What is Your Market Value?
Before you ask for a raise you must be able to answer one critical question: what is your market value? While you think the place would fall apart without you, your boss is probably thinking of you as something akin to a commodity, and as a commodity you have a market price. Figuring out what your boss perceives this market price to be, will allow you to negotiate from a position of power and to get the highest raise possible.
Here are some tools for identifying your market value:
1. Online Salary Comparison Tools - the easiest and fastest way to get a good idea of your market value is to check-out sites such as Salary.com and Payscale.com these free sites provide a great deal of information regarding salaries in your specific industry. They let you compare yourself to others working for similar sized companies, with similar background, title and responsibilities. Salary.com also offers a paid service which supposedly provides you with even more customization. I did not use this paid service so I cannot recommend it. Starting at these sites you will not only be able to benchmark your salary, but also compare your bonus, benefits and so forth to those typical in your industry. Both of these sites not only provide the average salary for someone in a position similar to yours, but also the bottom and top of the salary range.
2. Industry Salary Surveys - if you work for a company big enough to have an HR department, be aware that those groups often make salary decisions based upon industry salary surveys which they purchase from specialized consulting companies. I was recently able to get my hands on a salary survey for the Silicon Valley and boy, was that survey enlightening. Getting your hands on such a survey may not be easy. The best way may be to reach out to friends and acquaintances who work in finance or HR positions in other companies in your industry to ask if they have access to such data. This data is likely the same data that your employer is using to make salary decisions and as such it is invaluable.
3. Friends & Acquaintances - it is never easy to speak to people directly about your salary. BUT, if you have contacts you can trust in your industry (especially if you work for different companies) consider confiding in them and asking for their input on your market value. One method that I find particularly effective is reaching out to former bosses (who already know your past salary as well as your background) and asking them to estimate your market value. Another method that may work is reaching out to former colleagues from your company, and asking them what they had previously earned when working for the company. Since this is not current data, some may be willing to share the information.
4. Headhunters - headhunters are an excellent source of information, and many of them will be glad to speak with you, especially if you can do something to help them. For example, a few weeks ago I got a call from a headhunter that was looking to fill a certain position. I referred the headhunter to a great contact I knew, and then asked if she could return the favor by giving me some information. She was only too happy to oblige.
5. Interviewing - yes, this one is resource intensive and risky, but the best validation of your market worth is what someone else is willing to pay for you. If you get a written offer from another company, that is the ultimate testament to your value. Nevertheless, I don't recommend this strategy unless you are really interested in exploring opportunities with another company. For one thing, it is unfair to take up the time and resources of this new company. For another, by taking this approach you may be creating a bad reputation for yourself in the industry by needlessly interviewing. Lastly, there is always a risk your employer will find out you interviewed with another company and will react badly to this information.
Instead of guessing what you are worth and brazenly asking for a raise, base your request on facts. Find out what your market value truly is and you'll be able to negotiate from a position of power, while understanding your full range of options.