How often should I negotiate a raise?

Question

Generally speaking, while working in a small company (30 to 40 employees) that doesn't have a policy for raises, how often should I negotiate one?

If this is relevant, I'm a software developer in Europe.

More specifically, here is my situation: I got a new job 22 months ago and was bad at negotiating my salary (partly because I started working in another country where the market was different but most of all because I'm just bad at negotiating a salary).

9 months after that, I asked for a company car and compensation for fuel. I had an ~18% raise (which is not that bad I think).

However, after after a few discussions with colleagues and other people working in the same field as me, and after seeing job offers, I realize I'm still underpaid. I think that if I had another 15 to 20% raise, I would be paid fairly (not too bad, but really not overpaid either) according to the market.

The thing is that I think I could just work somewhere else and get a 20% raise easily. However, apart from my salary, everything about my job is great and if I change, I'm 90% sure I would get something that's not as good. So, I'd like to negotiate a raise with my current employer but is it too soon considering that I have not been here for 2 years and already had a nice raise once?

What could I lose asking too soon?

Thank you.

Answer 1

Your question was,

How often should I negociate a raise?

That has a simple answer: As often as you actually deserve one.

Of course, there are some caveats:

1. Many companies have fixed policies or schedules around raises. You stated that's not the case, so this concern is no issue for you.
2. You really have to be sure you're able to make a legitimate argument. Raises/salary are a negotiation between an employer and an employee, based on the value the employee brings to the company. Make sure you understand the value you're providing, and don't just base your negotiation on "the going rate" for your job title.

To accomplish the second point, be ready to talk about your successes at the company, and be ready to show your growth and increased contribution compared to when you got your prior raise.

I'm editing to make a distinction, as a sort of footnote to my answer. Generally, your salary may increase for one (or both) of two reasons. One, a "raise" based on your increase in value to the company - because you've learned more, gained skills, or otherwise "matured" and become more valuable. Two, cost of living increases to match your salary with inflation. Generally, in most cases, this is a basic expectation that doesn't require "justification" in the sense of showing your increase in value to your employer. I'm assuming you're talking about the former - an actual raise. If you're talking about cost of living increases, then it makes sense to ask/expect for that on a regular basis to match actual increases in cost of living. For instance, in the US, it may be typical to get a 2 or 3% increase annually.

Answer 2

I worked in a young bank for several years and like you, I negotiated a lower salary than many of my peers. I got annual increments but a real 'correction' came only after 4 years, by which time I realised I was still behind the curve. I later got to understand from senior colleagues (during an informal event), that my bosses (despite having fantastic ESOPs) negotiated at least thrice every two years. This aggressive behaviour was seen as a positive by the HR team and more in line with the company culture. Of course, they needed to have a performance to match their demands but ceteris paribus, the unsaid rule was "you only get what you ask for".

Caveat: This was in a rapidly developing country and the bank's margins were growing at 25% QoQ.

In sum, the DNA of the organisation determines what frequency is right. A good way to go about this would be to bring up this topic in informal settings and let your boss know what you're thinking. I did that several times during team lunches and I'd say something like: "My batch mate is already at AVP level and I have some catching up to do" - to my boss/senior colleagues.

Answer 3

In a small company with no formal policy you should make sure you talk about a rase:

1. Once a year. This is to make sure your salary is kept within the bounds you and the company are happy with without having to make large adjustments.

2. When your salary is wrong, i.e. it doesn't represent what you are worth to the company relative to other people of similar skills and experience.

Therefore, ask now. Make sure you explain why you are worth the new salary to the company. If the company doesn't think you are worth to them what you think you could get else where then you know where you stand.