It's an awkward conversation we avoid at the expense of our financial future. Frances Cook has tips on how to broach it successfully.
Even the smartest and most motivated people you know, struggle to ask for a pay rise or promotion.
And now, even when money is tight for many people and they could certainly do with a pay bump, it’s even harder.
New Zealand spent 2024 dipping in and out and back into recession, many industries are in strife and bosses cry poor. Even HSBC, one of the world's largest banking and finance organisations, recently declared that Aotearoa's economy was the worst hit in the developed world, in 2024.
This doesn’t mean we give up on getting a pay rise though – it means we knuckle down and get even more strategic. After all, the economy is predicted to improve this year, which means you need to start making those pay-rise plans now.
Companies want to hold on to their best people for when the recovery happens so, if you can show your value, you’re probably in a stronger position than you think.
The ability to negotiate your salary, with confidence, using a plan, is often the difference between feeling stuck with your money, and getting ahead.
It's an awkward conversation we avoid at the expense of our financial future. Here's how to broach it successfully. (Source: Breakfast)
Here’s a playbook that can work, even in a downturn.
Step one: Find out what you’re worth (and then some)
Most people underprice themselves, either because they assume their boss will “do the right thing” or because they’re nervous about coming across as demanding.
The problem there is that businesses actually expect you to negotiate your salary, so tend to come in with an offer on the lower side, and then wait for you to then counter. So if you don’t ask, you’re leaving money on the table.
Give yourself the confidence and knowledge you need for this conversation by first getting clear on what your skills and experience are worth in the market.
Look up job listings, check industry pay guides and, if you can, have honest conversations with people in your field. Use websites like whatsthesalary.com to see hidden salary ranges for job listings online.
Talk to people in your support network, whether they’re co-workers, friends, or family. Often the people close to us can see our strengths better than we can, and give us the pep talk we need to really go for it.
Sometimes as you’re researching, you might realise your job has evolved beyond what’s in your job description. If so, that’s a huge bargaining chip to ask for a pay bump which reflects your increased responsibility.
Always look at this conversation from the point of view of your boss, and how you’re helping the company’s bottom line.
If you can prove you’ve taken on extra responsibility, upskilled, or made improvements that have saved time or money, you’re in a great position to argue for a raise.
But you need to bring specific examples of how your work has added value.
Step two: Negotiate without burning bridges
Now it’s time to get yourself into the right headspace for the conversation itself.
It’s a careful balance to back yourself, without pushing too hard. As your mum would say, it’s not necessarily what you say, but how you say it.
So instead of demanding more money, because interest rates are insane and you’re about to lose the house, make a business case of exactly what you’re worth to the company, and why they should want to reward you for the hard work you put in.
The good old request sandwich is a great one for this. (Sure, it’s sometimes know as the sh*t sandwich technique, but we can keep it clean for this column.)
This means you start with a positive, usually something you’ve achieved. Sandwich in your request, the part they might not want to hear. Then finish up with a final positive, that focuses on how committed you are to the team.
So it could go something like: "I've really appreciated the opportunity to take on X, Y, and Z responsibilities over the past year. I’ve looked into market rates for similar roles, and I’d love to discuss bringing my salary in line with that. How can we make that work? I really enjoy working here and have so much pride and respect for what the work we do."
Look at you go – so professional, positive, and solution-focused.
This technique opens the door to a proper conversation. Maybe the boss really can’t offer a pay bump right now, but they could approve training, bonuses, or other benefits that increase your total package.
If they push back with an “it’s simply not in the budget,” that doesn’t have to be the end of the conversation. Ask when they expect conditions to improve and whether you can set a timeframe to revisit the discussion.
Even in tough times, many businesses make plans for staff they don’t want to lose.
Step 3: Future-proof your career
Recessions aren’t forever, but your career will continue all the way to your retirement.
So whether or not you’re able to get a pay rise now, take this opportunity to position yourself for your next big move.
Ask for professional development, a new title, or exposure to projects that will make you more valuable in the long run.
Remember, if a company can’t afford to keep its best people, they’re going to lose them when the economy picks up.
Think about where you want to be in the next year or two, and make sure your skills and experience will be in demand when opportunities open up again.
And if you do manage to bag a pay rise? Make it count. Have a little celebration, and then get some of it straight into your KiwiSaver, and extra mortgage payment, investments, or emergency savings.
Boost your financial stability because, recession or not, you can still take control of your career, finances, and future.
The information in this article is general in nature and should not be taken as personal financial advice.
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