can be to raise the issue of money, managers should expect it. They may not like it, but they should expect it. So don't wait for him or her to bring it up. Simply ask:  "Does this change in responsibility come with a salary increase?" If the answer is "No" go to Step 3. If the answer is "Yes" go to Step 4.


3.  Ask The Follow-Up Question To "No"- Very Important!

If you're asked to take on more responsibility, or you're given an opportunity, and you're told that your compensation may or may not change later, but certainly "not now," you have to take responsibility for trying to influence a different outcome. If you want the role, don't let a temporary blip in compensation deter you. BUT, make a strong effort to secure a commitment. Here are two examples of what I mean:
"I understand that you can't justify a raise now. I'd be lying if I said I wasn't disappointed. I'd like to understand when you believe you can justify an increase. I also want to be sure I understand the specific outcomes or results I need to demonstrate by that time, to be sure I've earned an increase that's appropriate for this level of responsibility. I'd like to have a documented plan so there are no miscommunications later."  
"I understand that you don't feel you can justify a raise right now. I think you know how much I want to take on these responsibilities. I also want to be compensated fairly for the work I'm doing. I'd like to help you justify the increase however I can. Can we review my past performance and the value I bring to this role? I'd be happy to write something up for you to review. How can I help you justify an increase now?"
Whether your boss asks for it or not, do a write up highlighting your contributions and unique qualifications for the job. If you can do it before the salary question is raised, all the better. But do it no matter what. Tell your boss you want him or her to have it so when the timing is right, your request can be approved.


4.  Ask For What You Want, Within Reason. 

People generally make two mistakes when it comes to asking for an increase. They ask for too little because of fear of rejection. Or they ask for too much because they're naive or inexperienced. The trick is to shoot the gap. You may not always get exactly what you want, but your goal is to find common ground between what you want and what you can realistically get.

Most companies have an average percentage increase they expect to pay for promotions. The average salary increase as you take on more responsibility is usually between 4% and 12% of what you're making today (based on my experience.) Some companies are higher, some lower, but that's the range that most companies would consider reasonable depending on the circumstance.

There are no set rules, but here are some guidelines to consider. You'll be offered around 5% if you're taking an incremental step on a defined career path. If you're taking on significantly more responsibility, you'll probably be offered 6%-10%. If you're taking on a role that has a material impact on business success, you may get 10%-12%.

If you consider where you are and where you want to be, and it requires more than a 10% increase to get you there, be prepared to justify the increase in writing. Try to provide this to your boss before he or she tries to get your increase approved (if not the decision maker). Be honest and tell your boss that you're not entirely sure what's appropriate for the role, but your target compensation would be "$x - $z" or more, and why you believe you deserve it. Talk about how important the role is to the business, how well your qualifications line up to the requirements for the role, and how you can provide value to the role beyond what's required given your unique background. Use the tangibles and intangibles to your advantage.

The fact is, if you don't ask, you probably won't get it. So ask. If you overshoot, your manager will tell you. If you demonstrate emotional maturity in the discussion, he or she is more likely to try and get you as much as possible within guidelines. If what you're offered is significantly less than what you want, ask your boss what it will take to get closer to your target number. It will open up a dialog that can only serve you well long-term.

One more thought:  Some people worry that by asking for a specific increase, they may ask for less than their boss would've offered and lose money in the process. It's very rare that someone will pay you less than what they considered fair, just because you didn't ask for it. I've found that most bosses would be delighted to give you more than you expected because they know it will motivate you. Playing it safe is more important when you're negotiating outside of your company, but less important when you're going for an internal promotion.


Bottom Line

Talking about money at work is uncomfortable. Ironically, it's uncomfortable for managers and staff alike. There are all kinds of perceptions around value and worth tied up in compensation. There are also tremendous budgetary pressures on managers most of the time. All the more reason you should have clear and direct discussions.

The more you understand the variables that impact your compensation, the better you can navigate the process to get what you want. There are tangible and intangible variables that influence your perceived value. The more valuable you are, the more richly you'll be compensated. Part of the challenge is being able to highlight what makes you valuable when you're asking for a raise. Use the list in this article as a jumping off point. Pay attention to what else is talked about in your company as being important and keep track of how you stack up.

If you take on more responsibility and you're told a raise isn't in the cards, ask for more information about when it will be and what you have to do to ensure you get the maximum amount. Do this with emotional maturity and with full appreciation for the opportunity you've been given. As you start to prove yourself in the role, share your successes with your manager and make sure he or she could tell the story to whoever else might have to approve your raise.

If you're worried about how much of a raise is the "right" amount, know that there are no set values. Your situation is different from everyone else's and only you can try to find the right answer with your boss. Ask for insight as to what's appropriate and how you can maximize your increase. If you want more, ask for it and try to justify it using the variables discussed in this article. Ask if your salary can be revisited if you achieve certain outcomes or results over time.

The bottom line is that if you take the fear out of money talks and have full context about what matters to your company, your boss and yourself... you're much more likely to get exactly what you want over time. What's the worst that can happen? Someone says no? You're no worse off than you were before. And you have new insights about your perceived value in the organization. It's a win either way.

More soon,
Lisa

If you're struggling with compensation issues at work, or you know someone who is, I can help. I offer "911" coaching support via phone to help solve specific challenges. Email me to learn more at lisalai@laiventures.com. Here to help.