Good news for office rock stars: with the economy in (slow) recovery mode, your boss is now back to worrying you may bolt. And that means 2011 is shaping up as the best year to land a raise since the financial crisis began (of course, if you're a CEO, now's not a bad time, either). According to Buck Consultants, three quarters of firms that imposed pay freezes during the last 18 months expect to lift them by the end of this year or in 2011.
"There is mounting concern that employees will seek new opportunities as soon as the job market improves," says Tom Burke, of Buck. That said, while the outlook for jobs seems to finally be picking up, we've still got 23 million Americans either out of work or looking for a full-time job. So it's not as if the balance of power has shifted all the way back to employees. Your boss still has the upper hand. Here's what you need to know about negotiating a pay raise in 2011.
- Employers are focused on valued employees. Don't think your firm is about to pull a Google and announce an across-the-board 10 percent pay raise in 2011. (Google has gobs of cash to afford that, and Google employees have a unique hammer to hold over their employer's head: job offers from Facebook, which is based just a few miles north of Google's main campus in Silicon Valley.) What's more likely for the rest of us is that employers will be targeting smaller raises for top performers. According to Buck Consultant's survey of HR folks, between one-third and one-half of companies that have altered their compensation formulas for 2011 have "reallocated" merit funds from low performers to high performers. In years past, by contrast, just 10 percent doled out more of the raise pie to top performers. While the average 2011 pay raise is expected to be in the vicinity of 3 percent, top performers may be able to snag double that pay hike. Getting promoted always helps, too -- the average raise if you move up the ladder is typically about 7 to 8 percent.
- Let the negotiations begin. Okay, time to throw out the "Gee, I'm just glad to have a job in this sucky economy" frame of mind. Unless we make an unexpected U-turn into a double-dip recession, your boss is no longer looking to reduce headcount. For the most part, downsizing is done; in 2011 the focus shifts to making nice(r) with valued employees. According to a recent 2011 salary survey from CareerBuilder, about one-third of hiring managers say they will be willing to negotiate salaries with current employees. If you're in IT, you've got the best chance of negotiating a pay raise in 2011, as 45 percent of employers in that industry say they will be willing to have the conversation. Among "professional and business services," 41 percent of employers say they will negotiate with employees in 2011. Interestingly, the CareerBuilder survey reports that more than half of employers say they will leave some "negotiating room" when making offers to new employees. That's an argument for checking out what might be available elsewhere, as well. Your odds of negotiating a deal are higher, and at the very least it gives you leverage with your current employer.
- How to make your case. At the risk of pointing out the obvious, you need to have a better reason for wanting a raise than "you haven't given me one in two years." The 2,400 hiring managers surveyed by CareerBuilder shared what they consider to be the the best ways to make your argument for a raise:
- Lay out your accomplishments and how those results helped move the ball forward for your division/company (cited by 48 percent of hiring managers).
- Have a number in mind, and a good case for why it's justified (cited by 39 percent).
- Show you are a company man/woman. Make the case for how your accomplishments and skills are aligned with what is important to your company (cited by 37 percent).
And what about your glowing performance reviews from years past -- aren't they an integral part of your pay raise pitch? Not so much. Only one quarter of hiring managers thought it was useful to come to the negotiating table with reviews in hand, probably because they already have that info handy. But keep in mind that in our what-have-you-done-for-me-lately world, long past performance probably isn't nearly as compelling a negotiating chip as what you've done in the past six months -- and what you can deliver in the next year.
- Ask for perks beyond more pay. Keep a few non-cash benefits in your back pocket during the negotiation. If the raise you are ultimately offered isn't all that, ask for a few consolation gimmes: 42 percent of the hiring managers surveyed by CareerBuilder said "flex time" was something they would consider, followed by a bonus (29 percent), training (23 percent), and more vacation time (21 percent). Of course, getting some additional training is not a bad way to get your skills super sharp for a job hunt...
More on MoneyWatch:
Negotiating Pay: How to Get a Better Offer
Drink, Go Blonde, and 5 Other Ways to Make More Money
How to Get a Raise