My first two jobs didn’t allow me to negotiate salary. One was an hourly rate with performance pay. The other was an AmeriCorps fellowship, so I got a “living stipend” of 105% of the poverty level for my county. Yes, that was about $11,000 before taxes.
After my AmeriCorps fellowship, I applied and was hired into the organization where I did the fellowship. Sadly, I honestly thought I negotiated my salary on this one. However, when they finally offered me the job, the salary was 12% higher than what I’d asked for. FAIL…
It is sad to look back and realize that I was one of those women who didn’t know her worth and wasn’t confident enough to ask for what I deserved.
During my four years with this organization, I received a couple of small cost of living increases and one significant raise (about 10%) when I transitioned to a more senior role. After 4 years there, the organization hit hard times and needed to downsize. At that point, I was laid off.
This created a lot of uncertainty for Corey and me. We weren’t sure how long it would take to get another job and what job that might be. It wouldn’t take a rocket scientist to realize that this was a low point in my career, or at least I thought it would be.
Now, this could be a sob story about how unemployed life is hard, but it’s not.
Since I was laid off 4 years ½ years ago, I have increased my salary by over 100%.
Increasing your savings rate is the most critical step to help you achieve Financial Independence. Remember, the savings rate equation has two parts – increasing your income and reducing your expenses. Therefore, if you can negotiate a salary increase, you could dramatically increase your savings rate.
In this post, I’ll share with you what I did to increase my salary and takeaways that will hopefully be generalizable for most roles and industries. Since I work in HR, everything I did will not apply directly, but I am confident that you will walk away with actionable tips for increasing your salary.
How did I increase my income by over 100% in 4 years?
Before I get into specifics, I want to give a disclaimer that I’m not going to share specific numbers. I will refer back to my salary before the layoff. I will share the amounts using the percent change in pay rate from before the layoff.
Further down in the article, I have included a table, so that you can see the changes in one place.
Timeframe: First 6 months after the layoff
Reason for Salary Change: Getting a job as a Contract Consultant
Change in pay rate from before layoff: 75% increase (although comparing contract to salary is not a great comparison)
Getting laid off is not what anyone wants to happen. However, I was more prepared for a layoff than most people would be.
I had just completed my Master’s degree about six months before the layoff. After graduation, I was planning to seek out HR and talent focused work. I had decided that I’d stay in my job at the time because it would allow me to transfer to the Boston office. To me, it was worth having stable employment during the move.
After we settled into Boston, I started looking for a new job in the field I wanted to be in.
When I found out about the layoff, I was in the interview process with a handful of different organizations. When I shared with one of the organizations that I would be leaving my current role and didn’t have another job lined up yet, they offered me a contract consultant role on the spot because they were short-staffed for the summer.
I started this contract consultant role the week after the layoff. Although comparing a salaried job to a contract job is like comparing apples to oranges, I will say that this organization paid me an hourly rate that was 75% higher than my previous hourly rate.
Because contractors pay self-employment taxes and aren’t offered benefits, I would expect the hourly rate to be quite a bit higher than a salary.
While I wasn’t ultimately offered a full-time role at the organization, I truly appreciated this experience. It not only provided me with income (that was much higher than I’d previously received) during a time I wasn’t working, it helped me build valuable skills to launch me into my next role.
Timeframe: First year at current employer
Reason for Salary Change: Negotiating Starting Salary
Change in pay rate from before layoff: 28% increase (although decrease from contract pay rate)
Since the consulting role paid me at a much higher rate than my pre-layoff role, it did provide me with a bargaining chip to negotiate my starting salary going into my current employer. I also did my research using non-profit salary surveys to determine what a reasonable starting salary would be.
They initially offered me a salary that was 23% higher than my pre-layoff salary. I negotiated for an increase, and we settled somewhere in the middle – 28% higher than my pre-layoff salary.
While I was hoping for a higher offer, I had only been a contract consultant, at the much higher pay rate, for 4 months and this new role offered excellent benefits, so I decided to accept it.
Timeframe: Second year at current employer
Reason for Salary Change: Promotion (and pay equity)
Change in pay rate from before layoff: 60% increase
Approximately one year in, I received both a promotion and a salary increase that was 60% higher than my pre-layoff salary.
You may be wondering how this happened so quickly. There are a few reasons:
- I was hired on as the organization’s very first full-time HR person during a process of growth. During my first year, the organization grew by 25%.
- I was able to add significant value to the organization, so much so, that they realized that they had hired me into a role that was more junior than my qualifications. They wanted to rectify this at the first opportunity for promotion, which was one year in.
- During this time I helped the organization create a compensation philosophy.* Because the organization didn’t previously have a standard way of setting salaries, we realized that our pay levels were inconsistent. According to the philosophy we created, some team members, including myself, were below the set ranges. Therefore, all of those people also got significant salary increases.
*Compensation Philosophy is the consistent process or standard by which an organization sets salaries to ensure pay equity across teams and role. Organizations can choose either a strategy that focuses on internal or external equity.
An internal equity approach usually means that there are salary ranges or grades, where people in similar roles make similar amounts of money. An external equity approach usually means that the organization sets salaries based on what the external market will pay the specific role and level, and then, ensures that similar performers are paid at similar percentiles of what that role gets paid in the market.
Timeframe: Third year at current employer
Reason for Salary Change: Cost of living adjustment
Change in pay rate from before layoff: 64% increase
At the two year point, I received a small increase to account for both standard of living and some increased responsibility.
Timeframe: Fourth year at current employer
Reason for Salary Change: Increased Responsibility
Change in pay rate from before layoff: 80% increase
During this year, one of the organizational priorities was to create clearer career pathways for our operations roles. HR is an operations role, so I was pretty excited about the opportunity to gain more clarity about my career path.
Because I lead the HR function at the organization, I was also in charge of coordinating this process with the Directors of each department. This was exciting but also somewhat awkward.
That’s the weird thing about working in HR is that you often do things that will benefit you, but you can’t ever let on that you know they will benefit you or make people think that you are doing them for yourself.
My boss was supposed to create and document the career path for my role. However, I knew that he was swamped because he was also creating the career path documents for both the finance and the administrative teams.
Therefore, I offered to “help him out.” I asked if he would like me to take the lead on creating the first draft of the HR career path, and I would get his input and feedback along the way.
Clearly, he said “yes,” so I was on my way…
As part of this process, I used professional association websites to research the competencies required for various levels of HR roles to help document the responsibilities at various levels. Through this process, I was able to demonstrate that I was already doing some of the responsibilities of a more senior position.
I also went above and beyond. I also offered to do the research needed to propose the comparable roles in the job market for each level on the career path. This helped to align the HR career path with the organization’s articulated compensation philosophy. Through this analysis, I was able to show that, based on my current responsibilities, the pay range for my role should be higher than my salary at the time.
Although they weren’t quite ready to promote me to the more senior position, they did increase my salary to 80% higher than my pre-layoff salary.
This process was also constructive because it gave me a platform to speak candidly with my supervisor about what it would take for me to be promoted to the next level.
Timeframe: Halfway through the fourth year at current employer
Reason for Salary Change: Promotion
Change in pay rate from before layoff: 102% increase
Six months later, I was finally promoted and received a salary increase that was 102% higher than my pre-layoff salary. Because I had already laid the groundwork earlier in the year through my research to help create the HR career path documents, I did not feel the need to negotiate. In fact, upon promotion, I was expecting the raise to be to the bottom end of the range for the role since I would be new into the role. However, what they offered was 4% higher than what I was expecting.
Had I not done the research and put in the work, I doubt I would have received the promotion or compensation increases of this magnitude.
Here is the overview of my compensation increases in the last 4 ½ years.
|Reason for Salary Change
|Change in Pay Rate from Before Layoff
|Change in Pay Rate from Previous Salary
|First 6 months after the layoff
|Worked as a contract consultant
|1st year at current employer
|Negotiated starting salary
|2nd year at current employer
|3rd year at current employer
|Cost of living adjustment
|4th year at current employer
|Halfway through 4th year at current employer
7 Actions You Can Take in any Industry to Increase Your Salary
1. Invest in education and professional development
After I was laid off, I am very fortunate to have been able to move into an HR role, which was what I was most interested in doing. I had not previously worked in HR, but I had the opportunity to take many graduate school classes (including my master’s thesis) that enabled me to build the knowledge and skills I needed.
While I wasn’t yet pursuing FI at the time of graduate school, I am thankful that I was able to graduate without loans. I did this by going to an in-state school, taking classes part-time at night, and working full-time.
While I don’t advocate that everyone goes to graduate school, I do believe that everyone can continue their professional development.
Here are some ideas for you to continue your professional development:
- Read books and articles related to your field of interest as well as management and leadership.
- Join a professional association. I am currently a member of the Society of Human Resources Management. This membership provides me with various benefits, such as weekly emails about best practices in the field, access to information and materials, and the opportunity to attend conferences and other events.
- Attend conferences or training or take an online course
Sometimes your employer will even pay for part or all of the trainings, materials, or memberships if you ask and can demonstrate how it will help you do your job better.
2. Find contract work between jobs (or build a side hustle) to continue building your skills
If you are between jobs and not working, one way to continue to build your skills is through contract work. As you put yourself out there doing informational or official interviews, if you really connect with someone, you could offer your services as a contractor for a short period. This could potentially lead to a job opportunity or help you build skills to land your next role.
If you decide to pursue roles through a staffing agency, they might have a list of short-term contracts that they are trying to fill.
If you have a side hustle, you might be able to leverage that experience into a full-time job. Mr. Fioneer leveraged his side hustle as a personal finance blogger to get his first operations job that focused on finance, technology, website, etc.
From an HR perspective, this is only a good idea if you are planning to do this short-term (or as a side hustle) while you are looking for a long-term opportunity. Having a lot of short-term contracts on your resume can be a red flag for recruiters in the future unless you can spin this experience as work you did under the umbrella of your own consulting company.
3. Seek out growing companies or organizations where your responsibilities will expand over time
This is perhaps the most important one of all. If you want to see your salary dramatically increase over a short window of time, find a company or organization that is at the very beginning of its growth process. In my organization, I joined as their very first HR person when the organization had about 40 people. After 4 years, the organization has 65 people.
Because Mr. Fioneer’s organization is also in a period of growth, he has seen his salary increase by almost 200% in 6 years. He joined his current organization six years ago as the FOURTH staff person. His organization is now 750% larger (and is still growing). He is now the right hand of the CEO. It’s been incredible to see this happen.
4. Negotiate your starting salary using research
You should always negotiate your starting salary unless, of course, the company tells you that they have a policy of no negotiation. That is rare. From my experience in HR, starting salary offers are usually lower than what is possible because companies expect candidates to negotiate. Companies will often make offers with wiggle room so that when the candidate negotiates and is offered a higher salary, they will join having favorable views of the company.
I’ve been on both sides of the salary negotiation. I’ve made offers and negotiated with candidates, and I’ve negotiated my own starting salaries as well. Here is my best advice for salary negotiation:
Do Your Research
Doing your research will ensure that a role aligns with the approximate salary range you are looking for. To do this, you should do two things:
- Review salary surveys to see what the role would pay in the job market, using websites like salary.com or find a non-profit salary survey for your state or region (such as this salary survey for nonprofits in New England). This helps you know what is realistic.
- Research the specific company or organization using Glassdoor and for non-profits, look at their 990 forms (which share salaries of highest paid employees and can be found on Guidestar). While this research won’t show you every role and the information might be slightly outdated, it will at least give you an indication of whether this company pays at, below, or above similar jobs in the industry.
Both of these will give you a good indication of what you could expect salary-wise from the organization or company.
Express appreciation during the initial offer conversation
Never negotiate in the initial offer conversation. When they share the offer, let them know that you are very excited that they made you an offer, ask non-salary related questions you have about the company/organization, and indicate that you’d like a few days to think about the offer and additional questions you might have. You may also want to take a moment to schedule a time to reconnect over the next few days.
Negotiate salary in your second conversation
Again, start by sharing how excited you are about the offer. If the offer is significantly lower than what you were looking for, you might want to to take an approach of saying something like, “I’d like to be able to accept this offer, and I’m hoping that we can work together to come to a solution that would work for both of us…”
If the offer is slightly lower or about where you want it to be, you could jump right into the negotiation, by saying something like, “I’d like to discuss the starting salary for the role. Because of the experience that I have with X, Y, Z, I was hoping for a salary that was closer to __________.” You can then elaborate on your experience, how it would be useful to their company/organization, and how it would enable you to hit the ground running. Then, end by saying, “Do you think an adjustment of starting salary would be possible?” Full stop.
It is unlikely that the person making the offer has the power to decide on a salary adjustment at that moment. Very often, they’ll need to run it by their supervisor or HR (or they will at least tell you that so that it seems like they are playing hardball). They will then likely come back to you with an adjusted salary. If it’s to your liking, you can accept it. If it’s not there yet, you can repeat the process sharing different things; or negotiate for other perks like a signing bonus, relocation assistance, flexible work schedule, or extra vacation time.
I would recommend practicing your salary negotiation with your partner or a trusted friend before having the conversation.
5. Learn about your company’s compensation philosophy
Even if you don’t work in HR, there are many things that you can do to learn about your company’s approach to compensation. If you work in an established organization, there’s very likely something in the employee handbook about when compensation adjustments are made and for what reasons. There also might be information available about salary ranges for different roles.
If you can’t find information about one or more of these questions, don’t wait until you are ready to negotiate your salary to ask about it. Ask your manager or HR these questions well before you plan to ask for a raise.
This inquiry-based conversation will help to bring their guard down because you aren’t asking for anything at the moment. Then later, you’ll have the information you need to ask for a raise that aligns with their process.
6. Build a strong relationship with your manager and ask lots of questions
Focus on building a strong working relationship and open communication with your supervisor, so that you can have regular conversations about your career development.
Once you’ve built a strong working relationship with your supervisor, you can ask them questions like:
- How can I advance in my career within or beyond this company?
- Can I take on additional responsibilities? What can I do more of to help you and the team succeed?
- What would I need to do to deserve a raise or a promotion? (And share your own ideas)
- What is the appropriate moment to ask for a raise?
All of these questions will make asking for a raise feel less confrontational and more collaborative.
7. Finally, when asking for a salary increase in your current organization, depersonalize the ask (as much as possible)
While this piece of advice is more critical for women and people who work in HR, operations, or finance, aspects of this could be relevant to anyone.
As you heard from my story, I took a very communal approach to increase my salary and never actually directly asked for a specific amount. I took this approach because I thought it would be most successful for me as a woman working in HR. In my research around compensation philosophy, I demonstrated that many people (including myself) in the company were being underpaid.
When I was creating the HR career path document and compensation ranges, I was doing it for the HR department. I admit that I took this communal approach to an extreme that I don’t believe that everyone needs to. Even though this has been a successful approach for me, I may also choose to do more individual advocacy in the future.
Regardless, I would encourage you to depersonalize the ask at least somewhat. Imagine that you are negotiating salary on behalf of someone else instead of yourself. My best advice would be to be as objective as possible when communicating the ways you’ve increased your responsibility and contributed to the success of the team. If possible, align these things with both your market research and the organization’s articulated compensation philosophy.
Try to make them feel like you are helping them do something that’s right for both you and the company.
Things NOT to do when negotiating compensation
- Don’t compare yourself with other people. For example, it wouldn’t help to share that others who graduated from your MBA program are on average making more money than you. This is not a good argument because people work in various fields and industries.
- Don’t share if you know someone else’s salary, and don’t use that as a reason why you deserve a raise. You should focus on your growth and accomplishments only.
- Don’t talk about how you need more money because of your expenses, especially if you haven’t dramatically increased your responsibility or improved your performance. If you don’t deserve a raise but feel you need more money, find a new job, a company that pays better, or start a side hustle.
Increasing Salary is Important but not Everything
We know that it is easier to achieve Financial Independence with a higher salary because it enables you to increase your savings rate.
Before seeking a salary increase, it’s important to consider whether what comes along with the increase is worth it to you. Sometimes a salary increase is only a recognition of what you are already doing. If so, that’s great! However, if seeking a salary increase means that you’ll need to work more extended hours than you’d want to, work in a more stressful work environment that you can handle happily, or do something that you don’t enjoy, it may not be worth it.
As a Fioneer, happiness both along the journey and after achieving Financial Independence is the goal. If seeking a salary increase doesn’t align with that, you may want to consider other options.
What other tips do you have for increasing your salary or negotiating compensation?