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What is the best way to request a raise?

salary1-smallEddie at Adams State University asked:

What is the appropriate way to request a raise from your employer?

HI Eddie –

Now that is a complicated question!

There is no single approach that is appropriate for all circumstances, but I can offer a few guidelines.  Follow these and the conversation should be positive and productive, regardless of the outcome.

Be Prepared

If you want to ask for a raise, you had better be prepared to explain why you believe you deserve a raise. “I’ve been here for a year” is not a very strong argument.  Simply being somewhere doesn’t mean you added value.  Chances are pretty good that you are not the only person or project  your boss manages, so chances are also pretty good that your boss is not aware of everything you do on a daily basis to contribute to the success of your organization.  If you want more money, you have to be prepared with examples of why you deserve more money.

Remember, even if your boss wants to give you a raise, she/he has to defend that request within the organization (and perhaps with her/his own boss!).  Make that job easier by providing the evidence to support your claim.

Don’t Ambush

Schedule a mutually convenient time to meet.  Let your boss know why you want to meet. Make sure you schedule the meeting for a date and time of day that will not require you or your boss to rush through the conversation.   Don’t try to schedule the meeting at the busiest time of the day, week, quarter or year. Don’t spring the meeting on your boss before she/he has had time to prepare.  Don’t try to slip it into the agenda of a meeting on another topic. Conversations about money are awkward under any circumstances; don’t make your meeting extra awkward by ambushing your boss with the topic.

Be Respectful

Those awkward conversations about money are also delicate conversations.  They are not times for confrontation, particularly public confrontation. Respect the private, delicate nature of the conversation by selecting an appropriate and private place to meet and scheduling enough time for the conversation.  Keep the tone cordial and professional; avoid confrontational tones, words and body language.  You can be assertive and professional in presenting your case for a raise without being boastful or arrogant.  The goal  is to convince your boss you are deserving of a raise. That process of persuasion begins with establishing a climate of mutual respect!

Be Realistic

Just because you want a raise doesn’t mean that your company is in a position to give you a raise. When asking for a raise, you have to be realistic.  You have to understand the financial status of the organization that employs you, You have to be aware of the state of the economy in your industry and where you live geographically.  And, you must have a fundamental understanding of the “going rate” for people in your field with your level of skills, education and experience.

As a general rule, the harder it is to replace you, the more valuable you are to your organization, the more you can expect to earn.  The easier you are to replace, the less valuable your are to your organization, the less you can expect to earn.   It’s basic supply and demand.

Before you ask for a raise, as yourself:  Is what I am about to propose realistic in today’s marketplace? Do I really have  a chance of getting what I am requesting?”  If you can answer “YES” to both of these questions, you are ready to ask for the meeting – you are ready to ask for a raise.

If you prepare ahead of time, are careful not to ambush you boss with the topic, approach your boss and the topic with respect and are realistic in the raise you are requesting, chances are pretty good that the conversation will go well.

Now, a positive conversation will not guarantee you the raise, but it will establish your expectations and demonstrate your professionalism in handling a challenging topic.

Good Luck

matt-signature

PS – Payscale.com has produced a pretty good infographic on this topic: Should you ask for a raise?

payscale-ask-for-a-raise03

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What hourly rate should I charge when doing contract work?

hourly-rateDary from Florida Atlantic University asked:

An employer wants to know if I can do econometric research for them for a per paper fee and asked how much would I charge.  I have no idea what to tell them.  What rate should I charge when asked to do contract work like this?

Hi Dary

This is a really important question.

Freelance work, contract work and other forms of independent professional engagement are becoming more and more common.  If the freelance, “work for yourself” world is one you wish to join, you need to be prepared so you don’t undervalue what you offer,

Following is my strategy for putting a value on your time and expertise as an independent contractor:

1. Identify the “market rate” annual compensation if the job were a regular, full-time salaried position

In your instance:  What could your reasonably expect to make in annual compensation as an Econometrics Researcher.  I  recommend using the NACE Salary Calculator to come up with an salary estimate.

Let’s say – for the sake of example – that you have determined the market rate for this position is an annual salary of $30,000.

2. Calculate the hourly rate equivalent of that annual compensation

Did you know that there are 2080 work hours in the year? 52 weeks x 40 hours per week = 2080 work hours.

To determine the hourly rate you are earning in a $30,000/year job, just do the math! The result = $14.42 per hour. To make the numbers round, let’s call that $15/hour

3. Factor in the cost of providing services

When you are in a regular, salaried position, that $30,000/year is only your base compensation.  It does not take into account the additional costs an employer incurs by having you on staff.  Employers must provide you a place to work (e.g., a desk/office/cubical), equipment  to do your job (e.g., phone, computer, software, internet), and benefits (e.g., insurance, healthcare, etc.), and they must have staff in place (typically in Human Resources, Accounting and IT) to manage benefits and payroll, pay payroll and social security taxes and provide technology and operations support.  It costs more than your salary to have you on staff.  There are many of these “overhead” expenses that employers need to factor in and pay for if they wish to make a profit.

When you are in business for yourself, you have to factor these costs in for yourself if you wish to make a profit.

You are using your own equipment, software, phone, office space and other resources (e.g., the electricity in your home).  You have to pay your own payroll and social security taxes (when you are a contractor, employers do not deduct them from your compensation).  You have to provide your own operations and technology support. All of the “overhead expenses” are your responsibility, so you need to factor these “costs of doing business” into your hourly wage so you do not undercut your value.

I recommend using a simply multiplying factor of between 1.5 and 2 to determine your hourly rate.

For example, if you wish to earn $15.00 per hour for your work, you should bill yourself out at $22,50-$30.00 per hour in order to earn $15.00 and cover your overhead expenses.

Let’s say each paper you write will take you 10 hours to research, outline, write, edit, re-write and deliver as a finished product.

At $30/hour, you should earn $300 for each paper,  At $22.50/hour, you should earn $225 for each paper. You have a range . . . now you have to negotiate.

4. Be ready to negotiate

This is often the toughest part.  You must be ready to negotiate.  In a free market economy such as ours in the US, the “market rate” for services is whatever the market is willing to pay.  The person spending the money wants to spend as little as possible to get what they want.  The person getting the money want to get as much as possible for the goods/services being provided.  The “right” amount is the result of the negotiation. The market will decide.

If you do your homework, you will be well prepared to negotiate and defend the rate you wish to charge.  If you don’t, you will have very little negotiating leverage.

Hope this helps!

matt-signature

Can I afford my current lifestyle?

Valerie from UT Austin asked:

You once came and gave a lecture for my class  and presented us with an budget worksheet that helped us to calculate what we needed to earn in order to live the life we wanted to. That included our rent, bills, entertainment, savings, etc. Do you still have this document?

Hi Valerie –

Ah, the eternal question about money! This is an important one, so thanks for bringing it up.

I have a workshop on Job Offer Evaluation and Negotiation. Whenever I deliver this workshop, I start with the same premise:

You’re in no position to negotiate salary unless you know three things:

How much you need to make?  What do you need to pay your bills?
How much do you want to make?   What would you like to make?
What will the market bear?   How much can you expect to earn given: (a) your education, experience, skills and qualifications and (b) the fields you are considering for employment?

To me, this all begins with that first question – How much do you need to make? – so I begin the workshop with the following budgeting exercise:

Can you afford to take this job? (a.k.a. How much do you need to make?)

Assuming that you are just trying to live your current lifestyle and factoring in all of your monthly expenses, what will you need to earn in order to maintain your current standard of living?

I then put the following spreadsheet up on the screen:

We then go through every line of this budget as a group (so as to not put any one person on the spot), inserting an amount that the group feels in representative of their monthly allocation to each line.

At the end, the spreadsheet annualizes the monthly expenses and calculates the Federal Income Tax due to estimate an approximate gross annual income required to maintain that standard of living.

Give it a shot!  Download the Budget Worksheet and run the numbers.

Find out how well you are living within your means.  See if the career paths you are considering offer income potential in line with your desired income.

Some goals aren’t compatible, some are!

You probably aren’t going to be a school teacher AND living in a big house, drive a fancy car and vacation regularly in the tropics UNLESS you marry well, have a trust fund or win the lottery.

No employer is going to pay you what you believe you are worth unless your perceived market value is in line with what the market will bear for someone with your education, experience and skills.

It’s basic economics of supply and demand.

So take my challenge.  Run the numbers.  Find out about the extent to which you can afford to live your currently lifestyle.

I hope you are pleasantly surprised!

When should I ask for a promotion?

Recent UT Austin grad Sarah asked: 

Is there a standard as far as when to expect or ask about promotions when you’re in an entry-level position?

Hi Sarah –  this is a great question, both for those new to the workforce and for those getting ready to enter the workforce.

Looking for that first job? Bring this topic up when you are interviewing

It’s a great way to learn about the short and long term opportunities that are available, demonstrate that you are serious about the process, and show that you are evaluating them while they are evaluating you.  Plus, you’ll get some info that will help you immediately and down the road.

Ask questions like:

What is the typical career progression for a top-performing entry-level professional in your organization?

What are the new graduates you hired last year doing now?  Is this typical of the entry-level candidates you hire?

Can you tell me about the performance review process?  When and how frequently are reviews conducted?  How is job performance measured and assessed?  

To what extent is compensation tied to performance?  Are there bonuses based upon performance?  If so, how are they awarded?

The answers you get to questions like these will help you determine whether or not the job is a good fit for you.

Already in the workforce and eager to advance? Ask as part of performance reviews and as new opportunities present themselves

Where am I now?  How am I doing? How do I see my career progressing? are questions that should be central to every performance review.

Since performance reviews usually take place annually (sometimes more frequently) and are usually scheduled, you have time to prepare. So, be prepared!

Do your job well.  Keep track of your accomplishments and be prepared to share them during your review.  Use some of the time during your performance review to talk with your boss about how you would like to see your career progress and see if your thoughts align with hers.

No one is as in-tune with your performance, your skills and experience, and your career goals as are you!  Pay attention to the job vacancy announcements in your company. Pay attention to the career advancement of others.  Be honest (not too bold and not too humble) in assessing your capabilities.  If a job comes available and you honestly believe you can do it, ask for the chance. Consider the following examples.

A more experienced colleague in your group gets a promotion, and you would love to move into her role.  You could approach your boss and say:

I was so happy for Shannon!  She really deserved that promotion. With her moving into that new job,  I’m really interested in stepping up into her old job. Given my performance and the experience I have gotten during the past year here, I think I’m a competitive candidate and would appreciate your consideration.

During your annual performance review, you might say:

I really enjoy my job here, and I am very interested in advancing with the company.  Can we talk a little bit about the next steps I might be able to take here and when you think I will be ready to take them?

A job that interests you in a different division of your company comes available.  You could approach your boss and say:

I noticed that a a Network Support position just opened up  in  the Customer Service Division.  I’ve been working very closely with our Network Administrator for the last six months, and I think I could do that job.  Would you support my candidacy?  I really like working here, and this looks like a great opportunity to grow with the company. 

However you approach the topic you have to be sincere, you have to be truthful, and you have to be realistic in your expectations.

In a perfect world, you and your boss will already be on the same page with regard to your current role and performance and possible future roles for you with the organization. But who lives in a perfect world, right?

In the real world, you are going to have to negotiate office politics, competing agendas, and different perceptions of your value to the organization.  There are obstacles that come along with almost every opportunity.

Sometimes, the best way for you to advance in your career is with your current employer.  Other times, the best way is to seek new employment elsewhere; regardless of whether your current circumstances are great or lousy.

The right time to ask for a promotion is whenever the opportunity legitimately presents itself

So, pay attention – You don’t want to miss those opportunities when they come along.