SETTING THE SCENE

It’s 3.45 pm on a Friday, as Alex stumbles out of the 16th floor lift of Budgie Wharf and feels that since he has six pints of bravery inside him, now is the right time to knock on his manager Katie’s door and iron out an issue that has been on his mind for the last three weeks.

Alex: ‘Hi Katie, I want to broach the subject of pay. I know there’s never a good time, but I really feel I should have an increase.’

Katie: ‘OK Alex, why don’t we diarise some time next week to discuss things fully?’

Alex: ‘Well, if it’s OK with you, I would like to strike whilst the iron’s hot and do it now.’

Katie: ‘OK, if that’s what you prefer, take a seat. Did you have a nice lunch?’

Alex: ‘Yes thanks, had a few beers with an old mate, and, you know how it is, we got chatting and before I knew it, six pints later and I’m running back to my desk not realising the time!’

Katie: ‘Yes, well, you’re here now. How can I help?’

Alex: ‘Well, Katie – Sally and I have just bought a new house and the mortgage is crippling me, which means that an exotic holiday is out this year, and you know how Sally loves her holidays! I need to earn more money and I heard Jack gets paid £4,000 more than me. This seems a bit excessive, especially considering he is constantly phoning his girlfriend in Auckland, using the company’s phone. I know he’s your favourite and all, but if you can see your way to paying me an extra £4,000, I’ll be really grateful.’

ASSESSING THE ABOVE

I have visions of you cowering behind the sofa at this stage, thinking there is no way on earth any sane, sensible individual would take such action. In fairness, I have exaggerated this to make a point, but it is easy to make unfortunate errors in our bid to get the sensitive subject of pay-rises off our chest, thinking that a ‘brave moment’ is the appropriate time. In reality, a well-prepared moment is invariably the right time.

• 1.Judge the best way to communicate effectively with your boss. If your manager is the type who dislikes things coming up in casual conversation, then arrange a meeting to discuss such matters.
• 2.Relentlessly prepare your justifications and don’t rely upon your gift of the gab.
• 3.Make sure your behaviour and work input befits a pay-rise. If you want to gain an increase, ensure that you have good grounds to do so. This chapter is to help you negotiate when there is adequate justification, and is not about helping you sell ice-cubes to Eskimos!
• 4.Showing an employer the benefits they do and will get from you, and why you deserve an increase, is what will persuade them. Do not give justifications that look at what you need or want to spend the rise on. Show them what they are going to gain by investing in you.
• 5.Oh yes … preferably not done after a few drinks!

THE TYPES OF PAY NEGOTIATIONS

We will discuss two types of negotiation.

• 1.An improved package: both in terms of a pay increase, and something that involves personal development.
• 2.A pay negotiation when you are offered a new job.

IMPROVED PACKAGE FOR A CURRENT ROLE

Although it would be nice to know that, whenever you deserve a pay-rise, your boss would automatically call you in and give it you without the need to ever darken his or her door, this is not always the case. Sometimes you need to make the choice as to whether to get on with life being underpaid; try and find a new job and then use it to persuade your current employers to increase your package; or take the bull by the horns, and go in and ask for a rise.

As a consummate optimist, I am going to assume we are going for the last option.

Try and create the best, most comprehensive reasons that you can give your boss, which will leave him or her with the thought that ‘of course we should give Alex more, and we are happy to do so’. This is assuming it is within their power. If not, then you need to raise the issue with the person who can make the decision, and that can mean higher than your line manager.

PREPARING YOUR CASE

• 1.Research similar jobs/positions both within the company and externally, and, if possible, see how much people are remunerated for their role. Look at conditions as well as actual pay. Although internal information is useful, openly using the salary comparisons as justifications can have negative results. So, if it’s available to you, be aware of the information, even if only for your own yardstick of what’s possible.
  A package comparison of similar roles outside your current company often gives you an acceptable objective benchmark to discuss, but whether you use this should depend on the kind of boss you are dealing with (see ‘understanding your manager’ later in the chapter). For positions outside your organisation, get an idea of the feel of the place and what it’s like to work there – you never know, you could like it so much you may decide to apply for a position with them instead.

Sally – paid £34k. Same benefits although joined two years earlier, and at that time they offered six weeks’ holiday after three years’ service. Is not involved in mentoring.	Steve – started at roughly the same time. Paid between £33 and £37k. Same benefits. No extra roles.
Me – worked for company for three years. £31k, car and pension, subsidised gym membership, five weeks’ holiday and working hours 9 – 5 with a one hour lunch break.
John – paid £30k though is a junior. Same benefits and also on a sales course paid for by the company.	Jessica – salary unknown. Same benefits though.

Internal information gathered. For your eyes only!

Company A pay between £35,000 and £38,000 hours 9 – 5.30, 1.5 hours lunch break company pension and car five weeks’ holiday per year, after five years an extra week ‘Great people to work for. Really listen to their staff and believe in investing in your development. I wouldn’t work for anyone else.’

Company B pay between £33,000 and £36,000 hours 9 – 5, one hour lunch break company pension and car five weeks’ holiday, then six weeks’ holiday after two years leave one hour early on a Friday between May and September ‘Nice company. I’m not a career person, but that doesn’t seem to matter. They have a high turnover of staff.’

Company C pay between £33,000 and £35,000 hours 9 – 5, one hour break company pension five weeks’ holiday, then six weeks after two years ‘Love working here. I regard it as part of my social life. People are fun, but I wouldn’t stay if money was priority to me.’

External information gathered for people with similar roles.

• 2.Think of your reason for why you believe that you deserve a pay increase. Is it because there are people who do similar roles who are paid more than you? Are you out-performing everyone on your level, and feel your pay should reflect that? If so, what specifically are you doing that makes you more valuable? Are you taking on more responsibility or work and your remuneration is not reflecting that? Are similar roles in other organisations paid more than you? Remember that one way of looking at remuneration involves pay and performance being linked. Therefore is there a possibility you could suggest a measurable bonus structure, that will help you to achieve an increase if you outperform your current levels? If there is no particular reason with your current responsibilities, is there anything you would like (or be prepared) to add into the role that would benefit both your development and also the company? Agreeing to take on added responsibility can help to gain an improved package.
  If it’s a significant development qualification like an MBA that you are after, again think of why you deserve to be considered. Are you keen to develop your career with this company? Have you a reputation for being studious and focused? Are there schemes within the company alreadyset up? Are there any other companies, within your industry, sponsoring their employees to do MBAs? Also think of how the company will benefit from sponsoring you for this course; will they be able to see physical benefits from investing in you? Can you use your learning to develop the company and individuals within it? What returns can they expect? Are there any case studies (either internally or externally) that can prove how a company has benefited from sending people on these courses? How can you assure them that you will use this to benefit the company rather than going to work for somebody else?

Team get paid between £33k and £37k for same job. Sally has extra week’s holiday.

Industry standard seems to be £33–£38k. Additional benefits as well.

Additionally to the job I mentor two new staff.

Summary of key information gleaned from external and internal departments compared with your current role.

• 3.Prepare your request for a meeting. Why leave anything to chance? The right introduction to this type of conversation can really lay the foundations for a positive, and hopefully, fruitful meeting. You want the boss to realise the subject you want to discuss, so that they can be adequately prepared and, importantly, not feel like they are being threatened or caught off-guard.
  Regardless of what people say, there is no one answer to how to approach the boss. It depends on their personality and mindset towards communication in business. Understanding your manager will help here.

Understanding your manager

The advantage of an internal negotiation in an existing role is that it is more likely you will have an understanding of your boss before you discuss a pay rise with them. It is an important element of business that you know how to manage upwards.

A. Understanding their current workload/challenges. Picking the right moment is extremely important. Hassled and stressed looks, following a particularly tough board meeting, suggest that a more appropriate moment may be later! It’s also important not to leave the discussion until the last moment, as you could be stepping into an unreasonable and unfruitful meeting because of its late timing.

B. Understanding your manager’s style. Are they brutally direct? If so, do they value that from their employees? Do they like preparing relentlessly and not being caught off-guard? Do they like to be relaxed (and discussing the idea via enjoyment, for example, breakfast?). Do they like humour, or a serious face-to-face discussion? Give some thought to this beforehand – the better you understand their style, the more likely you are to create the right atmosphere.

C. Know what’s important to them. Are they company-focused? Do they feel that you should regard it as an honour to work for the company, no matter what the wage? Or are they people-focused, understanding the needs of the individual, and believing that if you work hard you should be rewarded for it? Are they a combination of these? Are they a listener, valuing good staff and wanting to keep them? Or are they a ‘no-one’s indispensible’ manager, who feels that if you were to go tomorrow, a replacement would be sitting at your desk within minutes. Understanding what they value will allow you to discuss your proposal in the most effective manner.

Examples of top-line profiling

Current work-load of boss: Heavy, diary is busy (with external and internal meetings). This week she has the board meeting and seems preoccupied. Department is currently stretched and is working on projects that were meant to be completed two weeks ago.

Katie’s style:

Likes	Dislikes
direct approach	skirting around subjects
face-to-face contact	whingers and moaners
time to prepare	being put on the spot

Possible opening statement:

‘Hi Katie. I understand you’re busy at the moment; I’m manic on the Butler project as well. However, I would like to catch up with you soon. Could I put half an hour in your diary, either next week or the week after, to discuss ideas and thoughts regarding the department, my role and contribution, and also get some feedback from you?’

Current work-load of boss: Busy, but not hectic. Budgets are in, and they seem happy that that’s out of the way.

Katie’s style:

Likes	Dislikes
non-confrontation	direct approach
work-hard, play-hard mentality	formal meetings
being sociable	threats

Possible opening statement:

‘Hi Katie. I saw in your diary you are free on the 12th first thing in the morning[before work hours]. In return for discussing my role, contribution and ideas I have for the department, can I buy you some breakfast at the Garden Hotel?’

In both examples, an outline of the meeting is given, an indication that it is a two-way discussion, an element of ‘what’s in it for them’, whilst using the information about understanding your manager to positive effect. Both examples are set out deliberately not to give an impression of ‘I want …’, nor any demands.

Also, the words ‘pay increase’ are not there, being replaced by ‘role and contribution’. My personal opinion is that pay is a sensitive subject and should be treated accordingly and put into context with justifications and rationale. This cannot be communicated in 20 seconds (if it can, you may want to rethink your pitch!). If you feel more comfortable, then maybe use the word ‘remuneration’, directly telling them the exact subject.

Be prepared to be quizzed at this stage – it may not happen, but always be a step ahead! As an example:

Katie:‘Sure, is there anything in particular you want to discuss?’

Alex:‘Several things, including ideas I have, remuneration and your opinions and thoughts for the coming year.’

I call this the ‘wage sandwich’. Your key issue (i.e. the main ingredient!), and the side bits, top and tailing it (the bread!).

Again, this example is dependent upon your thoughts and understanding of how your boss reacts positively, as some may prefer a more direct approach.

• 4.Know what you want: having a clear understanding of what you want to achieve, as well as what you are happy to accept, is important. Maybe it’s not just financial additions. I have separated out two types of increase: firstly, a financial rise, and then, secondly, a personal development element (in this case, studying for a part-time MBA, and having the company sponsor you). This has significant value both financially (an MBA often costs over £10,000) and also in personal development terms.
  In both examples, I would suggest three outcomes; ideal, i.e. your best outcome (assuming you are not leaving the proposal to them); a good outcome, a happy compromise; finally, acceptable, really the lowest you are happy to accept, still feeling valued and listened to.

Ideal	Good	Acceptable
£35,500 (+14.5%)	£34,000 (+9.7%)	£32,750 (+5.6%)

Looking at three outcomes for remuneration package.

Ideal	Good	Acceptable
paid-for MBA extra ten days to attend course days	paid-for MBA extra five days to attend course days	50% paid-for MBA extra five days to attend course days

Looking at three outcomes for development package.

• 5.Prepare the benefits to the employer, i.e. what’s in it for them. It’s all well and good to know what you want and why you want it; however, that is looking at it from your perspective, and doesn’t normally do much for persuading the employer. They need to see what value it will gain them and/or the company. The good news about doing your justifications for the ideal outcome is that they rarely change for good and acceptable: therefore, effective preparation at the start will really pay dividends.

£35,500

been a loyal employee for three years salaries in other companies average around £35,000 for similar roles in addition to that role, I mentor two people consistently in the top three salespeople within our department increased my clients’ business by 15% year on year (compared with a departmental average of +1%) I know we are employing two more people, and in return for you increasing my salary, I am happy to take on more responsibility by mentoring one of them (know but not say) all are on more money –Sally £3,000 and Stephen between £2,000 and £6,000 more

An example of ‘what’s in it for the company/boss’ justification for a pay-rise.

paid-for MBA

extra ten days to attend course

Although it will benefit me, the company will also benefit hugely from the outcomes, as I will learn so much that will help the business. (Examples of subjects: marketing, finance, HR and management skills.) Will allow me to use the course to give development ideas to the company. Happy to offer a quarterly meeting to discuss the outcomes. (Predicting what they could raise as an objection, so only say if necessary.) If I need to, I will sign a contract that commits me to stay with the company, and, if I decide to leave, I have to pay back that year’s fees in full.

In order to do the course part-time, there are ten tutorial days which I need to attend. In all, with study and learning days, it will take around 30 days a year for four years (including weekends and evenings) and I am only looking for ten days. (To say only if required.) As a compromise, I am happy, if necessary, to take half of the days as holiday, however would like the company to afford me five days’ leave.

An example of ‘what’s in it for the company/boss’ justification for an MBA.

So, you have understood how to approach the boss and acted accordingly. You have also prepared your case for an improved package, understanding what you want and how the company and/or the boss benefits. Now it’s just a matter of doing it!

THE OPENING APPROACH

Face-to-face is often seen as the best way to approach sensitive and complex issues. With a pay increase, so much can be interpreted in the wrong way by email or letter (see Chapter 3). There is nothing better than positive and confident emotions that will help support your case.

Approach the meeting with positivity and politeness. Prepare an agenda of discussion and have it with you (perhaps even give a copy to the boss). Within the agenda, make sure you cover the subjects that you said you would when you first asked for the meeting.

Agenda for discussion
review of business and current role	Really enjoy role. Especially feel positively challenged by the two people I’m mentoring. Steve has had great start to the company and now runs one of our top five accounts – the client says he couldn’t be happier with him. Barbara has fitted in well and has presented to the department new research, which will really go down well with clients. Include other information from ‘ideal outcome’ sheet (see page 168). Questions to ask: What are your thoughts on the development of Barbara and Steve? Are there any new accounts that we are currently pitching for? If yes, can I be of help?
ideas	Suggestions: Mentor system has been hugely successful, why not develop it and give every non-manager a mentor? Weekly meeting to discuss each other’s business, what works and what doesn’t. Learn from each other’s experiences.
development	MBA info on ‘ideal outcome’(see page 169). You could include development on the agenda even if you were going for a financial increase, as it is a key part in most career roles, and the money normally comes from a different budget. For example, if you were increasing your role as a mentor, perhaps a mentoring course.
remuneration	From ‘ideal outcome’ sheet (see page 168).
AOB (any other business)

An example of an agenda and some notes attached for your use.

When communicating justifications for an increase, it is probably better to ask your manager to consider a pay-rise and let them offer you the increase, rather than you proposing. If they ask you what you want, then, unless the meeting has highlighted any key issues that may affect this, (for example, redundancies), go with your ideal income.

When you want a specific addition to your package, e.g. the MBA, you need to make your proposal; otherwise you could be leaving them guessing what it is you actually want!

Most bosses realise that additions to packages and pay rises are a difficult and sometimes stressful subject to bring up, and it’s highly likely that they have been through the same process themselves with a superior before. Remember to justify your proposal for a better package, telling them why you deserve it, as well as what they will gain from it. Remember that there is a fine line between arrogance and confidence, and what is important is to stay on the right side of it.

As you are asking for an increase or addition to your package, it is likely they will give you feedback on your performance. If it’s not given, you may want to ask for it, as an understanding of how you are doing, as well as discussing areas of development, often helps. It can be positive to use this as a platform to ask questions about the direction of the department and company as well as about your boss’s own role. Having a genuine discussion and showing interest in them and the company can help to build your relationship with the boss, as well as allowing them to get to know you better. I always say that when people know you, trust you and like you, you are well on your way to building a strong relationship – assuming, of course, you feel the same way about them!

A PAY NEGOTIATION WHEN YOU ARE OFFERED A NEW JOB

A cautionary note

This, in theory, is easier than when you are in an existing role, as you have managed to impress your prospective boss very recently, enough to be offered the job. However, before we begin to talk about the negotiation side, consider the need for the job on offer. For example, if you are currently out of work and have no real form of income, you need to assess whether haggling over a few extra pounds a day, compared with accepting the offer, makes you vulnerable to someone else being given the job. If income is less important at the moment than getting the right job and conditions, as you have several offers and some savings, then fair enough, but this is one to be careful with, as, unlike negotiating for an MP3 player, there can sometimes be no turning back.

Perhaps the best time to negotiate is when you are already in a job, especially if you are relatively happy in the current role, as your alternative to taking the new job is still acceptable to you.

Let’s assume you have balanced the pros and cons of the new job and are currently with another company, but are keen to move if the conditions are right. The position has been offered to you, but you want to improve the package.

If you intend to negotiate, under no circumstances accept the role there and then, as your negotiation possibilities have pretty much gone. Politely thank them for the offer and say that you would like to seriously consider it and will get back to them (I would also tell them when), and seek agreement that this is OK. Be prepared for them to ask why as well, and have a positive and honest answer to this, for example:

‘I really appreciate the opportunity and need to give it some serious thought. I would like just a couple of days to do this.’

Most employers will agree to this, as they understand that changing jobs is a big decision, and it’s important to be happy with the right location and package. If pushed, you may want to say this.

Comparing the differences in role

Now that you have some time to think, look at the differences in the role on offer compared with your current responsibilities. Also include any market knowledge information that you can find out: for example, average wages or other additional benefits that are normally included. Speak to your network of friends/colleagues to see what you can find out. Having been for an interview, it’s likely you would have done some preparation in order to get the job. Can any of this help you to determine the value of the role you have been offered?

Current job Accountant – small firm £36,000 9 – 5 20 minutes from home	New role additions Senior accountant as opposed to accountant Dealing with larger clients (c.£80 million as opposed to £5 million turnover) Mentoring two new accountants Evening entertaining More travel (domestic) Client knowledge suggest wages c£45,000 for this company
New job offer Senior accountant – large corporation £40,000 Company pension Additional three days’ holiday Company car. 9 – 5.30 50 minutes from home

Looking at the additional responsibilities of the job offer compared with your previous role.

Begin with the end result in mind

As with the package negotiation earlier in this chapter, have three outcomes in mind: ideal (your opening offer that you feel would be good for you, but justifiable to the new company); good (an improvement on their offer and enough to move happily from your existing employer); and acceptable (if they do not offer at least this, then I am prepared to stay where I am).

Current offer: £40,000 Company pension Additional three days’ holiday Company car 9 – 5.30 50 minutes from home	New role additions Senior accountant as opposed to accountant Dealing with larger clients (c£80 million as opposed to £5 million turnover) Mentoring two new accountants Evening entertaining More travel (domestic) Client knowledge suggest wages c.£45,000 for this company
Acceptable £44,500 pension, holidays, no car	Good £44,500 pension, holidays, car	Ideal £46,000 pension, holidays, car

Your three outcomes.

The conversation

Now you have the information to hand, choose your way of communicating it – face-to-face, by phone, letter or email. A face-to-face meeting allows you to read body language, which may give away emotions that expose signals of intention to be flexible in package offers (for more information read Chapter 3).

An example conversation could include a ‘wage sandwich’ that has considered your outcomes with the additional responsibilities in mind.

‘Hi John, it’s Simone here. Thank you for offering me the job, and I have given it some serious consideration. Whilst I would love to come and work for McHenry Associates, I need the package to reflect the move I am making. The role you are offering involves more travelling to work, around an extra hour a day, and whilst I am very happy to do this to gain a role with your company, the additional cost is around £1,000 per year. Also the move to you involves significant responsibilities that I know I am more than capable of, including mentoring two new employees and looking after your top accounts worth in excess of £80 million. If you would increase your offer to £46,000, then I would be happy to start with you in a month’s time and prove to you I am worth the investment.’

The above example is justifying the increase and not backing yourself into a corner, because what you are not saying is that you won’t consider other offers; you are merely saying what you want. From this John can say, ‘yes’, ‘no’ or make you a counter-offer, and then you have a choice as to what to do. If a counter-offer is made, remember to consider your good and walk-away outcomes and use the ‘if and then’ approach. For example, if John offers you £44,500 with the other conditions, you can either accept it, or if you feel the money side is exhausted, perhaps there might be something small that may be of use. For example:

‘OK John, I understand that £44,500 is the best you can offer, and if you allow me to start in seven weeks’ time, then I am happy to accept the role and look forward to starting on September 4.’

In this instance, you have always wanted to go away for a three-week break with the children, and, in normal working circumstances you couldn’t take that amount of time off. This is the perfect opportunity to get this if the company can afford for you to start a little bit later. I took such an opportunity when my first son was born. I was poached by a company that I really wanted to work for. Having negotiated the financial element to my package to what I felt was the maximum, I realised that there was something else that would be very valuable to me at this stage in my life, and that was to spend extended time with my wife and new-born baby. I said that I would happily agree to take the job if I could start in ten weeks’ time, and they agreed. This allowed me to have valuable father-son bonding (although the constant nappy changes did put a bit of a downer on it!), and that was something money couldn’t buy.

Or, if they mention that in addition to your current job, a car is an attractive part of the package, you may want to trade that (assuming the car is not hugely important to you) for an increase in money.

‘I appreciate that a car adds a significant amount to the package, probably around £15,000 over 3 years. However the financial element of the package is more important to me. If I was to not take the car, then would you increase the offer to £46,000?’

Importantly, this does not back the potential future employers into a corner as it is merely a suggestion, and therefore if they say no, or offer a compromise solution, then you have the choice as to whether to accept the offer or not.

The idea is to always keep the door open for as long as possible, and leave you with the choice of whether to accept what’s on the table at that point or not.