Last week was my annual performance review at work, which also means it was time for my annual pay raise. Like most corporations in the US, this is an annual salary bump of anywhere from 2% – 5%. However, unless you’ve been living under a rock, you know prices have far exceeded a 2% – 5% increase in the past year.
The 2022 inflation rate is currently sitting at 8.5%, meaning that, in order to “break even” in today’s financial environment, I’d potentially need to quadruple the company-standard pay bump. This left me feeling stressed and anxious, knowing that I’d need to ask for an inflation-adjusted pay raise during an already financially turbulent time.
So, rather than waiting it out in anxiety, I decided to gather the facts so I could intelligently, and confidently, ask for an inflation-adjusted pay raise. Keep reading as I guide you through my process so you can do the same!
Gather Your Data
When it comes to financial negotiations, arming yourself with data and information before walking into your performance review is key in getting the answer you desire from your boss.
So, about a week before my review, I set out to gather three key pieces of data. I used these segments of information to not only help better inform my exact pay increase ask, but also help identify a number that would be hard for my boss to say no to.
- The Current inflation rate: The single most important number you identify to start is the year’s current inflation rate, which has climbed to 8.5%. So, the first most obvious solution would be to multiply your current salary by 8.5% to determine your inflation-adjusted pay.
For the sake of an example, let’s pretend my current salary is $100,000. To determine my inflation-adjusted pay rate, I’d take $100,000 x 8.5% = $108,500. This means I could ask for an $8500 raise to adjust for inflation.
But keep reading before you run off to your boss…
- Industry pay data: By leaning on sites like Glassdoor and even a quick Google Search, you can find salary information not only specific to your industry, job title, and overall experience level, but also the average pay raises across all industries.
Write down the average salary for someone of your skillset, tenure, education background, and location. Then identify the average pay raise for each.
As an example, while my original inflation-adjusted pay raise would be an $8500 increase based solely off of calculations, the average pay raise for someone with my experience in the Midwest only earns about a 1% annual pay increase. That makes my 8.5% ask look wildly unrealistic.
- Your Own Performance: This one isn’t as black and white, but you do have data available to you. From company KPIs, to personal milestones set with your manager, you should be able to pull quantitative and qualitative data on your own performance from the past year. The more positive impact you can list out, the better.
Outline Your Request
Next, I wanted to define my request clearly before bringing it to any upper management by bullet-pointing my facts. Here’s what it looked like:
- Based on the average pay for someone with my experience and skill set, I understand I’m currently at an above-average salary.
- However, along with my dedication to the company for the past three years, here’s how I helped contribute to the company growth this year:
- Grew website traffic by 20%
- Increased sales leads by 30%
- Revamped marketing collateral that resulted in 22% improvement in lead conversions
- While I appreciate the annual 2% -5% salary increase, the 8.5% rate of inflation has made it difficult for me to break even financially. How can we meet in the middle to make my rate a bit more competitive in this new market?
Prepare for a No
Thankfully, my boss was able to approve my request on the spot. Larger organizations, or those strapped for funding, may not have as much flexibility in the budget. However, that doesn’t mean I wasn’t prepared for getting a ‘no’ – I actually expected it.
If an inflation-adjusted pay raise isn’t in the cards at the moment, you can ask about other non-salary perks to offset inflation. These include asking for flexible schedules, extended timelines for remote work, free meals, additional PTO, etc. All of these benefits don’t cost an employer physical cash, so they can be great perks to ask for.
Did you use the tips covered today to request an inflation adjusted pay rate? Share how it went in the comments!