Negotiating a raise during an annual review can be an important part of leveling up your career. But how much is too much to ask for? It's important to strike a balance between claiming your worth in pay without exposing yourself to negative backlash. So what's a good way to determine an appropriate increase in pay?
Some salary negotiation advice encourages asking for any amount that is deserved and says no amount is too much as long as it reflects the value of what is being delivered at work.
However, this runs contrary to what managers said in a recent survey by career blog Paysa. The survey collected opinions from more than 2,000 professionals and executives, and results were surprising. Only 28.9% of managers who are in a position to give a raise agreed with the idea that no amount is too much. In fact, most managers (or almost 39% of this group) thought that asking for amounts over 5% would be considered too much.
Non-managers and business owners responded in a starkly different way. In that same survey, 48% of non-managers and 45% of business owners both felt that it would be appropriate to ask for any amount that reflected the value of the work delieverd.
It's important to break these responses down a little. It shouldn't be surprising that business owners felt that asking for any amount that is deserved is appropriate because more than likely, as owners, they built the company. That type of entrepreneurial view point is crucial when creating an organization, and the value that the owner provides for the organization is clear.
What's less clearly defined is what 'deserved' means and how that is reflected in value for non-managers. This is where establishing a clear body of work or evidence is important in backing up the request for a raise. The survey results went on to show that managers are looking for exceptional work - not just good work - when considering raises in an annual review. A non-manager could also consider collecting information on the market rate of similar job duties at rival companies. According to the survey, while this type of data can be helpful, it's still more convincing to show evidence of exceptional work or increased duties to justify the bump in pay.
But this still doesn't answer the question of what an appropriate increase would be. A recent study from Columbia University's Business School helps expand on what Paysa's survey uncovered. Dr. Malia Mason and Dr. Daniel Ames found that a useful technique is to offer a range of options, rather than one fixed amount. They also found that asking for between 5% and 25% pay increases yielded the most successful negotiations. Using a range of options was not only effective in expanding potential outcomes, but was also an effective strategy because it communicates politeness. But the tactic has an upper limit. Their research found that asking for any range that would be more than 25% did not produce better results.
Taking the Paysa survey and the Columbia Business School survey results together, it might make the most sense to consider negotiating for an increase in pay between 5-10%. This might increase to as much as 25%, depending on the situation. For instance, a big increase in job responsibilities or an exceptional year in work product might justify a 25% increase. The key to the outcome is the strength of the evidence you can collect.
—Tanya Tarr via Fairygodboss
Tanya Tarr helps people connect with the power of collaborative negotiation. Since 2000, she has supported executive leaders in government, public education, and managed political and advocacy campaigns across the US. Tanya has a masters of science in performance measurement from Carnegie Mellon University and is a certified health coach. She is currently writing a negotiation manual for introverts.