In a NutshellIf you'd like to be making more money (who doesn't?), you may be considering two strategies: changing jobs or asking for a raise. There are pros and cons to consider for both.
You may have heard this one before: You’ll never get the raise you want unless you switch jobs.
However, this may not be true. According to a salary analysis of 22 million private-sector workers by ADP, a payroll processing company, full-time employees who changed jobs saw their wages grow 4.9 percent on average in last year’s third quarter.
Compare this to the 4.3 percent earnings increase for those full-time employees who held on to their jobs.
While switching jobs can appear lucrative, it may not always be the best move. So aside from how long you’ve spent in a job, what are some other things to consider when pursuing a higher salary, whether it’s at your current company or elsewhere?
Changing jobs can be tough — there may be a learning curve and a period when you’re the new kid on the block, trying to understand how everything works and your place within it. Not only that, but you may feel you have to prove yourself in the beginning of a new job, which can be stressful.
However, depending on your industry and how long you’ve worked somewhere, you may be able to negotiate a higher salary right off the bat by going to a new company.
“Employees often do better financially when they change jobs (as opposed to getting an internal raise or promotion), because there’s more negotiating power with a new company,” says Tim Toterhi, human resources professional and author of “The Introvert’s Guide to Job Hunting.”
Probably the biggest gain from changing jobs periodically is the potential salary increases over time and how they can affect your net worth and earning power throughout your career.
While the financial gains could be significant, money isn’t the only thing you should consider.
“Employees should consider the whole picture before bolting. Items like commute time, benefits, new manager and culture should play into the decision,” Toterhi says.
Additionally, some recruiters may not take you seriously if you’re considered a job-hopper or someone who’s not in it for the long run.
There’s no standard definition, but people who change jobs every one to two years may be considered job-hoppers.
However, being a job-hopper may not be a deal breaker.
“A good recruiter can work with a less-than-linear history. On the flip side, if you’re a job-hopper because you’re indecisive about your career goals or you ditch a job the moment it gets tough, recruiters will easily recognize that and won’t work with you,” says Lauren Milligan, career advancement coach at ResuMAYDAY.
Asking for a raise
Asking for a raise in your current job can help you avoid the hurdles of switching jobs and allow you to stay put, but at a higher salary.
There may also be opportunities for internal promotions that can lead to a significant pay increase. Some companies may prefer to promote internally — a University of Pennsylvania study found that workers promoted into jobs had significantly better performance than workers hired into similar jobs for the first two years.
Consider Milligan’s advice when trying to figure out whether to ask for a raise, “My words to live by: The answer to the unasked question is always ‘no.'”
While asking for a raise can seem scary, it can be an important step for you to take in order to avoid wage stagnation. It’s also important to be clear about what you’re asking for and make sure it’s realistic within your market.
Asking for a raise, or negotiating, is more of an art than an exact science. Go to the negotiations prepared to handle a variety of situations:
- What if they say “no”? Will you walk away or ask for a compromise?
- What if they say “yes”? You can say, “Thanks so much for this opportunity. I look forward to growing with the company.”
- What if they want to compromise? Have your minimum and maximum salary range in mind and any other perks you’re willing to go to bat for.
Keep in mind that it’s unlikely that you’d be able to double your salary in the same position. To find out average salaries in your field and geographic area, consider checking out sites such as PayScale and Glassdoor.
When asking for a raise, you’ll want to have a specific number in mind. Most importantly, you’ll likely have to build a case for yourself proving why you deserve a raise.
You may want to avoid framing your request by saying you have out-of-control credit card debt, need to buy a new car, or you’re helping a family member pay some medical bills.
“You need to have compelling reasons for why you deserve — not need — a raise,” Milligan says.
Document how you’ve been an asset to the company and include specific times and situations when you’ve gone above and beyond your job duties.
Milligan adds that there may be other things you can negotiate as well, including paid vacation, personal days, company stock or stock options, flexible hours or telecommuting, continuing education and bonuses.
If you don’t get exactly what you want in the form of a raise, you don’t have to walk away empty-handed. You can ask for support in other ways as well, such as having a flexible schedule or additional personal days.
In general, internal raises tend to be smaller than what you can negotiate elsewhere. Asking for a raise and staying in your current job could mean missing out financially, but it could be lucrative in other ways, depending on the company and your current position.
If you’re wondering whether you should change jobs or ask for a raise to maximize your salary, it will depend strongly on your personal situation. Maybe you haven’t been in your current position long enough to have the leverage to negotiate, or perhaps moving jobs in your industry isn’t likely to be lucrative.
Money isn’t the only thing you should consider; benefits, working environment and overall happiness can also have an effect on your decision.
If you’re happy with your current position and have room to grow at the organization, asking for a raise could be a logical next step. Weigh the pros and cons of each option and be realistic about the outcome.