It’s a tough job…

To ask for a raise! How do you do that - do you go out blunt and say this is what I expect? Do you talk about your performance and hard work you have done in past few months? Or do you sit back and hope your boss will recognize your efforts and give you a good bump this time?

Yes, I agree that money is not everything. One has to look at the growth opportunities, work culture, career development, and work-life balance that the company offers. But even after all this, how often have you felt satisfied with your compensation review?

Global markets are going through difficult times and most companies are finding it hard to sustain the high growth demonstrated in recent years. Direct impact – go slow on raises, hold-off if possible. What do you do if you are approaching a review soon? Inflation in India is touching new highs; you have every reason to ask for more. But will you? Can you?

I think about what more I have done in past six months or a year than what I used to do earlier. I base my expectations (or demand) on my understanding of how much more value I am adding to the company compared to my previous review. While this seemed a logical way and has worked till now, I realize now that it’s flawed. Compensation review is for the future, so it’s based on the expectation of how much value you will add to the company (and how company will be benefited by it) in the coming period. Just like any trending, past data (performance) is used to project the future. But the base assumption here is that the value created by my performance remains static – as in, value increase will be directly proportional to the increase in performance. And unfortunately, this assumption does not hold true in the economic downturn (or a slowdown).

But now, how do you decide if your performance will generate the same value for your company or not? In most cases, functional staff does not have much insight in to the sales pipeline of the company (except for what is made public - and that may not be reliable). Even if your company is doing well, what is the state of your department/project?

One of the very common ways of calculating expected raise is to find out how other companies are paying for the similar profile. If yours is a very conventional job (by profile and by company culture) then it may be easy for you to do this comparison by doing a bit of networking. But not everyone is so lucky (or unlucky) and very likely it’s not easy to just compare like that. I have never heard anyone coming to a conclusion that they are being paid higher than the industry average –that tells you how much you can trust such a comparison.

In my small career of about five years, I have received a raise almost 12-13 times. At times I got a raise without asking, sometimes it was easy to bluntly ask (and get it) and then there were times when I got much lesser than what I had asked for or expected. So far I have never been refused a raise, but I know it’s bound to change.

I think I can safely base my initial expectations on the following internal factors:

• Performance since last review
• Non-monetary benefits provided by the organization (work culture, growth opportunities, work-life balance, location advantage)
• Willingness to continue doing the same kind of work / or eagerness to do different kind of work (cost associated with the change of assignments - as your company is taking the risk by giving you new work)

And then adjust the number based on:

• Recent company performance and strategy
• General economic condition (local as well as global)

There are other factors that will impact (positive and negative both) the result but I don’t see a practical way of measuring these factors and calculating their probable impact:

• Industry attractiveness
• Local job market conditions
• Attrition rate in the organization
• Availability of local talent pool