Career Advice: How to ask for a raise?

[NoiseBoy]

At first glance, my question doesn't seem like it belongs on an ER forum, but bare with me for a paragraph or three while I try to explain why I'm asking this user community for their input.

My target FIRE date was March 31, 2020. Because of the Covid situation (nothing much to do) and working 100% from home, I've been in One More Month (OMM) mode since April. Another reason to keep plugging along was the hope of getting a buyout offer, but that appears to be pretty unlikely now. I have been planning to FIRE this year for a while, so I believe that I am ready financially. I will have a company pension that is enough to cover my basic needs, my savings, and company supported retiree health care.

So why am I asking for advice on getting a raise? There are two main reasons. First, due to cost cutting measures, my projected income for 2021 is less than half of my total compensation package from 2019. Since we've already received our profit sharing payouts this year, I am only working for my salary now (no profit sharing possible in 2021, pension frozen in 2019.) The second reason is that I've learned about some upcoming resource changes that will impact my team, and me especially since I generally handle the onboarding and training. The cost savings for the resource changes will accrue above me and I am happy with the current suppliers, so ugh.

And that brings me to the subject of my post. I think that I may have some leverage with management in that, I am perfectly willing to retire and walk away, unless they pay me more to put up with the resource churn. I could be totally wrong about that, in which case I will retire. But if I can get a significant raise then I would plan to work until next spring and use the extra income to do some remodeling on my house. FWIW - I like my boss and my job is okay. There's nothing really rewarding about it, but not making the daily commute has made the workday better. I have never been successful in this kind of employment situation before, so that's why I'm posting here for advice. How should I approach my boss about this? Am I kidding myself in thinking I have any leverage with management?

Note: In the three previous down-cycles in my career, the company has always offered the pension eligible employees an ER package. However, I realized only recently that they no longer need to do that since they froze our pensions; employees don't have to be shaken loose from their future pension benefit increases anymore.

 

[Spanky]

I am no expert. A common approach is to present the on-going market rate for your kind of work and demonstrate the extent to which your work contributes to the bottom line and/or the company's objectives.

It's a difficult to ask for a raise. Our company is having a hiring freeze, no pay raise or promotion while other companies are cutting pay and laying off workers.

 

[RunningBum]

Seems worth a shot. Have a conversation about your boss about the upcoming change and the amount of extra work it'll be for you. And that your compensation is considerably less. Maybe they can fill in the blanks and offer you more pay. If not, come right out and ask. I don't know that you boss has the authority to give you a raise on the spot, so ask when they can give you a decision. If the answer is No, or "I'll try to get you a raise but probably can't", tell them you're going to give some serious thought about leaving and will get back to them in a week with your decision. Maybe they will be able to give you that raise after all. If not, I'd give them my notice.

 

[NoiseBoy]

Regarding the current business climate, it's not good for my megacorp's core business, but our area is on the services side, which they are trying to grow. We have hired two new FTEs and one agency staffer recently despite cutbacks on the production side of the business. I have 22 years with the company and this is a most unusual down-cycle for me. I like the idea of laying out my case for a raise first, and waiting to bring up the possibility that I might retire later, if my boss comes back with a negative response.

My ER plans included trying to build a hobby business around providing sound systems for live music events and international travel. So yeah, that's why I'm willing to keep collecting a paycheck for a while longer. But, if I can't get paid what I was worth in 2019, then I don't want to do the "crap work" that is coming my way this fall.

 

[Spanky]

If you are thinking about retiring soon. A lot of companies are considering on offering voluntary retirement packages.

 

[Buckeye]

Regarding the current business climate, it's not good for my megacorp's core business, but our area is on the services side, which they are trying to grow. We have hired two new FTEs and one agency staffer recently despite cutbacks on the production side of the business. I have 22 years with the company and this is a most unusual down-cycle for me. I like the idea of laying out my case for a raise first, and waiting to bring up the possibility that I might retire later, if my boss comes back with a negative response.

My ER plans included trying to build a hobby business around providing sound systems for live music events and international travel. So yeah, that's why I'm willing to keep collecting a paycheck for a while longer. But, if I can't get paid what I was worth in 2019, then I don't want to do the "crap work" that is coming my way this fall.

Just make sure you are ready for them to let you go after you ask. If you are asking and they say no, they know you aren't going to be there long so they might just make the first move. Are you able to execute a retirement even though they walk you out the next day?

 

[jollystomper]

Just make sure you are ready for them to let you go after you ask. If you are asking and they say no, they know you aren't going to be there long so they might just make the first move. Are you able to execute a retirement even though they walk you out the next day?

+1

I saw similar things happen at my Megacorp.

 

[Starsky]

Responding to your query, by far the best way to ask for a raise is to have a better job offer in-hand - if it's a competitor, even better. The next best way is to have the leverage to retire if you want to. Especially in Megacorps, the salary structure is their rigid fall-back excuse to manage salaries of long-term employees. Exceptions create expectations. What you want may be hard for them to deliver without a promotion. (OTOH, you have a steady paycheck and a pension! In these times, that's considered lucky.) Once you ask, you'll need to be prepared for some fallout.

Even if you are considered a key employee by the company, it seems like it would be very hard to successfully argue for a raise in this business climate without some wildly compelling sales numbers, or other solid businesses arguments to make your case. This is even more true if they know your are considering retirement with a full pension. It's one less employee buyout to worry about. Since live music and international travel will likely be recovering for a long time, perhaps you could negotiate more flexibility in your schedule to build your hobby business on the side before you get out. In the meantime, and with this economy, maybe you'll get the buyout offer you've been waiting for sooner rather than later.

I'd hate to have to go back to work with COVID on the rebound. Good luck and good health to you, whatever you choose!

 

[NoiseBoy]

Regarding a buyout, management has communicated that they have no plans to offer a package. In the 3 prior down-cycles that I've worked through, the ER packages would've long ago been offered, so I tend to take them at their word. Best guess is that they are simply waiting for us older, pension eligible workers, to realize that we will be working for a lot lower compensation, and to hit the Retire Now button.

As to being asked to leave immediately once I indicate that I might retire if I don't get a raise, I'm ready. I talked to a retirement advisor last year and made sure that I understood my benefits correctly. My pension is nearly equal to my starting salary with megacorp in 1998! I have my savings, plus another civil service based pension that I can start at 62. And Social Security (reduced by WEP.)

For the raise I want, they will have to promote me. It would be to the first level of supervisory management, but there are plenty of non-managers with that pay grade in our organization so it would not be setting a precedent. However, I agree that it is unlikely they will agree to pay me to stay. My thinking is, why not ask? If all I get is a swift kick out the door, it will end my indecision.

 

[CardsFan]

To OP:

If you are truly FI, and were looking to retire a few months ago anyway, I guess asking for raise can't hurt, even if you are shown the door that day.

If it were me, and it isn't, I would tell my boss I plan to retire, but if they want to retain mean for a period of time on a contract basis, I will listen to an offer.

IF you are FI, then what ever you make over the next year will have no real effect on your retirement. My idea just let's you bow out gracefully, and not confrontational, but that is your call.

 

[OldShooter]

Having spent a career in management I would suggest you consider doing it differently:

Similar to @cardsfan's suggestion, I would tell them that you're ready to retire but that you would prefer to go to a consulting position where you work fewer hours but get paid something based on their fully loaded labor rate -- maybe 250% of your current salary. This way your boss gets a headcount reduction that he might otherwise have to make by laying someone off. Also the fully loaded labor rate is kind of an accounting fiction but it can make the company's panjandrums feel like your cost to them won't be changing. Finally, gigs like this can become quite comfortable for management and can last a long time.

I would not "ask for an offer." I would state a number that can be backed up by the accounting calculation. "On a fully loaded basis I'm costing you around $200/hour right now, so I am thinking that $175 would be fair." This is not all gravy of course because you will have to pay self-employment tax. You'll also be paying health insurance but that may be the same as if you retired, so not really a factor.

 

[CardsFan]

I would not "ask for an offer." I would state a number that can be backed up by the accounting calculation. "On a fully loaded basis I'm costing you around $200/hour right now, so I am thinking that $175 would be fair." This is not all gravy of course because you will have to pay self-employment tax. You'll also be paying health insurance but that may be the same as if you retired, so not really a factor.

Fully agree. I said ask for an offer, but that was me, and I really just wanted to retire. If you really want to keep working, at a rate you like, Old Shooter's idea is good. I, personally, didn't do that, for fear they might say yes. Quite frankly, when I thought about it, I could not come up with a number that would make me happy.

 

[NoiseBoy]

I would not "ask for an offer." I would state a number that can be backed up by the accounting calculation. "On a fully loaded basis I'm costing you around $200/hour right now, so I am thinking that $175 would be fair." This is not all gravy of course because you will have to pay self-employment tax. You'll also be paying health insurance but that may be the same as if you retired, so not really a factor.

First of all, I'd like to say thank you to everyone who has chimed in with their thoughts.

My thinking on continuing to work versus retiring is that, given the current situation in the world (reduced opportunities for doing many of the things that I'd planned to do) why not keep working until things open up a bit more? Since I'm working from home, it's not that hard to get up, make a pot of coffee and login.

The crux of the issue is that I really don't want to deal with the headaches that are coming my way and certainly not for significantly less money than they have paid me to do this job in the past. I like the idea of going to my boss with the fact that I'm ready to retire, but willing to continue working on the team but in a different role. Ideally, I'd retire which would put me on the retiree health care plan and start my pension, and then he would hire me back part time at a rate close to my fully burdened rate and I'd work 20 hours a week. I think this approach has a better chance of success than getting a significant raise. Hmm....

 

[CRLLS]

As you say, you are wanting your 2019 income in 2021. It would be a very hard sell to ask for 2x your 2020 salary without some extenuating circumstances. I think your expectations may be a bit unrealistic. It appears that even if you get, say a 50% raise, you would not be satisfied. These situations are the reason that incentives are given instead of just giving out a larger salary. Things can be reduced in hard times.

If your retirement gig of providing sound services is needed for your "retirement plan", I would sit quietly by and wait it out. Having some reduced income to cover expenses is better than reducing your nest egg. Not only that, but it reduces the number of years that nest egg needs to support you. Giving an ultimatum of raise or leave may be just what a company is wishing for. No unemployment expenses. lower fixed operating costs etc, in a difficult economic time. I don't think the company would tell you to leave. They would just wait it out and call your bluff.

Sorry, but time to put your big boy pants on and decide if you can/want to retire or not.

 

[OldShooter]

... I like the idea of going to my boss with the fact that I'm ready to retire, but willing to continue working on the team but in a different role. Ideally, I'd retire which would put me on the retiree health care plan and start my pension, and then he would hire me back part time at a rate close to my fully burdened rate and I'd work 20 hours a week. I think this approach has a better chance of success than getting a significant raise. Hmm....

Since you're thinking about this, here are a couple more points:

If you don't know already, try to figure out what your company's policy is on "double dipping." (Which is what this is sometimes called.) It may be formal or informal. In our area the informal policy for senior government employees seems to be that double dipping is a normal phase of a career. But, whatever the policy is, you should understand it before you open negotiations. Ideally you can point to a more senior employee who got a double-dipping deal. Nothing makes a bureaucrat happier than having a precedent. (And as managers, we all have a bureaucratic streak.)

Second, from Negotiating 101: "If you're not willing to leave the table, you're not negotiating, you're begging." From what you're said you'd be OK with leaving if this gambit fails, but just remember the rule. Also, the truth is that as negotiators we sometimes do end up being beggars. Live can be like that.

 

[rent4ever]

I think a few things are missing that are important to the conversation.

How much $ are we talking about for a raise that you would want?

How much is your daily job going to change/be harder with these fewer resources?

My approaches to these situations is not to walk into a meeting and play hardball with demands, counter offers, etc. I would ask for a meeting with the decision maker, and simply say something to the affect that with the changes you are making by reducing my resources, my job is going to be much harder, longer hours, etc. I enjoy my work, the company and the people. I’m also fortunate to be in a situation where I don’t need to work anymore. As much as I want to continue working and see X project through (or whatever) I am having a hard time justifying it with my reduced salary and now my reduced resources making the job harder. Is there something that can be done to bring that back into balance?

Then I would leave it open so it’s an ongoing conversation. See how they react, start poking with common sense suggestions like the raise, promotion, more vacation time, work from home or other accommodations that you’d like to see. My goal would be to leave the meeting with them knowing 2 or 3 things that you would accept and for them to consider. I would not paint yourself in a corner with exposing your timeline on leaving, that you really want to leave, or threaten to do so if nothing is done. Don’t show your cards. Just start conversation that things are out of balance.

If they don’t act or blow you off, then you can get as aggressive as you’d like to the point if ultimatum.

 

[Mr._Graybeard]

During my last performance review my supervisor said the department's plan was to try to help employees at the bottom of the scale a little more than people at the top of the range, like me. I told him that was cool, I'm probably out the door in a year or two anyway.

When raises came around, I was surprised to see I'd gotten a 5% bump. And that spring he sent me on a professional junket to St. Louis -- an unprecedented perk in my professional life.

Just when you think you have management figured out, they go and do something decent.

 

[Aerides]

I like the idea of going to my boss with the fact that I'm ready to retire, but willing to continue working on the team but in a different role. .

Good approach. And you've said you like you boss, and plan to ER sooner than later.

I don't know how your company is structured, but for mine: If I had an employee who even deserved an extra, out-of-cycle raise, as their boss I'd have to go to bat, hard. I'd have to spend some of my own favor capital with my bosses and peers, and possibly compromise on raises for the rest of my team at the normal cycle. It certainly would have a cost. So, if I won the raise for that employee, and less than 18 months later they said "ok see ya" I'd be burned. I'd have my bosses on my back about how I didn't see that coming.

Anyway, that was my environment. Hopefully yours is healthier!

 

[NoiseBoy]

I think a few things are missing that are important to the conversation.

How much $ are we talking about for a raise that you would want?

How much is your daily job going to change/be harder with these fewer resources?

If I were to keep working full time, the raise I would like to see is on the order of 25%. That would put my cash compensation roughly equal to 2019. There's nothing to be done about the frozen pension benefit, but as an FYI, I did a SPIA calculation on what it would take to buy an annuity for the amount that my pension increased in those last 12 months, and the result was ~$100k.

As far as the job goes, the changes that are coming mean that I will have to onboard and train new staff to replace existing staff, who are already trained and productive. This is all about total contract cost savings, which will not directly benefit my team (our piece is relatively small.) It's rework, essentially, and sadly I just did this for one of the groups starting last November, and it was very stressful. They're staying with the same provider, in that case, but moving to offshore resources, so that means all new staff. So the hard work I did for most of the spring, I get to start all over again in the 4th quarter

I can see that train a comin' and I don't have to let it run me over anymore. At this point, I believe that I will pursue OldShooter's and Cardsfan's suggestion of a contract or part time role. I honestly don't believe they will offer me anything close to a 25% raise to stay full time anyway.

 

[samm]

+1

I saw similar things happen at my Megacorp.

+1

I have seen colleagues ask for raises and get fired (at financial institution) for "not being team players" (aka corporate slaves )

 

[NoiseBoy]

I don't know how your company is structured, but for mine: If I had an employee who even deserved an extra, out-of-cycle raise, as their boss I'd have to go to bat, hard. I'd have to spend some of my own favor capital with my bosses and peers, and possibly compromise on raises for the rest of my team at the normal cycle. It certainly would have a cost. So, if I won the raise for that employee, and less than 18 months later they said "ok see ya" I'd be burned. I'd have my bosses on my back about how I didn't see that coming.

I think your description is pretty close to what the process would be in my megacorp. And yeah, I do not plan to work 2 more years. Ideally, I'd like to keep working until the world opens back up more or the weather improves next spring, whichever comes first. I'm going to list out the duties that I have now which I'd be happy to keep doing, and then meet with my boss and discuss my retirement plans and that I'm open to staying on the team, but in a reduced role, and see what happens.