The Factors that Can Affect Your Raise at Work
Uncover the rules that govern salary increases at your company.
You've been working hard, earning praise from your boss and co-workers. So when will those kind words translate into a raise at work? The answer isn't that simple. In fact, there are plenty of factors at play that determine whether or not a company will be giving its employees raises.
Furthermore, raises come in different forms. Two of the most common types of raises are:
- a cost of living adjustment (COLA), an increase in your wages, salary, or social security benefits to counteract inflation. COLA varies depending on where you live
- a merit increase, meaning you're financially rewarded for your excellent performance at work
To gain a better understanding of whether or not you can expect a raise at work, start by arming yourself with facts about how your company operates and the strength of the labor market. Only then will you know when and how to ask for a raise and the odds of you walking away with a bigger salary.
The Job Raise: A Complex Equation
How large a raise you can expect (and when) can depend on many factors beyond whether you're performing well. For example:
- your company's culture
- its financial performance
- how much you make compared with your peers
A company's salary budget is the total amount of money a company has for merit increases or cost-of-living adjustments. External factors also play a role in this equation. Take the impact Covid-19 had on our economy. The national total salary budget increase average dipped in 2020, falling to 2.9%, a considerable difference from the projected increase of 3.3% average, according to WorldatWork. In addition, average merit increase budgets for 2020 were reported at 2.6%, a 0.3% drop from 2019.
Basically, there are many variables that can affect whether you get a raise at work—and not all of them are predictable. Here are the ones to look out for.
Factor #1: Your Boss
It's always a good idea to have a general talk with your boss about how and when raises are handed out. A good leader would be very open to having that conversation. Ask what it takes to get a raise, when decisions on raises are made, and how you can find out if you're on track.
If your boss changes, that can mean you're suddenly operating under a different set of criteria, especially if your company gives managers a lot of latitude in awarding increases. If your boss doesn't know how to answer your questions, someone in human resources should be able to.
Factor #2: Your Company
Bear in mind, though, that some companies are more organized than others when it comes to pay increases. Meaning, how to ask your boss for a job raise can differ from one company to the next—sometimes even from one department to the next.
Some employers simply give everyone average raises. Others are trying to move away from giving everyone an annual increase and instead look at whether you're being paid what the market says your work is worth. (Check out Monster's Salary Tools for great info on that topic.)
At many companies, raises depend on a mix of your performance and how much you make compared with others doing the same job. You may find that if you're nearing the top of the pay bracket for your position, you'll need to earn a promotion to get a raise at work.
For example, an average performer who is paid an average salary for employees at that level would get an average raise, but an average performer who was paid near the top of the company's range for his job would likely get less. A top performer who is paid less than others in the same job could be in line for a larger-than-average raise. Unfortunately, the linkage to performance is sometimes tenuous.
Factor #3: Your Value
While you're asking your boss to explain how raise decisions are made, should you also ask for a raise at work? Again, it's important to know how your employer operates.
Large, traditional companies and government agencies often use clearly defined processes to determine raises, and asking for more money mid-year will just make you seem out of place. On the other hand, more entrepreneurial companies may be more open to requests for raises, as long as they're backed up by solid data about your performance and what it's worth, not just a list of things you'd like to buy if you had more money.
Whenever you decide to pursue a job raise, you should have a number of good talking points with hard data to show all you've accomplished. Don't simply say to your boss, "I'm a hard worker and everyone likes me." Something like this is much more effective: "I led the recent website redesign project that entailed managing a team of 25 people, and evaluating 10 outside design firms. I streamlined the review process, which meant we saved $10,000 and came in under budget. The results of the redesign saw a 50% increase in year-over-year traffic, which translated into an additional $250,000 in sales last quarter."
A Raise at Work May Mean a Job Change
Knowing how to ask your boss for a raise will serve you well at every stage of your career. But sometimes, the money just won't be there. In that case, it never hurts to see what else is out there. Could you use some help? All you need to do to get started is create a free profile on Monster. You can get job alerts, connect with top recruiters, and much more. We can help put a sweeter paycheck within your reach.