Pay & Salary

What to Expect from an Average Promotion Raise

February 22, 2021

One of the primary reasons that employees work hard to earn promotions is the promise of a raise. The exact amount to expect from a raise depends largely on the employer's budget and the specific duties associated with the new job title. If you are currently working toward a promotion or if you are pursuing a position with a new employer, you need to know what you can expect from a future raise.

In this article, we will discuss the national average for promotion raises and offer tips on what you should consider when negotiating a promotion.

Read more: How to Ask for a Promotion

Average raise for a promotion

Frequently, when an employee is promoted, they receive an increase in pay. A raise is often offered as a performance incentive for employees or in connection with an increase in responsibilities. Unlike a bonus, which is typically a one-time event, a raise affects the amount that an employee earns each pay period. The size of the raise depends on several key factors including industry, geographical location and the number of years the employee has worked for the company.

According to the Bureau of Labor Statistics' annual review, the average raise for a performance-based promotion in 2020 is 3.0%. This means an employee earning $40,000 a year would receive (on average) a $1,200 raise. The $1,200 would be added to the employee's annual paycheck, which is typically distributed bi-weekly or monthly. If an employee is paid once a month, a $1,200 raise would equal $100 more in pay each month.

Performance-based promotions are offered to employees by the company they currently work for. For example, if a member of a sales team shows exceptional abilities and potential, they might be promoted to sales manager. This type of promotion usually involves the employee taking on more responsibilities or authority.

Employers typically have a limited budget when it comes to doling out raises or bonuses to their current employees. Often, a company has a nonnegotiable maximum amount that it can offer when promoting employees. Depending on a company's salary increase budget, they may be required to offer less or able to offer more than the national average raise.

A professional can also seek out a promotion by taking a new job at a different company. This is usually the quickest way to earn a raise. When a potential employee interviews with a company, they typically have the opportunity to negotiate their salary. When hiring a new employee, companies are usually not constrained to the same budget that they draw from when promoting internally. So, if the interviewee can prove that their skills and expertise would be valuable to the company, they are often able to secure a salary that is, on average, 10-20% higher than what they currently earn.

Read more: 6 Tips for Your Next Salary Negotiation

What to consider when negotiating a promotion

If you are offered a promotion or if you are in the process of pursuing one, you will probably have the opportunity to negotiate the finer details. Here are our suggestions for some things you should consider when negotiating a promotion:

  • The person you are negotiating with
  • Your work performance
  • Your history with the company
  • Your skills and training
  • Benefits

The person you are negotiating with

Before you meet to negotiate your promotion, it is important to know with whom you will be speaking. In many cases, the office manager or direct supervisor is responsible for discussing promotions and raises. However, in other situations, this may be the responsibility of the head of Human Resources or the Accounting Director. As you are preparing to negotiate, you should know if the other person is already familiar with your recent work performance and if you will need to provide a summary.

The person you are negotiating with might also have different goals depending on their department. For example, your direct supervisor who works with you daily may be primarily focused on how maximizing your potential could benefit their team. However, an accountant may be more concerned with the financial impact your efforts have had on the company. Knowing the other person's goals can help you prepare and negotiate more effectively.

Related: How to Negotiate at Every Stage of Your Career

Your work performance

When discussing a promotion, you should have an accurate understanding of your recent work performance. If you know that you have performed well and contributed significantly to your team's success in the last year, you can use that fact to help you negotiate a higher raise. If you are still struggling to perform well in certain aspects of your role, it may be wiser to focus on improving your performance before you inquire after a promotion.

Your history with the company

Another point to consider is your history with the company. If you have been a committed employee for several years, you can use your loyalty as a point of discussion when negotiating a raise or promotion. Employers typically prefer to promote employees they can trust. For example, if you have a positive reputation in the office as someone who has never missed a deadline, earned disciplinary action or engaged in conflict with another employee, you would likely have better success when negotiating a high raise.

Your skills and training

Some of your strongest selling points as a negotiator are the skills and expertise you have acquired since working for your current employer. All of the training and education you have received as an employee adds to your overall value. This is particularly true if your job involves using specific equipment or technology. If your employer offers you a promotion, they are saving themselves the time and effort it would take to train a new hire. You can also use your familiarity with the company culture and your understanding of the industry to negotiate your worth as an employee.

Benefits

The final thing you should consider when negotiating a promotion is the benefits your employer may offer that are not monetary. Some companies compensate newly promoted employees by offering more vacation days, 401(k) plans, better schedules or career development opportunities. These benefits will not immediately increase the funds in your bank account, but they can be extremely valuable if you maximize their potential. If your employer mentions these benefits during the negotiation process, you should be prepared to either accept them or to politely request that your raise take the form of a larger paycheck.

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