How to justify a pay rise – everything you need to know
As professionals, we all strive to receive fair compensation for the skills, services and contributions that we provide to our employer. It’s hard not to feel dissatisfied when personal and/or professional circumstances change. Increased responsibilities, lower than market average remuneration and rising costs of living are just some examples that can spark salary resentment.
That said, many employees are hesitant to instigate pay rise discussions because they feel intimidated and unsure about how to navigate these delicate conversations. While they can be daunting, they are essential in advocating your worth, securing a fair salary and enjoying career prosperity.
This blog will explore the effective strategies to help you justify a pay rise and increase your chances of success.
Market conditions
While many employees have opted to avoid ‘awkward’ pay rise discussions over the years, the 2023 economic landscape is closing in on them and forcing their hand.
According to the Australian Bureau of Statistics’ latest Wage Price Index report, wage growth is lagging at less than half the rate of inflation. While wages increased 3.7 per cent over the 12 months to the March quarter, inflation sits at 7%.
With inflation eating into the pay packets of Australian workers amidst a cost-of-living crisis, it’s becoming more crucial than ever to understand how to justify a pay rise.
The Mercer Total Remuneration Survey recently revealed that while some companies were lifting wages to attract workers, they were not doing so in response to the rising cost of living. In fact, just one in five (22 per cent) organisations planned to factor inflation into their 2023 salary budgets, with half yet to determine whether the rising cost of living should influence their remuneration packages.
Related: How does inflation affect employees’ salaries?
If inflation isn’t cause for a pay rise, what is?
Employers in Australia were recently asked the factors that will determine salary increases for existing staff - 20% said salary increases will be based on tenure while 22% said increases will be based on a combination of company and/or individual performance and tenure*.
Brian Cunningham, associate director at Robert Half says, “while this is encouraging for employees who fall within these categories, it should also serve as motivation for those who don’t. You never know how far organisations will go when it comes to retaining talent in this skills short market. It doesn’t hurt to ask the question, especially if you do it right”.
Successful pay rise strategies
Knowing how to justify a pay rise is the key to a successful outcome. Preparation is key and it’s vital that you present the facts with tangible information and proof of your individual achievements.
The below strategies provide a solid framework for how to justify a pay rise so you can come to the conversation prepared.
1. Research industry standards
Before approaching your manager about a pay rise, undertake your own research to identify the industry standards for your role and level of experience. The Robert Half 2023 Salary Guide offers comprehensive salary data and insights to help you determine where your current salary sits in the context of market ranges.
If your current salary is below the market averages or, if you feel you are worth more, it’s important to justify this to your employer. Either way, research is a critical way to obtain the objective data that can help you make a compelling case.
Interested in current job openings and pay rates? Check out Robert Half’s dedicated Jobs Page
2. Highlight your achievements
There is a distinct difference between ‘asking’ for a pay rise and ‘justifying’ a pay rise. For your request to be successful, it’s essential that you prove to your manager why you deserve a pay rise.
Cost of living stresses won’t cut it - you need to circle back to your accomplishments and the value you have brought to your organisation. The intent is to highlight the positive impacts you have made.
Be prepared with specific, quantifiable evidence in the form of personal accomplishments that directly align with successful business outcomes.
3. Outline Professional Growth
To help justify a pay rise, be sure to draw attention to your commitment to professional growth and development. Outline any new responsibilities that you have taken on, and clearly explain how these have impacted the organisation’s success.
Similarly, highlight any professional development activities you have undertaken to enhance your skills, knowledge and qualifications. This may include training programs, workshops, certifications or courses.
Be sure to articulate the skills and expertise you have developed during these endeavours and reaffirm how they align with the organisation’s goals.
4. Emphasise Your Future Value
A pay rise not only serves as a reward for hard work, it can act as an incentive to continue to excel. Ensure you outline your future vision, career goals and aspirations, highlighting how this aligns with your company’s own objectives. Showing that you are invested in the company’s growth and long-term success can help to cement your future value to justify a pay rise.
5. Request a Performance Review
A formal performance review provides a forum to discuss your progress, accomplishments and improvement areas with your manager. A vehicle for constructive dialogue, it allows you to make a compelling case for a pay rise based on your demonstrated value to the organisation.
Whether you are trying to justify a pay rise in person or online, it’s imperative that you maintain a professional manner. Take control but also control your emotions – remain approachable, calm and open to negotiation.
Related: How to negotiate a higher salary offer via email (sample included)
Next steps
Don’t expect an answer immediately when trying to justify a pay rise. The reality is, your manager will likely need to review budgets and discuss the situation with HR before making anything official.
After your meeting, it would be wise to email to your manager to recap the discussion and mitigate any misunderstandings. Thank them for their time and confirm the next steps clearly and concisely.
Brian says, “if more conversations are required, book in a time and a date promptly. If your manager denies your request for a pay rise, don’t be scared to explore other ways to acknowledge your value like bonuses and extra paid leave. If this isn’t a possibility, ask for another discussion in 3-6 months.”
If your manager agrees to a pay rise, be sure to get in in writing to clarify the details of the agreed amount and the implementation date.
Pay rise pitfalls
If you’re questioning how to justify a pay rise, be mindful that success hinges on the manner in which you communicate.
To improve your chances of a successful outcome, be sure to avoid the common pitfalls of salary negotiations:
- Springing a meeting on your boss – formally schedule a meeting and specify the objective.
- Starting with a demand - it can make you appear aggressive.
- Ignoring feedback – remember this is a two-way conversation that requires active listening
- Using ultimatums – it comes across as unprofessional and jeopardises your pay rise chances.
- Being too rigid – collaboration is key and negotiations are about give and take.
- Being unprepared – it makes it difficult for you to make a compelling case.
- Being rude in an attempt to be assertive – don’t burn your bridges
- Inopportune timing – time your request at the end of the financial year/calendar year or before the next budget sign off.
Related: How to discuss a salary hike with your manager
While pay rise discussions can be daunting, they are the perfect opportunity to highlight the value you bring to your role. If you find yourself questioning how to justify a pay rise, remember that preparation is key. Be sure to professionally present solid evidence to validate your request.
If you adhere to the successful pay rise strategies and supply appropriate data, your grounds for an increase will be hard to ignore.
Looking for advice on how to find a job or move your career forward? Check out Robert Half’s dedicated Career Advice Page.
*The study is developed by Robert Half and was conducted online in November 2022 by an independent research company, surveying 300 hiring managers, including 100 CFOs and 100 CIOs, from companies across Australia. This survey is part of the international workplace survey, a questionnaire about job trends, talent management, and trends in the workplace.
