How to ask for a pay rise – and when to give one

This is an audio transcript of the Working It podcast episode: How to ask for a pay rise — and when to give one

Max
I sat down with my manager for the first time in my career and essentially said, I think I’m due a pay rise. What can we do? How can we make this work? And I was very fortunate in that in three months later, I got a pay rise of 36 per cent, which was super exciting. Very, very happy when they told me. And that felt like a great win. And actually, it wasn’t as painful a process as I thought it was going to be. Wasn’t awkward. Didn’t impact the relationship with my boss, which I think is kind of what I was concerned about to start with. You know, how do you go and ask for more money without your boss thinking I was greedy or is he going to leave? Or what are they going to do?

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Isabel Berwick
Hello and welcome to Working It with me, Isabel Berwick. Today we’re talking salaries and in particular, pay rises. What’s the best way to go about getting that increase in pay? Is your best bet to negotiate internally or just to jump ship altogether? And the voice you just heard was Max. He’s a project manager in the renewable energy sector. You might recognise him as one of the listeners from the Pay Rise episode of the FT’s Money Clinic podcast, which went out in November last year. On that programme, Max spoke about his desire to get a pay increase after discovering he could get a higher salary with rival employers. And along with Money Clinic host Claer Barrett and the FT’s career expert Jonathan Black, we offered some advice on the best ways to start that conversation with his employer. Well, it worked. Max’s negotiations were incredibly successful, landing him that whopping 36 per cent increase in his salary. Max is a stellar example and clearly an expert negotiator, but for many of us, pay is still such an awkward topic in the workplace. So how exactly do we go about framing our demands in the most tactful way? Well, these are the tips that Max had to share with us from his experience.

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Max
It all started really with speaking to a few recruiters on LinkedIn. And I think one of the big issues with talking to these people is often you don’t have any context. You don’t really know them, and people send you emails and say, oh, do you want this job? You get a massive pay rise or these sorts of things. And it’s quite difficult to filter kind of the wheat from the chaff and try and gauge what is a realistic expectation versus what someone is telling you to tease you in and then in reality ends up being less. The strategy I took was to speak to a number of different people and get what I thought was a sensible benchmark for what I actually thought was my job versus what they thought my job was. And then I spoke to my boss on two main points. The first one was the benchmark that we use as a company to figure out what should this role be paid. You know, a lot of companies, when you get to a certain scale, have a good idea of what a given job will be worth in the market because a) they’re hiring, and b) they’re paying for this information from other people. And my first point was, I think the benchmark they’re using for this is off because I can see that I can get paid a lot more elsewhere for doing exactly the same job. And then the second angle I took was, you know, I’ve worked there for three years. I’ve had really good performance results. And you’re telling me that I’m doing a really great job. So then, although the benchmark is low, I also think that whatever the new benchmark should be, I should be at the higher end of it, because if I’m one of the top performing or well performing person in my role, then it makes sense that I should be paid the higher end of what people in my role are paid. I tried to make the conversation quite structured and fixed around those two points, and apparently it seems I gave my boss this sort of ability to justify why that should be the case to people more senior in the business and the people that sort of sign these things off. Because I feel ultimately my boss is quite keen to give me a pay rise because turnover impacts her team directly, but it’s often something that has to get signed off higher up the chain. It’s how do you then justify that to people more senior, and how do you get it approved the way up to the top, etc that I think can be quite challenging.

Isabel Berwick
Yeah, that’s a really good point because people forget you’re not actually just talking to your boss. You’re talking to the people above them. That takes some of the emotion out of it actually, doesn’t it?

Max
Yeah, I think so. Ultimately, in my situation, it wasn’t my boss’s money. It wasn’t her that was paying me directly. So it’s about how do you build a convincing argument that it makes sense for the business to give me a pay rise so that I can stay and so that I can be properly remunerated to reduce staff turnover and to mean they didn’t have to hire someone to come in and learn the ropes and replace you and start from scratch.

Isabel Berwick
So how did you get such a whopping increase? Did you actually go in with something written secretly on a piece of paper, or did they just come out and offer it to you?

Max
I went in with a couple of, as I said, benchmarks almost I’d got from recruiters that I trusted more and that I got a reasonable feel for. And, you know, naturally in these sorts of things, I inflated them a little bit and in the end got the inflated number that I had put forward, I think, because in an industry like this was that’s the going rate now, who knows what it’s going to be in a year’s time? So I think I was fortunate in that ended up being at the top of that end. I think there’s always a risk when you’re at a company for a while and you’re just getting maybe a promotion every now and then, but then you sort of rake in a percentage increase that you don’t keep step with the market. And I think for anyone who’s been at the same company for a while and is told that there’s a rigid pay rise structure, you know, we’ve got a budget, we can only give you 2 per cent if you perform well, you can get an extra 1 per cent or whatever. That’s not really how the world works. And the companies that can’t see that they’re going to lose good talent if they don’t keep up with what other companies are doing, I think are making a big mistake. So for anyone that’s out there who’s been told that the pay rise structure is very rigid and it can’t be flexed, at the end of the day, you can leave and these companies know you can leave, which means that that pay rise structure isn’t as strict as they say it is. So it was definitely a learning that I took away because it’s very easy for someone to use that as an excuse not to pay you what you deserve.

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Isabel Berwick
So Max makes some valid points there. And joining me to unpack all of this and more is my FT colleague and host of the Money Clinic podcast, Claer Barrett. Claer, welcome.

Claer Barrett
Thanks for having me.

Isabel Berwick
So Max’s techniques were many and varied. What stood out for you as some of the successful things that he did?

Claer Barrett
Well, actually, the thing that stood out to me the most was the thing that his manager didn’t do. I mean, he said this was the first time he’d sat down with his manager in his career to talk about pay and performance. But then for a lot of people, if they don’t have a rigid appraisal system the bigger companies tend to have, then there isn’t any natural moment with which to raise issues about pay, but also about progression, which is obviously linked to pay. So that surprised me a bit. But in terms of like how he did on his negotiations, I mean, undoubtedly questioning the benchmarks that they were using, showing that he had done his own research, being aware of the high opinion that his boss and his boss’s boss undoubtedly viewed him in and being confident enough to say, well, if that’s what you really think of me, then I should be at the higher end of those salary expectations. He was really helping her to build a business case for keeping Max within the business as a person that they should invest in as a manager of the future. And certainly they’re all really good points. But the reason he got that 36 per cent rise, I would say, is probably not really related all that much to any of those, as good as he is. It’s related to the industry that he’s in, renewable energy, and the fact that there was a recruitment crisis and they will be well aware that rivals will be trying to pick off other members of the team. He was not the first one to be picked off, so they had seen it happen before with other people. And so much of this does come down to the industry they were working in and how good a pandemic it may or may not have had and how it’s faring now in these times of record inflation and global energy wars.

Isabel Berwick
Yeah, I think at the time we said Max would probably be pushing at an open door when he went in for that negotiation and clearly that was true. But one of the things that he touched on there and that he was very worried about during the first podcast was the awkwardness of it. And also falling out with his manager. And discussing pay is still so awkward. But have you seen any shift in this in a post-pandemic world? Are readers and listeners starting to talk more openly about money? Do you think there’s a lot of salary sharing on spreadsheets, for example?

Claer Barrett
It’s awkward to talk about pay, but people are desperate for a pay rise at the moment. The cost of living is shooting up so fast. Even if you think that you’re not one of the top performers, nevertheless, rising inflation is still going to mean that the purchasing power of your money has gone down, and the cost of everything is going up. So just to stand still at the moment, you’re going to need a rise of seven, eight, nine, maybe 10 per cent later in the year just to be in the same position that you were a year ago with what your salary could buy you then. Now, if you’re somebody who considers themselves to be one of the top performers in the company and you want a pay rise, then like 10 per cent is kind of like the minimum now because that’s just to keep pace with what’s happening in the wider world, you know. So you will want more.

Isabel Berwick
Well, yes, but I do think we’re at this sort of interesting moment. And I want to pause for a minute and think about the poor managers who are probably being besieged with pay rise demands from people because even, as you say, even if you’re not a stellar employee, you’re going to be looking for 10 per cent to cover your cost of living rise this year. I mean, I was sort of thinking about some of the ways in which managers can deal with this onslaught. What if you haven’t got the money to give? What kind of tips and tricks can we think of for the poor managers.

Claer Barrett
As somebody who has asked many times for pay rises and has been knocked back probably on about the same amount of occasions as I’ve had a yes, it’s how you’re left to feel about it afterwards. A real cop-out is the “We just don’t have any budget”. So it’s like, yeah, you’re good; we just don’t have any budget. That may well be the case, but if the manager is not making you feel like actually you are somebody that they really want to retain on their team, that they can offer some other way of making you happy, whether that’s letting you work from home more often, do a training course, be involved in different projects, see your role restructured. Being a manager is tough, especially at the moment, keeping people happy. Because I fought for people to get pay rises on teams I’ve managed here and elsewhere, and it is very much the responsibility of the line manager, as Max was saying, to take it up the line and say, well, this person is really brilliant and there is a very strong risk that they could leave, and the cost to the business if that happened would be devastating because of X, Y and Z. You’re really relying on your line manager having your back and lots of people who are going in and asking for pay rises, if you’re not somebody who’s well thought of in the private sector, of course, then there’s no guarantee that your manager will fight for you. They can’t fight for absolutely everybody.

Isabel Berwick
No, we’re all subject to our biases, actually, and I think it’s good to be aware of that. But I was talking to one very experienced manager who emphasised to me the importance of talk and finding out what the person’s motivation is. I mean, of course, talk takes time, and that’s what managers have very little of. But if we can distinguish between their intrinsic motivation, you know, their enjoyment in the job, perhaps they’ve suddenly got too much on and they’re struggling, and extrinsic motivations, which is the pure money aspect, so some people will actually not really want a pay rise. What they want is to be recognised or to feel valued or to enjoy what they’re doing more. So I thought that was a really valuable piece of insight, that it isn’t just about the money sometimes.

Claer Barrett
No, it’s not just about the money. And if you are feeling valued by your employer, that’s great. But I found in the past that not feeling valued and not being valued often occurred at the same time. One of the occasions that I was knocked back for a pay rise, not at the FT, I hasten to say, I said, well, can I have a change of job title? And the reason for that was because I thought I would stand a much better job of getting a job at another rival media organisation if I had a title that made me sound more senior and it wasn’t going to cost my boss anything. So he said yes. And lo and behold, I got into the Investors Chronicle about two months after that. So that was great. But there could be other things like saying, I can see where the industry is going and I lack the skills, whether it’s digital skills, social media savvy that I can see would be transformative for me and be of value to the company. So will you invest in me as a member of staff, and you will retain me and that new knowledge that I have brought, and I can be a better asset to your company in the future.

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Isabel Berwick
So I talked to Max actually because he was successful in his endeavours, but I asked him what would have happened if he hadn’t got that enormous pay rise.

Max
To be honest, if I hadn’t have got a pay rise at all, I think I would have been extremely disappointed. And that’s the point where I probably would have picked up the phone and started looking more actively for other opportunities. It is always a difficult balance of if I’d got a maybe a 10 per cent pay rise, which would have been great, you know, it’s still a 10 per cent pay rise, but when you know that speaking to other companies, you could get more than that, you’re then in this sticky situation of I know I like where I work and there is a risk associated with leaving. So is it worth that risk for X amount of pay increase? That wasn’t a decision I had to make, but I think it’s a pretty tough one. You know, it’s quite scary leaving a company, I found anyway. So I think that would have been my plan. Go out and start more actively applying for roles, sending CVs, doing interviews and, you know, if you don’t get a pay rise at the first attempt, you know, you can always get a job offer and take it back to your employer and see if that changes anything. And if it doesn’t, then at that point, you have a job offer that you can go to.

Isabel Berwick
Exactly. And once you’ve actually raised the issue of getting a pay rise, it’s in their head so even if you don’t get it at the first attempts, sometimes they’ll come back to it next time you ask.

Max
Yeah, exactly. Or perhaps next time in the performance cycle, there’s more of an incentive or, you know, a lot of companies, I think, will mark you down as a, potentially a flight risk if they know that you’re looking at salary or that you may be speaking to other people. And often that can spur thinking on their part to try and retain you, be that in the form of pay rises, be that other perks, be whatever.

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Isabel Berwick
Yeah, I think being a flight risk is probably the strongest position to be in in today’s market.

So, Claer, the magic words, flight risk. It does seem to be a very hot topic at the moment. Does everyone realise they’re a flight risk? How can we know that we are or aren’t?

Claer Barrett
Well, I think if your bosses are talking to you about how you’re feeling, are you happy with your job? Is there anything more we could be doing for you? It’s a pretty good indication. I mean, hard financial indications could be things like long-term incentive plans. Now, again, they don’t necessarily exist in every industry, and they aren’t widely used in the public sector. But this is a little golden handcuff, if you like. If you stay with the company, then you’ll be rewarded, whether that’s through a pre-agreed pay rise, whether it’s share options depending on where you work, it could be different things. And that is quite common in areas of finance, tech companies, where particularly really senior talent is hard to attract, hard to retain. But further down the pecking order, of course, these things are just a pipe dream. Now, I spoke to Paul Johnson, who is the head of the IFS, Institute for Fiscal Studies on the Money podcast a couple of weeks ago, and we were talking about how difficult it is for young people to negotiate higher pay. Two things that he said really stayed with me. Number one, is that if you do get offered a job and you tell your boss about it, you’ve got to be prepared to go, ultimately. The second thing that he said was that people who do move jobs more frequently over the course of their career, he felt that was likely to be a much more rewarding strategy when it came to getting your pay up rather than hanging around at the same company waiting for an increment to be given to you. It certainly is effective, but whether you have got the confidence, as Max said, takes a lot of courage to leave a company and move on. Better the devil you know, and all that.

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Isabel Berwick
So to sum up, if you are in a hot sector, it’s a no-brainer. If you are not in a hot sector, marshal your data, decide what you want and why you want it. Do you actually want a better job title and more recognition? Do you really need that extra money? And if you’re a manager, talk, talk, talk to your staff. It’ll help retain them, and it’ll help you find out what it is they need. And everybody just needs to be very clear and do very good due diligence on any future employers because we’re in a really sticky time and it’s only going to get worse, I think.

Claer Barrett
Can I try and end on one vaguely positive note for women who are listening? Now, I have a real bee in my bonnet about women who work four days a week because they end up doing five days’ work for four days’ pay. And I would say to anybody who is part-time and is listening and thinking, yes Claer, that is me, I want you to make a case for going back up to five days, because that way you’ll get a 20 per cent rise, hello! And with flexible working and everything that we’ve learned during the pandemic about logging on at different times, having days to work from home, I think that with the employment and the recruitment market like it is at the moment, this is a really great time for women to negotiate the package that they need. So go for it and see if you can get a 20 per cent rise because I feel sure that you’re already doing enough hours to fully justify it.

Isabel Berwick
Preach, Claer. Preach!

Loads of tips and takeaways there, and we can summarise them in the show notes to help you. But from what Max said, I would take away that he went in knowing what his benchmark was and what he was worth. So you can do that too. And also, if you are a manager, talk to your team and think about what it is that’s motivating them. Are they motivated by intrinsic or extrinsic factors? Is it really about the money or is it about their purpose or their joy in the job? Has something happened that has made them disappointed or feel undervalued? It’s up to you as a manager to get to the bottom of that before you even think about the pay. And what Claer said was so arresting about women who work four days a week, you can get yourself a 20 per cent pay rise by moving up to five days because with flexible working that’s something everyone can do. I wish I had known that ten years ago because I worked four days for so many years.

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Well, with thanks to Max and to Claer Barrett for this episode. And please do get in touch with us. We want to hear from you. And we’re at workingit@ft.com or with me @isabelberwick on Twitter. If you’re enjoying the podcast, we’d really appreciate it if you left us a rating and a review on Apple Podcasts. And if you’re an FT subscriber, please sign up for our new Working It newsletter with the best of FT reporting on the future of work. Plus, some exclusive content you won’t get anywhere else. Sign up at FT.com/newsletters. Working It is produced by Novel for the Financial Times. With thanks to the producers Anna Sinfield and Harry Cook, executive producer Joe Wheeler and brilliant mix from Chris O’Shaughnessy. From the FT we have editorial direction from Renée Kaplan and Manuela Saragosa and production support from Persis Love. Thanks for listening.

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