Eyeing a raise as inflation soars? It’s a great time to ask, experts say

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Personal finance expert Rubina Ahmed-Haq has advice for those who are feeling the financial pressure and the latest financial headlines including the latest inflation data, the interest rate hike and how a proposal to end blind bidding could help cool the housing market. – Apr 20, 2022

Soaring inflation amid a tight job market could mean good news for Canadian workers hoping to bring home a little bit more to cover the surging cost of living, according to career experts.

Statistics Canada reported Wednesday that the annual rate of inflation hit a whopping 6.7 per cent in March, setting a new 31-year high, while the country’s labour market is at its lowest point on record, dropping to 5.3 per cent last month.

Experts say this has created a perfect window for anyone eyeing a bump in compensation to offset the rising cost of living.

“There’s probably never been a better time to ask for a raise,” says Michael French, national director at recruitment agency Robert Half.

Sarah Vermunt, career coach and founder of Careergasm, echoed French. She tells Global News the current economic conditions are a “rare opportunity” where job seekers and those feeling underpaid have a chance to boost their salaries.

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“It’s actually a great time to ask for a raise because your company very likely wants to keep you in this job market. So you have a little more power than you usually do if you’re looking for a raise right now,” she says.

A recent survey from Robert Half shows employees are feeling the heat from inflation and might be well aware of their bargaining power.

Of the more than 500 Canadian workers surveyed in early March, half said they plan to ask for a raise this year.

Of those respondents, 31 per cent said adjusting for the higher cost of living was their top reason for wanting a boost, followed by accounting for additional responsibility (18 per cent) and reflecting current market rates (16 per cent).

A survey from accounting firm MNP earlier this week illustrated how hard inflation is hitting Canadians’ wallets.

Some 31 per cent of respondents to that poll said they already don’t make enough to cover their bills and debt payments.

But with the ongoing labour crunch, Canadian employers also have to devote closer attention to how much they’re paying.

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A separate Robert Half survey showed 69 per cent of companies are experiencing “pay compression” — longer-tenured employees seeing their salaries look closer to those of new hires as market rates rise.

French says giving an employee a raise, rather than letting them slip away and having to hire a replacement, can be a time and money saver for companies.

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“If you’re not keeping up with the market or in many cases, leading the market, you have people leaving you and the most expensive thing you can do is have turnover during COVID,” he says.

But how should you go about asking for that raise? Here are the top tips and biggest mistakes to avoid when looking for a pay bump.

How much money should I ask for?

Before launching into any conversations about compensation, it’s important to know where market rates for similar roles are, Vermunt says.

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“Given the job market now, it’s probably higher than it was a year ago. So that’s important to research,” she says.

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Websites such as Indeed, Glassdoor and Robert Half itself all have salary trackers that will show you where the industry has set the bar for your position.

When should I ask for a raise?

Vermunt says one of the biggest mistakes people make when they’ve been wanting a raise for a while is to ask when they’re already at their wits’ end.

“Going into the conversation in an overly emotional state is a recipe for disaster. Do not do that. Wait until you have a moment to have a planned conversation,” she says.

Set a meeting in advance for a downtime during the week, Verument recommends. Call it something informal like “career goals” to make sure both you and your manager are in the same frame of mind before launching into raise talks.

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Show your value

Don’t focus on arguments related to your tenure at the company, or how much you need the raise right now, Vermunt suggests.

Those kinds of points don’t show your company why you’re worth the extra money.

Instead, focus on three to four examples that show how your performance has materially benefited the company: a time when you earned the company more money, reduced costs, moved the needle forward — anything quantifiable that shows why you should continue to be an investment priority.

“You want to make it about your performance,” Vermunt says.

Avoid ambushing your boss, but put the onus on them

Though your instinct might be to avoid showing your hand, French says the last person who should be surprised by a raise request is your manager themselves.

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If you’ve set your expectations for career advancement well, your manager can help you “craft the path to get there,” he says.

“They should be the first person you’ve talked to and they’ll actually, in most cases, help you sort of craft the path to get there,” he says.

“Talk to your manager, have a very frank, transparent conversation, and it usually will pay dividends for you.”

Vermunt notes that not every raise comes after the first ask. If you’re rebuffed at first, ask for tangible steps you can take to earn the higher pay and set a follow-up meeting in six months’ time to double back on your request.

“That then puts the onus on them to say what they’re looking for if they’re willing to give a salary bump and it gives you something concrete to work towards to then be able to use as evidence when you reopen the conversation a little while down the road,” she says.

“It holds them accountable for doing what they say they’re going to do in the future.”

Look for ‘Plan B’

Sometimes, even when you’ve put in the work and proven your worth, the company’s budget doesn’t have any wiggle room for you.

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In cases like that, French encourages workers to look beyond the bottom line when they’re negotiating.

There are some perks and benefits employers can offer in lieu of a raise, such as more flexibility in your work schedule, extra vacation or other quality-of-life improvements.

“What else could they be doing for you? Don’t just focus on the money. Focus on the entire package,” French says.

Vermunt agrees.

“I personally think it’s also important to think about what your Plan B is if they say no or if they give pushback,” she says.

Can I push up a starting offer?

For some people, Plan B looks like alternate compensation. For others, it’s striking out to find a new job.

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While Canada might be firmly in a job seeker’s market at the moment, Vermunt says the quitting point is different for everyone.

But even for those who have tested the job market and found themselves with a new offer in hand, Vermunt notes there’s always room for a raise there, too.

“People often don’t realize this, but you are in your most powerful salary negotiation position when you’ve just been offered a new job that you haven’t accepted yet,” she says.

Whatever starting salary you accept with a new company, you’re “setting a precedent” for what you’ll take going forward, according to Vermunt. Even if your job performance is off the chart in the first few months of the new gig, she says it would be hard to argue for a raise in that timeframe, so soon into the position.

“You should be doing some good salary negotiation at the beginning of a new job because that’s your power position.”

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