How to ask for a pay rise in uncertain economic times

As cost-of-living pressures force people to ask some difficult questions about keeping food on the table, Australians are increasingly being forced to swallow their pride and approach bosses for a pay rise.

Research from Hays reveals that 95 per cent of employers will increase salaries in their next review, but with salary increase budgets under pressure, employees need to make the best possible case to maximise the value of their pay rise this year, Matthew Dickason, Hays Asia Pacific CEO, says.

Pay rises are on company agendas this year, Mr Dickason says, with the majority (84 per cent) of employers looking at performance as the most important factor when evaluating pay rise requests.

Other key factors include the responsibilities of the role, external typical salaries for the role, the organisation’s performance, the employee’s expertise and the organisation’s set pay structure, in that order.

Mr Dickason recommends preparing a persuasive case to demonstrate why you deserve a raise.

“It’s not enough to talk about the rising cost of living. Instead, focus on your individual performance and the importance of your responsibilities,” he said.

“Showcase that in the past year you’ve consistently exceeded performance expectations, met targets and made a significant contribution to the team’s or organisation’s success.

“List the additional responsibilities you’ve taken on and the duties you perform that are crucial to the organisation. Highlight the value of your expertise.

“Back this up with specific and quantifiable evidence. For instance, perhaps you are managing a 20 per cent increase in the overall volume of work or were involved in a project that exceeded objectives.”

How much to ask for

Workers should be asking their employers for a pay rise of between 7 and 8 per cent in 2023 to maintain their real wage given that unemployment is hovering at a 50-year low, there’s persistent inflation and also an ongoing skills shortage, recruitment firm ASPL Group CEO Kris Grant says.

“You need to show your employer that you’re adding value to the organisation,” Ms Grant said.

“Include any improvements in sales or profit to which you have contributed. The more you can prove your value, the greater your chances that your request for a pay rise will be granted.

“You should also research comparable salaries being paid for similar roles in the jobs market as an independent measure of your worth.”

Workers should ask for a pay rise in person, not by email, she says.

“It will be much easier for your boss to say no if you aren’t in front of them. If you can’t do it in person, a video call is better than a phone call or email.”

Once you’re at the meeting, stress your loyalty, as well as your value to the organisation.

The more prepared and confident you appear, the more your boss will be prepared to listen to your request.

“Many companies won’t want to pay you more money because it will hurt their bottom line. So, outline the reasons why you deserve a pay rise clearly and succinctly. Practise sounding confident and your request is more likely to be heard,” Ms Grant said.

Asking for more flexibility could be an idea if a pay rise isn’t forthcoming. Photo: Getty

What if they say no?

If your boss says no to your request for a salary increase, ask if there is another way they could recognise your value.

“Other perks could include flexibility on work hours, assistance with tertiary education, professional training courses, extra paid leave, time off in lieu, a gym membership or help with child care. Having some of these extras could hold great value and lead to greater job satisfaction,” Ms Grant said.

Mr Dickason said that workers should be willing to negotiate: “Be prepared to discuss the salary you feel your results are worth, but consider how much you are willing to compromise. It can help to have a top and bottom figure in mind that you think would be fair.”

If you’re still not sure whether the timing is right to approach the boss for a raise, keep in mind that wage growth has been lagging behind company profits and productivity gains for the past decade, said Fiona McDonald, policy director of social and industrial at the Centre for Future Work.

Fair request

The government has tried to make it easier to collectively bargain in recognition that wages have been stagnant, but employees approaching management about a pay rise need to remember that it’s a perfectly fair request, Dr McDonald said.

Indeed, employees working under an enterprise bargaining agreement recorded their biggest jump in 11 years, up 3.7 per cent in the March quarter, data released by the Department of Employment and Workplace Relations shows.

Remember, a tight labour market elevates the value of employees, she says.

“If you’ve gained other benefits such as flexible working arrangements or extra leave, that doesn’t mean you don’t deserve a pay rise, as there are benefits and costs to both sides,” Dr McDonald said.

“Those working from home at least some of the week report that the biggest advantage is that they are more productive without the commute or the distractions of the office.”

And if you get knocked back, ask the boss again in six months, Ms Grant said.

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