4 Things you should know before asking for a rise
Wed Jul 10 2019 06:00:00 GMT+0000 (Coordinated Universal Time)
Asking for a rise is something that we all thought of doing or did one time in our life. But even if it seems pretty easy to do (it is a single question, right?), you should correctly think about it before taking action.
Let’s imagine a conversation between the HR and the boss, where they are having a salary review during a regular meeting.
HR: I just received an email from Jason Chan, the senior administrative assistant, who has been working for this company for 6 years.
Boss: What did he say?
HR: He said he was being underpaid so he requested a promotion and a 7% salary increment. He mentioned that his colleagues, who come from the same cohort, recently got promoted and paid more than he does. He thinks it is totally unfair as he has been working for this company for so many years and that the company should appreciate his contribution and loyalty, otherwise he would consider job hopping.
Here are 2 types of answer the boss could give:
Boss: Seriously? He can’t even contribute 0.7% of the company’s profit.... How dare he make such a request? Moreover, I observe that some companies are starting to use artificial intelligence and software application to handle the menial tasks. Why is he so cocky?
Boss: Sigh…. To be honest…. I really don’t want to exploit any of my employees. I was a poor staff 10 years ago. The reason why I started my own business is because I was also stuck in the same position for 6 years, therefore, I really understand how they feel. You know…. It is not easy to survive in such an ever-changing business world. Meanwhile, our company is encountering a decline of the business life cycle and it requires a large amount of resources for the business reform as well. You know…. I really want to grow with our employees.
At first glance, people will directly link ability and qualification with the salary that they get.
Yes, your knowledge and skills are definitely your asset. It is seemingly fair to be rewarded for the extra value. But in the real world, what determines your salary is beyond these. Sometimes, the reason why you failed to get promoted and get a salary increment cannot only be attributed to the evil boss. Before asking for a salary increment, you should ask yourself several questions:
1. Industry – Is your industry rising or declining?
Picking a right job in a right industry is the key. For the same position, the salary may differ greatly among industries. Also, the prospect of the industry should be considered. In the past half-century, Hong Kong has experienced several economic transformation periods, from entrepot trade to the international financial center, transportation logistics, and communications hub, trade, and tourism center. And now, the HK government has announced the new economic pillars – promote R&D and re-industrialization. The changing of economic structure causes a significant impact on the sustainability of the industry. With the coming of the digital era, it is believed that the IT industry is growing and with a positive outlook.
Choosing a growing industry means that you could benefit from it in terms of bonus, salary growth, mobility etc. In short, industry determines how far and how fast your salary can grow.
2. Demand and Supply – What is the demand and supply of the employment market regarding your industry?
This is the factor that deserves more discussion because it is a very active topic as the demand and supply of talents in the market is ever-changing. First let’s explain the dynamics of the supply and demand system: if more people want a particular thing while its supply is temporarily fixed, that thing will rise in price. It works the same in the job market.
A survey asking what job functions will employers hire in the upcoming 3 months revealed that the top of the list includes IT, Sales and Business Development. However, not many people study IT in Hong Kong resulting in a scarcity in talent and a difficulty in substituting them. The cost of replacing them being higher, employers therefore offer them a premium in salary to retain them. What is important to remember: if the supply of the skilled-labor in a pursued industry remains unchanged, the bargaining power of this skilled-labor will be increasing and eventually lead to salary raise.
3. Company – Which phase is your company encountering regarding the business life cycle?
The business life cycle refers to the progression of a business and is commonly divided into five stages: Launch, Growth, Shake-out, Maturity, and Decline. Every company is situated at a different stage at different time.
Generally speaking, many startups are located at Phase One – Launch. During this phase, it is impossible for a company to finance debt due to its unproven business model and uncertain ability to repay debt. With the negative profit margin, it is hard for start-ups to pay well when encountering phase one. At the same time, if your company is encountering a declining phase, whereas, there is no future plan about business reform or revolution, it is very likely that the company won’t be able to offer a high salary or any employee welfare.
Your company’s position in the Business Life Cycle is therefore an important topic to take into consideration. But not only. Culture and value, size of business, product, market share and growth are some factors that you should pay attention to. In most of the case, the more sizable and profitable, the higher the salary.
4. Position – Can your role create extra value for your company?
In this ever-shifting business environment, people can survive only when they got the necessary skills to excel in certain roles. When looking at the corporate structure of a company, you can observe that there must be some core positions. These “core positions” determine the highest-level decision making and contribute to the most important portion of the company’s profit and daily operation of the enterprise. Generally speaking, the wages of employees in these positions are relatively high to maintain the working incentive.
So, before going to your boss or the HR and ask for a salary raise, make sure that you asked yourself those questions and that the time is right!
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