Peak Performance: Your Salary Review

Most employers conduct salary reviews as part of the performance review cycle. This is one of the best opportunities to negotiate for more pay. Startup companies and other employers may offer a salary review after the first three to six months on the job.

Many companies believe in separating the performance review from the salary review, because one is an evaluation and the other is a negotiation. But the business world moves so fast that that the two discussions are often combined.

Companies set budgets for pay increases. Usually the budget calls for the average employee to receive a 4 percent increase. Raises vary by position and by performance, however. Executives, IT personnel, and other employees in jobs in which salaries are moving faster may receive bigger raises. Within whatever range they operate, however, managers usually have the latitude to give some employees larger increases than others.

Remember: a pay increase below the level of inflation is not real raise because it does not keep pace with the eroding value of the dollar.

Many employers pay at or close to the prevailing market rate to retain good people. Research your market value and the typical raise for someone in your position in your industry before your salary review so that you can make the case for what you believe you deserve. Understand that the median salaries reported in studies are for people who are proficient in the job. If you are new to the role, don't be surprised if you are paid below the median. Then, as you develop skills to progress in your job, your pay should reflect your increasing proficiency.

Your employer also researches salaries, and is likely to have access to many data sources that are difficult or impossible for individuals to come by. Some progressive companies readily share this data with employees so as to foster an open dialog about fair pay. If you and your employer begin a dialog about data sources, you may be well on your way to a win-win negotiation based on market value.

In an ideal world, here's what a salary negotiation might look like.

  • Your pay is aligned to your performance.
  • You have a task-oriented job description and measurable performance standards.
  • At your performance review, you and your employer agree about how well your performance measures up to expectations and how proficient you are in your job.
  • At your salary review, you and your employer agree about the market price for your job.
  • Your salary is set to coincide with your level of proficiency and performance in your job.

What to ask for

  • As with any negotiation, thoroughly understand what you have to offer.
  • Find out the market range for your job through research tools such as the Personal Salary Report.
  • Consider your own value within that range given your particular skills and accomplishments.
  • Find out the customary raises in your industry and your company through the Personal Salary Report, your network, and your human resources office.
  • When presented with better information about the value of a job, a firm could make a considerable salary adjustment.
  • Some companies offer only modest increases, even for outstanding performance.
  • Remember that a cost-of-living increase that simply keeps pace with inflation is not a real raise.
  • A promotion, usually accompanied by a raise, acknowledges your ability to handle additional responsibilities.
  • Even without a pay increase, a promotion will signal progress in your career.