As the cost of living soars, many people will be thinking about asking for a pay rise. In the UK, inflation is rising so quickly that workers could need an annual salary hike of 18.6% by January 2023 just to command the same purchasing power as a year before.
For employees, the good news is that it’s a jobseekers’ market right now in many, but not all, sectors. The historical tightness in labor markets in developed economies has given workers stronger bargaining power to negotiate higher wages, so long as their demands are framed strategically.
For organizations, of which many are already facing pressure on their own cost bases, this presents several quandaries – including how to attract and retain talent while simultaneously tightening the purse strings. Companies will need to think creatively and find other ways, besides upping pay, to motivate employees and lower attrition rates.
There’s always a risk when asking for a pay increase, so employees will need to relay their request carefully in order to increase the likelihood of success.
Negotiating too aggressively can backfire. You may be seen as selfish or too pushy. Unfortunately, this is often the case for women, who can be punished for being seen to be too “assertive” at work by being rebuffed or isolated. This means women tend to be less likely to ask for a pay rise. On the other hand, sitting tight and waiting to be offered extra money is no way to further your career or improve your circumstances, either.
The starting point for anyone looking to increase their earning power should be finding out what they are worth. It’s important to come to the discussion armed with the right metrics: pay negotiations are all about data. A big part of this is gathering intelligence on whether you are already underpaid, or even overpaid, relative to your peers. …
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