Let’s talk about money. This is definitely a key factor for most people when seeking, accepting, and working at a job.  Finances are noted as being a primary reason for divorce, a leading cause of stress, and we have heard about the love of money being the root of all evil. However, it is also a necessary factor for survival in America.

Before asking for a raise, consider a few insider tips from a business perspective.  The following insights are related to the red tape and office politics that may impact employee income.  As a reminder, not every organization or business operates under the same policies and procedures. These insights are highly common in larger organizations, but you may not find that they apply to your specific employer. However, it is important to consider these factors as possibilities and also know that they may impact your pay at future jobs.

Salary Bands

When applying for a job, notice if there is a salary range. For example, it may be listed as “$74,000- $86,000.” Another example would be an estimate, “Mid $50k to upper $60k.”  These salary bands indicate the lowest and highest income that position can earn.  Salary bands can change annually and as they do, the people in those positions are now eligible for those new ranges.  That means if the maximum dollar amount increases, an employee in that salary band is now eligible for that new maximum income.   Likewise, if a salary band decreases the maximum dollar amount and even the minimum dollar amount, then employees are now subject to that range.

Salary bands for most public organizations (e.g., federal or state agencies, non-profit organizations, local governmental agencies, schools, etc.) are considered public information and may even be posted on a website. If not publicly posted, the Human Resources department should provide the bands upon request. For private organizations (e.g., large technology companies, private medical practices, retailers, etc.), this does not have to be public information.   This means they have more confidentiality associated with salaries. However, it is a good idea to monitor job postings and see if a salary range is ever posted.

The important takeaway from salary bands is that an employee will not likely experience success if requesting a raise that is above the listed salary band. These bands exist to ensure employee ranks are fairly compensated.  This prevents entry-level positions from out-earning senior level positions and it also prevents people from earning drastically less pay than the position is worth. However, salary bands also allow for negotiating. If a person is earning the mid-range of their salary band, that means there is potential to request a raise.

Competitive Entry Offers vs. Incremental Raises

This is an employer insight that not many people are made privy to.  Once hired with a company, raises will likely only occur in small, incremental amounts (e.g., 1.5%, $1,000, etc.).  There are two main reasons for doing this:

1. The initial offer may seem high to lure the applicant in.

2. The position has a range of appropriate pay and the employee should expect to stay within that range until a new position/promotion is offered.
           

Once hired, offering minimum pay increases is all that is needed to keep most people in their jobs. Most people do not enjoy job-hunting or asking for a raise, so there is not a high chance of pushback. Furthermore, employers may love their staff, but it is not economically possible to give everyone extreme raises from year to year.  

Salary Caps

Similarly to salary bands, many organizations implement salary caps. This is the maximum amount an employee can be paid to perform a certain role. Salary caps exist to prevent lower-ranking positions from out-earning higher ranked positions. It also helps align employee expectations with reality.  This means, regardless of longevity, experience, or education levels, a certain position can only earn a certain maximum dollar amount. If they want more, they will have to apply for a different position. In situations like these, there may be opportunities for stipends or bonuses that an employee can take advantage of.  If an employee is already earning the maximum amount the position is listed for, there is not room for negotiating an increase in salary.

Merit-Based Raises and Performance-Based Raises

Merit-based raises and performance-based raises occur when an employee has exceeded minimum expectations.  Please note, different companies may define each of these terms differently based on the industry they are in and company policy.  Verify with your organization what these terms may mean for you.    

An example of a merit-based raise would be an Office Administrator who, after a period of time, demonstrated success at the job by responding to clients, having a positive attitude, and following through with scheduling commitments with minimal redirection.  Due to her overall success at the job, her supervisor offered her a merit-based raise of 2% for the upcoming fiscal year.  This is a salary adjustment, not a one-time bonus.

Performance-based raises occur when a goal was set and the employee met or exceeded that goal.  An example of a performance-based raise would be a Development Coordinator who had a fundraising goal of $250,000 for the year. If the employee met that goal, then they would earn a $4,000 bonus. Another more controversial example of performance-based raises includes teachers who are eligible for bonuses based on the performance of their students on standardized testing.   

One of the greatest differences between these two types of raises is permanency. Merit-based pay is a permanent salary adjustment.  Performance-based pay is a one-time bonus that you may be eligible for on a recurring basis.

Another difference between these two types of raises is objectivity. Merit-based raises are quite subjective because what one person perceives as a job well done, another might interpret as needing improvement. However, performance-based raises are objective in the sense that usually a quantitative goal was set and success can be measured by the accomplishment of that goal or the lack thereof. 

In order to help mitigate the subjectivity of merit-based raises, it is best to implement a quantitative rubric. For instance, in the Office Administrator example, measurable outcomes on the rubric could include number of days absent, number of messages not passed on, time it takes to complete the client check-in process, typing speed, and percent of email addresses collected from clients.  These micro-goals can help ensure aligned expectations for both parties while not being as major as the performance-based macro-goal.

Non-Income Perks

When negotiating, salary is sometimes a non-negotiable, meaning the hiring manager is only allowed to offer a certain dollar amount and nothing more. This is when it is helpful to understand some of the non-income perks a company offers. Some of these items may be written in policy and also non-negotiable, but others may be available upon request, meaning you have to know to ask for them in your salary negotiations.  Here is a list of non-income perks that may be available at your next job:

• Matching 401(k) or 403(b) and pension
• Insurance- Health, dental, vision, life, accidental, short-term disability, long-term disability, supplemental insurance, etc.
• Identify theft protection
• Tuition reimbursement/continuing education allowance
• Gym memberships or wellness stipend
• Wholesale memberships
• Cell phone service
• Company car and car insurance
• Travel allowance
• Paid maternity/paternity leave
• Work from home
• Flex days (days off that do not count against vacation)
• Vacation days and paid time off
• Technology stipend
• On-site amenities: Childcare, cafe, gym, covered parking, nurse, walking trails, etc.
• Bring pets to work and pet insurance
• Housing
• Legal assistance and counseling services
• Discounts on company products/services
• Flexible schedule (employee selects work hours)
• Sabbatical opportunity
• Stock shares

Identify which of the items on the list are most important to you and which you would not use even if made available.  When dollars cannot be negotiated, sometimes services, products, and non-monetary perks can be. It is important that you have the language and the insight as to what human resources may have the power to offer you.

Remember, in these situations, it never hurts to ask. If they are willing to offer you a position at their company, that means they like you and they want you onboard. This is your opportunity to ensure the terms of this position meet your expectations. Choosing a job is agreeing to a contract in which both parties are satisfied. This means the employer receives the service of the employee and the employee receives an agreed upon rate and benefits.  Determining if a position is a good fit partially depends on the terms of employment.