In today’s “Money Mondays” segment, Mellody Hobson tells listeners how to ask for what they’re worth.
We all know that the recession hit Americans, and particularly black Americans, pretty hard. We have seen jobs losses, sliding wages rates and fewer pay raises. It has certainly been tough out there. But the good news is that the economy is getting stronger and hiring is picking up, so I am here this morning to help people ask for what they are worth – both when seeking a new job or in the job they are currently at!
Is it really a good time to ask this question, just as we are passing a rough patch?
It is. Right now, corporate profits are at the highest level in decades, and small businesses are re-emerging from the recession and beginning to hire again. These are signs that companies are feeling good enough to spend some more money. Additionally, many people are still in the bunker mentality of the recession, so there are fewer people asking for a raise or negotiating for a better salary overall. Both of these facts make it a good time to ask for more money. But the bottom line is that you should be willing to ask for what you are worth, regardless of the time!
What is the first thing we need to know?
That’s easy. Rule #1: You probably won’t get something you do not ask for in the first place! It seems straightforward, but the reality is that asking for a raise is very intimidating for most people. A survey conducted last year by Salary.com found that 59% of employees dread salary negotiations because it makes them nervous or apprehensive. The same survey showed that 41% of employees do not ask for a raise during performance reviews, and fully 1 in 5 Americans – 20%! – didn’t negotiate at all when they were offered a new job. This is a huge missed opportunity! In order to get what you are worth, you have to be willing to ask for it.
Is there a way to break through this anxiety?
The most important thing you can do to reduce the amount of anxiety you feel during this process, and improve your chances of getting paid what you are worth, is to prepare for the conversation ahead of time.
If you are looking for a new job, you HAVE to do your research and go into the interview with a salary range. After all, it is the responsibility of the interviewer to find out whether or not you fit within the company budget, so you had better be prepared for the question. To get a sense of where you fall, first look up the average salary for the position you are applying for in the company’s industry. You can find this on websites such as Salary.com or U.S. News and World Report. Then try to find out more information about the company’s pay scale. Sites like Salary.com or Glassdoor.com may actually have salary numbers specific to the firm. These are also great sites if you are looking to ask for a raise, or you are getting a promotion. Finally, you can also ask friends, family or colleagues who are already working in that field.
If you are currently employed and you are considering asking for a raise, you are not off the hook here. You definitely have to be prepared for this conversation as well. In this case, being prepared means being ready to take on some more responsibility and up your game in the workplace. It’s much easier to ask for a raise if you have been working to deserve it ahead of time. Additionally, when asking for a pay bump, be realistic – both about your performance and the increase you are seeking. If you have only been in your job for a month, or if you have been slacking off, it is probably not going to happen. The same goes if you are ask for a 50% pay increase in hopes of negotiating to 25%. There is nothing that will bring the conversation to a stop like an outlandish request, so think this through ahead of time, demonstrate your skills and build a list of your accomplishments. It will pay off when you have the conversation.
What else should people know?
There are three other important tips that listeners need to keep in mind:
1) Remember that it isn’t all about the money. This is true both for new salary negotiations and for those who are currently employed. Outside of your salary, there are other means of compensation. For example, your benefits package! If the company cannot pay you more, can they increase other perks? For example, will your company cover your gym membership? Your transportation costs? Increase their match for your 401K? These are all very much up for negotiation.
2) In terms of negotiating tactics, don’t shut down at ‘no.’ Be patient and provide alternative suggestions, like those items I just mentioned. Ask for increased training or professional development opportunities to help you build your skill base – and therefore, your value to the company – if they are particularly stubborn. Overall, it is important to remember this is a conversation, so don’t depart at the first sign of rejection.
3) You have to have a limit. If you are offered a job, but the compensation is too low and they won’t budge, you have to know when to walk away. There are certainly other jobs out there that will pay you for your skills. The same is true for a current job. If you have worked there for years without a raise, and there isn’t one in sight, it is probably time to start looking for a new job. This is another reason you have to know what you are worth: You have to know when to walk away.
Remember, you can’t get what you don’t ask for!
Mellody is President of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally, she is a regular financial contributor and analyst for CBS News and CBS.com.