Many discussions about money are either contentious or scary, but they don’t have to be. If you’ve concluded you’re ready for a raise, but you’re not sure if the pros outweigh the cons of asking for a raise, consider the subsequent benefits of asking for a raise.
Asking for a raise is a good idea because money is not left on the table, your manager is reminded of your accomplishments, your confidence is built, your pay keeps pace with inflation and earning potential, you save for a purchase or pay down debt, and your resume and job-readiness are refreshed.
Whether or not you’re actively in the process of asking for a raise or just starting to think about it, there are a number of advantages to asking for a raise.
Why it’s Worth it to Ask for a Raise
A survey done by Payscale concluded that only around 37 percent of employees had asked their employer for a raise, but 70 percent of those employees who did ask were able to receive one. So though the odds are small that your colleague in the next cubicle has asked for a raise, the odds are much higher that if she has, she’s received one. There are a variety of benefits to being one of the 37 percent who asks for raise.
You’re Leaving Money on the Table if You Don’t Ask for a Raise
A key reason you should ask for a raise is because you’re leaving money on the table if you don’t. The same Payscale survey concluded that only around 30 percent of workers received a raise without asking for one. This means that around 2/3 of employees don’t get a raise unless they ask for it. Unfortunately, a tenure-based or periodic raise is never guaranteed. You might find yourself waiting for your employer to offer you a raise only to find you’ve been with the company for years and never received a raise. Failing to assert yourself and ask means you’re excluding yourself from a higher earning potential — and all you have to do is ask (with the right preparation and delivery). Learning how to successfully ask for an hourly raise or salaried raise is critical to taking advantage of your full earning potential.
Your Manager is Reminded of Your Accomplishments and Work Ethic
Another reason why it’s good to ask for a raise is that your manager is reminded of your recent and past accomplishments and your work ethic. In preparing to actually ask for a raise, it’s advantageous to quantify your accomplishments and your market value. Evaluate if you have recently completed any large projects, taken on more responsibility, started managing other employees, or automated an expensive process. Take the time to write out these successes and highlight the important numbers associated with them, such as saving the company X amount year over year due to your project completion, or closing a large sales deal for X amount, or scheduling and managing X employees.
By quantifying just how much you’ve executed, and translating your work to dollar amounts, you can express to your manager just how valuable of an employee you are, regardless of whether or not you get a raise. The next time a spot opens up for a promotion, you might be top of mind!
Your Confidence in Your Skillset and Value Grows
After assessing and quantifying your workplace achievements, you’ll find another inadvertent benefit of asking for a raise: your own self-confidence in your abilities as an employee will increase. You’ll be able to look objectively at what you’ve accomplished during your tenure with your employer and recognize the impact you’re making on real-world figures, regardless of whether or no your company is able to give you a raise.
Your Pay Keeps Pace With Inflation and Stalled Earning Potential
Inflation is a general increase in the prices of goods and the fall in purchasing power. Because your skillset is as susceptible to inflation as any other type of good, asking for a raise is worth it because it helps your pay keep up with the inflation of the price of your labor. If inflation was around 5 percent the previous year, then a raise of 5 percent would allow your compensation to stay level with the market rate of your labor.
Not only does asking for a raise alleviate disparity in your pay caused by inflation, but it can also safeguard you against hitting an earning potential wall. Payscale produced additional research that suggests the following:
Because earning potential seems to be capped much sooner than the average career ends, it’s critical to continually ask for and receive raises to make sure your earning potential doesn’t stall.
You Can Save for a Large Purchase or Pay Off Debt
When you ask for and receive a raise, you’ll have more income at your disposal, which is the most tangible benefit to asking for a raise. That extra income can be used strategically to make a large purchase (such as a down payment on a home), prepare for new expense in your life (such as having a child), or paying off debt (such as student loans). Increased income does not and should not equal lifestyle inflation. Use your newfound means as just that — a means to an end — rather than to have a fancier car or a bigger wardrobe. By asking for a raise and receiving it, you’ll fast track your journey to financial independence.
You Prepare Yourself for Future Career Opportunities
By following the steps to ask for a raise, you’ll unintentionally also be preparing yourself for future career opportunities. As you quantify your accomplishments and evaluate your market value, you will be able to refresh your resume and assess the job market’s demand for your skillset. By asking for a raise, you’ll ensure you’re more aware of and ready for future growth opportunities.
Is it Always the Right Time to Ask for a Raise?
Though asking for a raise provides you with a myriad of benefits, including taking full advantage of what you could be making, reminding your manager of your value, building your confidence, assuring your pay rate stays current with inflation and your overall earning potential, saving for a large purchase or to pay off debt, and preparing yourself for future job opportunities, there are times when it’s either not appropriate or not fruitful to ask for a raise. Here are a few situations when you shouldn’t ask for a raise.
When Should You Not Ask for a Raise?
Asking for a raise it worth it when the timing and circumstances are opportune, but that’s not always the case. There are scenarios when you should not ask for a raise, such as the ones described below.
You should avoid asking for a raise when your company has just finished budgeting, the company’s financial outlook is bad, your manager is especially stressed, your industry or job is dying, you are close to finishing a project, your tenure is less than 6 months, or your lifestyle has inflated.
Though this isn’t an inclusive list of the worst times to ask for a raise, it should help you understand the types of situations where the cons outweigh the pros of asking for a raise.
Your Company Just Finished Fiscal Planning and Budgeting
Employers typically run on a fiscal year cadence, whether it aligns with the calendar year, starts halfway through, or begins at a different point. If your company has just finished allocating budget resources, it’s not a good time to ask for a raise. Ideally, you’d want to have compensation and raise discussions around 3-4 months ahead of budget planning so your manager has the time to vouch for you and access the right resources to pay you more.
Your Company’s Financial Outlook is Poor
Sometimes it’s not apparent to the casual observer whether or not a company is in good financial health. If you are able to identify that your employer’s financial position is declining, you should consider waiting to ask for a raise because the funds to increase your compensation just might not exist. A few key resources that can be used to understand the fiscal health of your company are the income statement, the balance sheet, the cash flow statement, and various financial ratios such as debt-to-equity or net profit margin.
Your Manager is Experiencing an Especially Stressful Period
The reality is that some employers have managers who are always stressed. But it’s best to avoid asking for a raise when your manager is unusually stressed due to personal or work related factors. Is your boss’s child in the hospital? Did your boss’s boss just get fired, and your boss is managing twice as many employees? Think about what is happening in the life of your manager that could contribute to an unfavorable outcome when you ask for a raise, even if whatever is going on is completely unrelated to you. Instead, wait for a time when they’re relaxed or optimistic about the company, such as when they just received a promotion.
Your Industry or Specific Job is No Longer in Demand
If you work an industry or role that is effectively dying, it might not be the best timing to ask for a raise. If it backfires, you could find yourself out of work in a job market that isn’t vying for your skills. Instead, focus on transferable skills and accessing job training to prepare you to work in another, more high-paying career.
You’re Close to Finishing a Large, Impactful Project
It would be silly to hand a performer a bouquet of roses halfway through a concert, and the same goes for your professional performance. If you’re in the middle of a highly impactful project which has the potential to save or make your employer money, you should avoid asking for a raise until the project is complete and you’ve been able to see its influence.
Your Job Tenure is Less than 6 Months
Promotions based on tenure can occur as frequently as 6 months or as long as 5 years, depending on your employer. It is not a good time to ask for a raise when you’ve only been at your company for less than 6 months (and even less than a year at some places).
One caveat to be aware of is if your job duties are drastically different than what you agreed to when you signed your job contract. If you are managing a team of people when you thought you’d be an individual contributor, or if you are working on ten accounts when you only agreed to two or three, it’s appropriate to bring these discrepancies to your manager. They might not be able to give you a raise immediately, but calling out the difference between what you thought you’d be doing and what you are doing can be justification for asking for a raise.
Your Lifestyle Has Simply Inflated
The worst reason to ask for a raise is because you can’t afford your lifestyle anymore. Lifestyle inflation is allowing yourself to purchase more expensive clothing, cars, or recreational activities, even if you can’t afford them. Your employer is not interested in helping you maintain an expensive lifestyle, so instead of asking for a raise, consider decreasing your spending and increasing your savings rate to live within your means. Adopt a budgeting methodology to track where your spending is getting out of hand or learn how to budget a small salary rather than asking your boss for more money.
For the majority of circumstances, the pros of asking for a raise including increased self-confidence and making sure your pay keeps pace with inflation, far outweigh the cons. However, when it comes to specific situations, such as a declining financial forecast for your company, or your professional skillset no longer being in demand, it can be advantageous to avoid asking for a raise until a better opportunity arises.
Climb on, FinBase.