How to negotiate at your current company?

Question

My questions are:

1. What do managers and companies care about in deciding whether or not to award a raise?
2. What does a successful internal negotiation for a raise look like within (most companies) from start to finish?

I am grateful to have a job at a company that has done well during the pandemic. I kind of messed up the initial negotiation process when joining. When joining the company gave a base salary and hiring bonus number first with someone that I knew prior to the call (a negotiation mistake I know). The company wound up offering me 10k more than the number I gave them, which is never a good sign, I know, for negotiations (That is, I did not state a base salary high enough and they had plenty of slack to go higher, or so it would seem). In 2020 I have done a really good job. I have a lot of things I can point to, but I have not been at the job very long (< 2 yrs). I have had a few performance reviews already and I've had many performance reviews in the past at various other companies. One of the things I find extremely difficult and/or confusing to navigate logistically is how to ask for a raise within a company given the situation below?

I am especially interested in the start of the conversation after the very thorough NOs that seem to come along with inquiring. In past, these types of conversations seem to have gone like this for me:

Me: I'd like a raise.

Bosses Bosses Boss:: No.

Me: Look at X, Y, and Z.

Bosses Bosses Boss: No.

Me (Mentally): Guess I'll hope for better luck next year!

The thing about this is that the person delivering the news of compensation is not the one that sees my work on a day to day basis. They do know how much I earn but they're not familiar with my work. My manager is familiar with my work but does not know how money I earn. This may make it more or less difficult to negotiate. I am not sure but I am guessing more difficult.

I have read a few books on negotiation. There are a lot of really great resources on negotiating for a new salary when you're first hired (this article being one of my favorites on the subject). But there seems to be a relative dearth of material on the matter of negotiating within a company. I have read some books on negotiation and he thing is, I really do not want to leave this particular company. Right now, I cannot really be bothered to go get another BATNA (best alternative to negotiated agreement). That is, I'd very much prefer to get a raise without having to go out and get an offer at another company for more money. I would love to get paid more without having to go to the lengths of having another offer in hand. I get it if this needs to be done, but what else must I do, or show, in order to make this negotiation process go smoothly? How can I get this negotiation process kicked off when the answer is repeatedly no to these questions? It seems like the negotiation never really starts at all as if by design (/s)...

Answer 1

What do managers and companies care about in deciding whether or not to award a raise?

That depends a lot on the specific manager and company. In my personal experience, issue number one was "fairness", i.e. I would rate my team and make sure that the compensation differences reflect what I thought is the relative value of each team member.

Issue number 2 is overall budget: you typically get a total of $X for raises for your entire department. You try o divvy this up using again "fairness". I.e. if I feel that Bob is overpaid compared to Alice, Bob would get a small raise and Alice a larger one.

Issue number 3 are corporate policies and standards. Many companies have job grades and associated salary bands. Over time most people move from the lower end of that band to the higher end and then it kind of stops and the only way to climb up further is to move into a new job grade with a higher band. In other words: a promotion.

Issue number 4 are promotions and long term strategy. Where do we see people in 3-5 years from now, what's a good path to get them there and how does a compensation profile track to this. This may also include "managing someone out the door". If you have a team member that is just scraping by with little prospect of improvement, you can just freeze their salary and see if they leave on their own volition.

What does a successful internal negotiation for a raise look like within (most companies) from start to finish?

Start with data and do your homework. If your company uses job grades and salary bands make sure you know what they are and where you sit in the salary band. Do some research on the "market rate" (salaray.com for example) and understand where you sit relative to this. Go through your past performance reviews and distill what was "good" and what were "areas for improvement" . Collect some data and examples that show that you have actually improved in this areas.

How you approach the negotiation & conversation really depends on what you find in your homework. If you are sitting high in your salary band, have middling reviews, and areas of improvement without much progress against them, there is probably little you can achieve. If you are low in your band or with respect to the market and have stellar reviews and strong accomplishments you can point to, this should be an easy conversation.

In any case, you can always ask "What do I need to do, to get a raise?", "what metrics can we use to track my progress towards my raise or promotion?"