Know your value and ask for a salary increase that matches it

Salary negotiations during your annual review are crucial to ensuring your pay reflects your value. These discussions are about more than just adjusting your pay – they're a chance to align your salary with your contributions, skills, and the market standard. In this guide, we'll help you understand how to do salary negotiations confidently so you can secure the compensation you deserve.

What is a salary negotiation and why is it important?

A salary negotiation is a discussion between an employee and an employer about the employee's remuneration package. During an annual review, the conversation focuses on adjusting your current salary or employee benefits to reflect your contributions, skills, and market value. 

An annual review is a structured opportunity to discuss your value within the company. Initiating a salary negotiation during this time is crucial for several reasons:

  • Recognition of contributions: It's an opportunity to highlight achievements and link your salary request to your accomplishments at work

  • Fair compensation: It's an opportunity to ensure you're compensated well for your time and effort

  • Financial security: It's a way to align your salary with your growing experience and responsibilities – and any interest rates!

  • Job satisfaction and retention: If you leave your annual review feeling valued and fairly compensated, this will enhance your job satisfaction and loyalty

How to prepare for your annual review salary negotiation

Preparing for a salary increase negotiation during your annual review can feel daunting, but with the right approach, you can make a strong case for a raise. Here's how to get ready:

Look at the market average for your position 

One of the quickest ways to determine whether you're getting paid enough, and consequently, know how much to ask for when negotiating your salary, is to look up the market average. A quick search will tell you how much other professionals are making in your role. If you find you're significantly below the average, it's a clear sign that you need to negotiate your pay. Knowing your market average can also help you negotiate your salary effectively, especially when a salary range is given by your manager or employer.

Factor in your location and experience 

Remember that salary ranges can vary based on where you live and your experience level. If you're new to the industry or working in a less populated area, your pay might naturally be lower. Make sure your salary comparison takes these factors into account.

Document your successes

Make a list of your key accomplishments from the past year. Include any metrics or milestones, such as “increased sales by 15%” or “completed a large-scale project on time and under budget.” Displaying your achievements with concrete evidence makes them irrefutable and strengthens your position.

Determine your desired salary range

Set a realistic salary range based on your market research and self-assessment. Have a target salary and a minimum figure in mind to guide the discussion and keep your negotiation focused throughout the conversation.

Consider non-monetary benefits

Sometimes, companies offer perks other than a salary increase. Think about the additional benefits that might be valuable to you, such as extra holiday days, professional development opportunities, flexible working hours, or remote working.

Prepare your case

Pull together all your research, documented achievements, and salary goals into a well-organised argument. Practise presenting your case clearly and confidently, focusing on how your contributions have made a difference to the business and why a salary increase is justified.

How to approach salary negotiations during your annual review

Navigating salary negotiations during your annual review can be challenging, but it's an essential step for ensuring fair compensation. Here's how to make the process smoother and more effective:

Arrange a formal meeting

Set up a formal meeting with HR or your manager to discuss your salary. Tell them beforehand that the meeting will focus on your annual salary review. This preparation helps them anticipate the discussion and allows both parties to prepare.

Start positively

Begin the conversation on a positive note. Express your gratitude for the opportunities and support you've received over the past year to create a constructive atmosphere and set a collaborative tone for the discussion.

Present your case

To present your case, start by sharing market research on salary averages for your role, highlighting how your current pay compares. Next, detail your achievements with specific metrics and mention any new responsibilities or skills acquired since your last review to show increased value. Finally, propose a salary range based on your research and contributions, including a target and minimum acceptable salary.

Use effective negotiation tactics

To underscore your value and justify your salary request, express your readiness to take on additional responsibilities or contribute in new ways. This shows your commitment and dedication to both your role and the company. During negotiations, keep your tone professional and calm, avoiding emotional responses. 

Be ready for counteroffers

Your employer might offer alternatives to a salary increase, such as additional benefits or responsibilities. Be prepared for this possibility and approach it with an open mind. Evaluate these counteroffers carefully, considering how they align with your long-term career goals and overall job satisfaction.

Don't expect an immediate answer

Understand that your manager may need time to discuss your request with higher-ups. Ask for a timeline on when you can expect a response, and follow up if you don't hear back by the agreed date.

How to handle salary negotiations after your annual review

Once your yearly review is over, keep the momentum going with these follow-up steps:

Send a follow-up 

Send a brief follow-up email summarising the discussion, agreed-upon points, and actions. This ensures you and your employer have a clear record of what was discussed, helping avoid any potential misunderstandings.

Stay professional

Regardless of the outcome, respond graciously and maintain a professional attitude. It will reflect positively on you and keep the door open for future opportunities. 

Plan for the future

Use the feedback and areas of improvement discussed in your annual review to set goals for the future at your current workplace or beyond. Continuously working on your skills and achievements strengthens your position in subsequent negotiations and contributes to your long-term career growth.

Negotiating salary: tips and common mistakes to avoid

Avoid these common pitfalls when negotiating a pay rise to make sure you stand a fair chance of receiving the salary increase you deserve:

  • A lack of preparation: Failing to research industry salary standards or document achievements can weaken your case
  • Being too aggressive or too passive: Find a balance in your approach, as being overly aggressive can alienate, and being too passive may miss opportunities
  • Focusing on personal needs only: Base your request on professional achievements and market value rather than personal financial needs
  • Ignoring company budget restraints: Make realistic requests based on the company's financial situation to avoid setting yourself up for disappointment

  • Failing to practise responses: Prepare for common questions and counteroffers to handle the discussion smoothly and confidently

Know what to say in salary negotiations

It's vital to ensure that you're getting a fair annual salary. If it's been a while since you've had a pay rise or you fear that you're underpaid, do something about it by applying our tips on how to do salary negotiations. Now that you know how to work out your pay, seize the opportunity to ask for the salary you've earned!

If your salary negotiations are fruitless, you may find yourself looking for a new role where your skills and experience are valued. Get off to the best possible start with a free CV review from our experts! 

This article was originally written by Charlotte Grainger and has been updated by Laura Slingo.

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