Is Getting a Raise Really Just About Negotiation Skills?
Today, I want to talk about a topic that almost every employee cares about: getting a raise.
I believe that receiving a raise is one of the things most workers hope for.
But the real question is" how should you approach it, and how should you negotiate in order to actually get a raise? "Even more importantly, how can you ensure that the outcome of your raise leaves you satisfied?
I will share my personal experience of how I increased my annual income more than tenfold, and tell you where you should focus your efforts if you truly want to increase your income.
At the end, I will also discuss how to fundamentally shift your mindset about raises.
1. The Underlying Logic of a Raise
Let’s get straight to the point.
Many people, when it comes to raises, immediately start focusing on negotiation techniques, scripts, timing, attitude, or emotional intelligence. Honestly, these are not the most important factors.
The real key is this " you must first understand the underlying logic of a raise." From a company's perspective, is giving you a raise a COST or an INVESTMENT?
If your boss sees a raise as purely an additional cost without bringing in more revenue or value, why would they spend the money?
In such a case, even if:
- Your salary is below market rate
- Your performance is quantified with measurable results
- You choose the right timing for your proposal
- You maintain a positive attitude and emotional intelligence
......the chances of your raise being approved remain very low.
Conversely, if you're not even on the priority list for layoffs, consider yourself lucky.
It’s important to remember "the logic of raises in the private sector is completely different from that in the public sector."
In private companies, if the business is not profitable or not growing, the boss is unlikely to approve a raise.Even with inflationary pressure, if you have no option to change jobs, why would the company voluntarily increase its operating costs?
Thus, the essence of getting a raise is closely related to three factors:
- The company's overall profitability
- Your contribution to the company's performance
- The supply and demand of talent in the market
If you ignore these three points and rely solely on negotiation techniques, the results are often inefficient, or even counterproductive.
2. Company Profitability Determines Your Raise Ceiling
A raise is always constrained by the company's ability to generate profit.
For example, if a company's revenue grows 20% compared to last year, the overall personnel budget might only increase by 2%–4% next year. And this budget is rarely distributed evenly, it usually goes to a few employees considered critical to operations.
This means that for most people, the actual salary increase may be only 1% or even less.
Why? Because salary is a fixed cost, while bonuses are only paid when the company earns a profit.
So how do you break through this ceiling?
The answer is quite simple "Change Jobs."
If the company's growth is limited and the boss lacks capability, no amount of effort to request a raise will help, it only creates mutual discomfort. Switching to a company with higher growth potential can immediately raise your ceiling.
In practice, switching jobs often brings a salary increase of at least 20%, sometimes even higher. Ask yourself: " how many years would it take to achieve a 20% raise in your current company?"
From my own experience, every time I changed jobs, my salary increase was never less than 30%.
3. How Companies Evaluate Your “Contribution”
The second key factor for a raise is your contribution to the company's performance.
Performance here isn't limited to sales or business roles. As long as your role:
- Is hard to replace
- Has a high replacement cost
- Would immediately impact operations if absent
......then you are considered valuable to the company.
From a boss's perspective, every employee is like a screw in a machine. The difference is whether the machine immediately malfunctions or stops working if you are absent.
If your position:
- Can be easily replaced
- Handover is simple
- Has minimal operational impact
......then the space for a raise is limited.
This is why I often encourage people without specialized backgrounds to consider business roles. Business positions are the easiest way to demonstrate your value.
And another advantage of business roles is that you can feel changes in company operations earlier than other departments, allowing you to prepare for a job change sooner if needed.
4. The Labor Market Determines Your Negotiation Power
The third key factor is supply and demand in the labor market.
If your position has low demand and high supply, no matter how good your negotiation skills are, the potential raise is limited.
Conversely, if your skills are in high demand and hard to replace, even if your initial salary was low, there's still a high chance of getting a raise later, provided you communicate effectively.
5. Common Misconceptions About Raises
Misconception 1: Relying too much on "market rates"
The most accurate way to understand your market value is by interviewing elsewhere. This approach not only gives you a realistic sense of your market worth but also boosts your confidence when negotiating a raise with your current company.
Misconception 2: Only discussing performance numbers
Quantifying your performance is important, but if your KPIs or metrics aren't directly tied to the company's profitability, even excellent results have limited persuasive power.
Misconception 3: Misunderstanding "timing"
Many people say that timing is critical when negotiating a raise—but when exactly? Before or after performance reviews?The key is to understand that work is an exchange of your knowledge, skills, time, and effort for money. Whenever the company plans to increase your workload, that is the right time to discuss a raise.
Misconception 4: Lacking communication skills
Performance reviews are not just about submitting reports; the way you communicate is more important than the numbers themselves. Otherwise, the company only needs to set the rules, anyone who meets the targets will get a raise, so what's there to discuss?
We'll have a chance to talk more about DISC based communication techniques later.
Misconception 5: Not stating your desired salary
Some advise not to state a number first. But if the company also doesn't provide one, or offers a low number, what should you do?
Instead of a zero-sum approach (I win, you lose), adopt a win-win communication style: clearly state your expected salary increase and discuss what the company expects from you to meet that goal. This approach allows both sides to achieve your objectives.
6. Special Reminder: Don't Use Resignation as a Threat
Always remember " once you mention resignation, you must be prepared to follow through."
No one likes being threatened, and no boss wants to retain an employee who appears disloyal.
7. The Best Way to Truly Increase Your Income
Honestly, all the methods above are not the most effective way to increase your income.
The best approach is this " Raise your salary yourself, rather than waiting for someone else to give it to you. "
Here are three main ways to do this:
- Improve professional skills
- Enhance language abilities
- Increase financial literacy and passive income
Enhancing the first two can increase your active income. However, since everyone has a limited working lifespan, the marginal returns of these investments decrease with age. That's when financial literacy and passive income become crucial.
Two key points when investing:
- Never invest with borrowed money
- Focus on assets and yield, not price fluctuations
Expecting returns purely from price differences is essentially gambling—and the odds are overwhelmingly against you.
Finally, I wish everyone steady progress toward true financial freedom, so that you can work with peace of mind and live life with ease.
See you next time.
