Pay Attention: Preparing for the Pay Raise Conversation



Pay raise conversations between employers and employees are sensitive, but necessary. On average, U.S. employees can expect only a small increase in the upcoming year—just 3% according to a recent survey of U.S. employers. This is only slightly above the rate of inflation, so many workers will not feel the difference.

So, how will conversations about pay go in 2018? Indeed recently surveyed 1024 U.S. workers to see. We found that most workers want a raise. The vast majority of workers want more money to feel comfortable, and more than half put an exact number on it: $6,000 per year. Only 19% of workers are comfortable with their current pay rate.

What is contributing to this general dissatisfaction? Besides wage stagnation, a variety of factors are at play according to workers we surveyed – from how frequently a firm offers pay raises, to regional differences, as well as a gender gap where men are slightly more likely (21%) to be comfortable with their pay rate than women (16%).

While salary issues are obviously important to employees, employers also need to pay attention. Organizations can lose talented workers to companies that offer better compensation and opportunities for more frequent, substantial raises. In fact, our survey found that more than half (54%) of workers would consider changing jobs to get a pay raise.

We also found that nearly half of workers (47%) may ask their current employer for a pay raise this year. Knowing this, employers can start preparing for these conversations now:

Know how your firm compares – Run salary audits and compare your company’s compensation packages to competitors’ salary ranges to see if you’re paying enough.

Anticipate more pay raise conversations – For example, about a third of 25-34-year-old workers plan to ask for a raise in 2018. The fact that early-career-stage Millennials frequently earn less than older workers gives them added incentive to ask for a raise.

Understand where employees are coming from – Three out of five workers who plan to ask for a raise believe their good performance should be rewarded.  Dissatisfaction is another factor; 2 in 5 of “dissatisfied” workers request raises because they’ve taken on extra responsibilities without a salary boost.

Budget ahead – Workers who plan to ask for a raise say they will request an increase in the 6%-10% range, with an average of 7%. Workers say lack of budget (70%) was a frequent reason given when previous pay raise requests were denied.

Get creative - If cash is truly limited, benefits such as flexible work hours, healthcare benefits or additional PTO may prove powerful alternatives. More than two-thirds of workers said they would consider additional benefits in lieu of a pay raise.

While pay is important, keep in mind that dozens of other factors contribute to job satisfaction. By having meaningful and productive conversations about each position as a whole, everyone is more likely to walk away feeling good about pay negotiations.


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