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Learning the Rules for Raises

Learning the Rules for Raises

By Margaret Steen, for Yahoo! HotJobs

You've been working hard, earning praise from your boss and coworkers. So when will those kind words translate into more money? To find out, start by arming yourself with facts -- about how your company works and the strength of the labor market.

A Complex Equation

US companies increased their overall salary budgets by 2.8 percent in 2011, with a 2.9 percent increase projected for 2012, according to the WorldatWork 2011-2012 Salary Budget Survey. The salary budget is the total amount of money a company has for merit increases or cost-of-living adjustments.

How large a raise you can expect -- and when -- can depend on many factors beyond whether you're performing well: your company's culture, its financial performance and how much you make compared with your peers, for example.

Get Details from the Boss

It's always a good idea to have a general talk with your boss about how and when raises are handed out. "Good bosses would be very open to having that conversation," says Gail Ginder, a leadership coach in Healdsburg, California. Ask what it takes to get a raise, when decisions on raises are made and how you can find out if you're on track.

"They really need to find out what it is they can expect," Ginder says. Even changing bosses within one company can mean a different set of criteria, if the company gives managers a lot of latitude in awarding increases. If your boss doesn't know, someone in human resources should be able to answer your questions.

Every Employer Is Unique

Bear in mind, though, that some companies are more organized than others when it comes to pay increases. Some simply give everyone average raises, says Shari Dunn, managing principal of CompAnalysis, a compensation and HR consulting firm in Oakland. Others are trying to move away from giving everyone an annual increase and instead look at whether you're being paid what the market says your work is worth.

At many companies, raises depend on a mix of your performance and how much you make compared with others doing the same job. You may find that if you're nearing the top of the pay bracket for your position, you'll need to earn a promotion to get a raise.

For example, Dunn says, an average performer who is paid an average salary for employees at that level would get an average raise, but an average performer who was paid near the top of the company's range for his job would likely get less. A top performer who is paid less than others in the same job could be in line for a larger-than-average raise.

"The linkage to performance is sometimes tenuous," Dunn said.

Demonstrate Your Value

While you're asking your boss to explain how raise decisions are made, should you also ask for a raise? Again, it's important to know how your employer operates.

Large, traditional companies and government agencies often use clearly defined processes to determine raises, and asking for more money mid-year will just make you seem out of place. On the other hand, more entrepreneurial companies may be more open to requests for raises -- as long as they're backed up by solid data about your performance and what it's worth, not just a list of things you'd like to buy if you had more money.

"Employers like ambitious employees, especially if they're good performers," Dunn said.

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