This question very often arises in a very unexpected way – and probably quite differently to the way most employers would expect it to.
Candidates get in touch with us to specifically ask what they ought to be asking for from their employers taking into account all factors including what is the right amount or what is the morally acceptable amount, rather than what they can squeeze out of their employer. Some of course are only interested in the money, but the vast majority tend to want to know what they ‘should’ be paid.
Employees tend to be genuinely worried about asking for too much money, for fear of causing their employer difficulties with their cashflow. Of course, some employers are very good at constantly going on about cashflow so that employees start to develop the idea that their employer has no money, and therefore they should not be asking for a pay rise. However, the vast majority of employees and employers try to do what is fair for each side, rather than trying to squeeze lots of money out of the other party.
Factors to consider
So, very often the question arises, how much an employee should be asking an employer for in terms of a pay rise on a year-to-year basis.
We tend to advise in the same way that we do law firm valuations. You need to look at a whole host of different factors including the following:
- How much work you have generated for the firm
- What extra responsibilities you have taken on in the previous year
- What hours you have worked
- What your sickness levels have been like (not strictly relevant but still relevant) and how good your employer has been about any sickness leave
- What benefit your employment has been to the company, if not just in billing or managerial skills
- What suggestions you have come up with over the year that have generated more income for the firm
- What introductions you have made to the firm both for clients and for other staff
- What level of inflation there is at the moment in the country generally
- Whether your own personal costs have gone up due to external factors such as divorce, death in the family, extra children, a move to a larger house.
- How much it would cost the firm to recruit someone else into your position – would the salary need to be a lot higher or lower?
When you have put all of these factors together to determine what has changed from the last year, you are then able to have a think about what you want to get out of the pay rise.
Can I have more money please?
Just asking for a pay rise for a pay rise’s sake doesn’t really work, because there is no real justification from one year to the next for an employer to give you a pay rise unless there is a real reason for it. A reason for a pay rise is one of the reasons given above – the strongest of these will be of course that your billing has increased or your value to the business has increased dramatically, and therefore you need a pay rise to reflect this.
The curse of inflation
However, don’t forget the implications of inflation. For many years now, inflation has been running at such low levels it has not been a thing, but in recent times with inflation now shooting up to double figures it has become a real thing again, and it does need to be taken into consideration when looking at pay rises every year.
If you do not get a pay rise from one year to the next, then in fact your employer has actually given you a pay cut, because the value of your salary has now gone down by the cost of inflation.
Sorry there’s no money
Of course your employer might come up with a list of reasons why they can’t give you a pay rise, which could include the business not having the spare capital to be able to spend more money on your salary.
You could in cases like this try calling your employers’ bluff and ask them for details of exactly what is going on with the company accounts – how much the turnover has dropped from year to year, what the extra costs have been that mean there is an increase in the overheads, why there is no spare cash to pay you a bit more when you have generated more money for the business. Some employers are very open with their own finances, but others are a little bit more reluctant to divulge details.