How To Effectively Negotiate a Promotion Salary Increase
Updated June 9, 2023
Receiving a promotion within the company you work for is a wonderful achievement. Whereas you may be able to convince hiring managers at a new company of your skills and excellent work ethic through an impressive interview, you can be sure that an in-house promotion is based on outstanding merit. However, your new salary may not match the increased responsibilities that accompany your promotion.
In this article, we provide a few tips on how to negotiate a salary increase during a promotion.
Why is it important to negotiate a promotion salary increase?
It's important to negotiate a promotion salary increase because your employer will, in all probability, be aware of what it would cost them to hire and train a new person for the role you're taking on. They may also know that you could possibly earn a higher salary if you applied for the same position at another company.
Promotional increases within the same company typically amount to around 3%, whereas a person that switches jobs can expect a pay raise of about 10% to 20%. What's more, you may receive a promotion without any accompanying salary increase. In such a situation, it can be challenging to ask for more money while simultaneously expressing your gratitude for the recognition your employer is giving you. However, you have the right to negotiate a salary increase with a promotion—and the time to do so is during the promotion. Management may even anticipate that you will do so.
Related: How To Ask For a Promotion
How to negotiate a promotion salary
As is the case with any negotiation process, you should approach salary increase negotiations with tact and open-mindedness. Be prepared to consider all angles and show your willingness to compromise. Here are a few tips on how to negotiate a salary increase with your promotion:
1. Know your market value
If you're going to be asking for a salary increase, you should base your argument on well-researched facts. An important fact to research is the market value of your new job. You can gauge this information in various ways, such as chatting with other professionals in your field and also asking your mentors for advice. Even if they don't discuss actual salaries, they can provide you with estimates and other useful tips.
The next step you can take is to search for salary information online. Many job websites supply average salaries for job titles (like Indeed's searchable library of salaries) and some also provide salary calculators that offer personalized salary estimates based on your data. You can also browse for jobs with similar job descriptions to yours and note the salaries that employers offer.
Once you've determined the market value of your position, you can adjust this according to your unique situation. Factors to consider, for instance, may include whether you're working for a startup or a well-established company and whether you possess the relevant qualifications for the position.
Example: "Thank you for the promotion. I am so grateful for the recognition. However, I researched the market value of my position, and there's a considerable discrepancy between this number and the salary you're offering. Is it possible for you to adjust my salary to closer reflect my new responsibilities?"
2. Emphasize your value
If you feel you deserve a raise with your promotion, you need to provide management with solid reasons why they should pay you more. If you've pursued the promotion, management may be under the impression that you'll be satisfied with a small or no salary increase. You can point out to them that your new position comes with added responsibilities and possibly also longer hours.
In addition, you should show them how you've added value to the company. The best way to do this is through quantifiable data where you provide numbers and percentages that back up your claims. You can also mention any accolades you have received from clients, managers or colleagues.
Example: "I have successfully negotiated and concluded contracts with various clients to the value of $35 million over the last year. All of these clients have indicated that they plan to extend their contracts with us next year, as they are very happy with the service I have provided. I am hoping that you can adjust my salary to better reflect the positive contribution I am making to the sales department."
3. Keep an open mind
During the negotiation process, aim to keep an open mind and remain reasonable at all times. Despite the fact that your manager may also think that you deserve a raise, they may not be able to give you the percentage you're demanding due to various constraints. For instance, if you're working for a startup, the company may simply not be able to pay you according to the market value. Or, the departmental budget might currently not allow for the unexpected increase in compensation.
In such situations, you can show your willingness to compromise. There are many ways in which a company can compensate you apart from increasing your salary. Depending on your needs, you can suggest that the company compensates you in one or a few of the following ways:
Increasing your commission
Paying you a higher bonus
Increasing your annual leave
Providing you with a more flexible work schedule
Reimbursing you for tuition fees
Example: "Thank you for taking the time to explain the department's predicament to me. I am excited about contributing to the growth of the company. In view of the current situation, would you perhaps be willing to increase my commission by 5% and allow me to work remotely two days a week?"
4. Discuss the way forward
In the event that your company is currently not able, or willing, to give you a salary increase, it's advisable to discuss the way forward with your manager. If the company's budget doesn't currently allow for a raise, your manager can provide you with a date when they realistically estimate you can continue the discussion regarding your raise. It's advisable to book a meeting on that date to ensure that the discussions actually do go forward.
You can also inquire whether there are any expectations from the side of the company that you should meet before you can receive a raise. If this is the case, your manager should provide you with measurable and achievable goals and timeframes in which to achieve them. You should also agree on dates when you'll meet to review your performance so that your manager can provide you with the necessary support and advice during the process.
Example: "I understand that the company is currently not able to meet my salary demands. I will, in the meantime, view my promotion and new responsibilities as an opportunity to grow professionally and gain valuable experience. However, I'm not willing to work for this salary indefinitely. Can you please provide me with a date when we can meet again to reevaluate the situation?"
5. Retain the goodwill of your manager and the company
Negotiating for a raise when you receive a promotion is a delicate process that you should approach with the necessary consideration. Firstly, management has expressed their trust in you and has acknowledged your hard work through a promotion.
Apart from the fact that it may mean a higher salary, promotion is great for your career. The added responsibilities will allow you to develop professionally, and with the new job title comes the potential to apply for other positions after you've gained the necessary experience. Even if you don't receive a pay raise straight away, you'll be in a good position to ask for one in the foreseeable future.
For these reasons, it's advisable to continually aim to keep the goodwill of the company. If you've asked for a pay raise and management seems unwilling to meet your demands currently, it may be wise to retreat for a while, learn as much as you can in your new position and resume the discussion at a later stage. However, if the company doesn't remunerate you fairly for your extra responsibilities over a prolonged period of time, it may be time to start looking for new opportunities.
Example: "Thanks for taking the time to listen to my requests. I accept that you're currently not in a position to meet these. I want to take the opportunity to thank you, once again, for the recognition you've given me. I plan to make the most of this wonderful opportunity and I promise you that you will not regret your decision to promote me."
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