How to Get a Raise
You are reading You Are The Product, a monthly newsletter for product people who want to become product leaders. Every month, I share my experience, material, and advice to help you move up the career ladder and have fun while at it.
I wasn’t going to write about this, but so many people have recently been asking me about how to negotiate a raise when their companies are laying people off, I figured it was worth it.
If you're a product manager or product leader trying to negotiate a raise in this market (or in any market, for that matter), you need to start asking yourself questions that go beyond your personal feelings and dreams of trips to Bali.
Let me explain what I mean.
Negotiating a salary is emotional for most people, naturally so. We tend to look at a money amount as somehow proportionate to our value as humans, and we are of course calculating how well a certain figure divides into our basic survival needs, the comforts and luxuries we want to afford ourselves, and potentially the needs of others in our care.
So people approach negotiating a raise with that backdrop in mind and go through all these scenarios, often burying themselves into a hole in anticipation of disappointment. What I find puzzling is how many people have already given up way before they've even started having the conversation.
What folks fail to consider are two things: context and leverage.
What is the context in which I am asking for a raise?
Are the company's financials good at the moment?
Is the company profitable?
Is revenue growing?
Are we hitting our targets?
Is there budget for raises? Have others gotten raises?
Is my boss a person who would risk political capital to get me a raise?
What is the leverage that I have?
Am I considered an important employee? Does my boss see me that way?
Am I indispensable? How easy is it to replace me?
If I quit today, are there immediate negative effects for the business? For my team? For my boss?
Do I create value for the company?
Would it cost a lot to replace me? Would it take a long time to replace me?
Why should you know the answer to all these questions to ask for a raise?
Shouldn't it be enough that you are a good product person who does their job, and it's been X amount of time since you last got a raise?
Should you just wait for the new review cycle like everyone else?
Look, whatever companies tell you, raises have a life and logic of their own.
First, you can get a raise outside a review cycle if you're valuable enough of an employee.
Second, all of the above questions are what your CFO, your CEO, your CPO, your boss, your boss's boss, your boss's boss's boss, and their accountant are asking themselves.
Third, most companies have tightened the purse strings right now. So you need to consider that.
Put simply, if you want a raise, try to answer all of the above questions. If most of the answers are "Yes," then you should go to your boss now and ask for a significant bump to your current pay.
If most of them is a "No," chances are your boss isn't going to expend their political capital to fight for your raise.
And sometimes you also may just need to wait a little longer.
Or, you know, find another job.
Anchoring Bias
Even if you do find another job, you’re going to have to negotiate the new salary. So before I let you go, let me tell you about anchoring bias. Here’s the Wikipedia definition:
a cognitive bias whereby an individual's decisions are influenced by a particular reference point or 'anchor'. Both numeric and non-numeric anchoring have been reported in research. In numeric anchoring, once the value of the anchor is set, subsequent arguments, estimates, etc. made by an individual may change from what they would have otherwise been without the anchor. For example, an individual may be more likely to purchase a car if it is placed alongside a more expensive model (the anchor). Prices discussed in negotiations that are lower than the anchor may seem reasonable, perhaps even cheap to the buyer, even if said prices are still relatively higher than the actual market value of the car.
In practice, that means that whoever gives the first number sets the anchor.
Always be the first one to set the anchor.
I like to think of this in terms of a private anchor and a public anchor.
Private Anchor
The private anchor — also known as the resistance point — is the lowest amount you’re willing to go. It’s essentially what you need to cover all of your living plus quality-of-life expenses (such as travel or your Netflix subscription). It’s the lowest you’re prepared to go.
Never compromise on your private anchor with yourself. Consider that you need those quality-of-life expenses not as an indulgence, but as compensation for all the hard work, frustration, stress, and overtime you are undoubtedly going to do in most jobs.
Public Anchor
The public anchor is not a single amount, but rather a range where the minimum is ideally at least somewhat above your private anchor. This may sound sneaky, but the truth is you have no idea how much the other side values you or the position in question, and having a little extra wiggle room is not a bad thing.
There’s no real science as to how to set the range, but I tend to keep it fairly wide in the very beginning of a conversation (if this is a new job) where you have little information on what the role might entail (i.e., how much life it might suck out of you).
In an existing job scenario where you’re negotiating a raise, I’d use a single target anchor, but put it above my target raise, because that again creates negotiation wiggle room.
Most people hate this kind of thing, because it’s really all about sales. But if you look at your career (and therefore your job) as a product, then this is nothing personal. Haggling may not be your thing, but you’re not cheating anyone out of anything. You’re trying to get a fair deal.
Let’s Practice
Now that you’re sufficiently confused by the number of anchors I’ve introduced, let’s walk through two practical scenarios. These are purely fictional and in no way related to any real person.
Imaginary Scenario A: Negotiating a Raise
You’re a senior product manager earning between EUR 85-95k p.a. (The amount here is irrelevant. This is a typical salary for a Senior PM in a number of Euro countries. This amount would typically be quite a bit higher in the US, the UK, and Switzerland, depending on company and location.) The company you work for is not profitable, but its financials are good. There is plenty of cash on hand, a long runway, and revenue has steadily been growing quarter-over-quarter for the past year. You’ve gone through a round of layoffs and have reduced your cash burn, which has freed up budget and others have gotten raises.
You are a valued employee, very visible in the company. Your work is recognized as high quality, and your boss regularly speaks well of you. However, in the time you’ve been at the company, your growth has stagnated, and although you’ve done a couple of big things, you haven’t taken any risks, so you’re seen as overly careful. Some folks have wondered whether a more dynamic, less risk-averse PM might not work better in your role.
Let’s interpret the above.
The context is at first glance favorable for getting a raise
However, the company is clearly being conscious of its spending
The PM is valued, but there are lingering questions about whether or not they are replaceable
I find this scenario to be extremely common. This PM typically sees themselves as deserving of a raise. And you know what, they probably are. But unless they have a boss who’s willing to use some of their capital because they really believe in this hire, I am doubtful that it would be easy to get a raise.
What this PM could do is try to take on a larger initiative and demonstrate they are capable of managing risk.
None of this is to say that this PM can’t still try to negotiate.
I’d approach the boss here directly and go in with only one anchor — the actual desired amount — which should be realistic and not major, ballpark ~5% raise. Because this person is doing a good job, and they should be rewarded, but they don’t have enough leverage to ask for a more significant increase. Replacing them would be more expensive than giving them this minor raise.
But this PM should be ready to up their game.
Imaginary Scenario B: Negotiating an Offer
A junior product manager is negotiating their second ever job position in a company. They initially lowballed their ask and went 10k lower than what they actually want. The company they’re interviewing with has made them an offer and used the amount they initially gave. The junior PM now feels like they can’t say no to something they originally asked.
I’m pretty sure some senior PMs reading this will remember doing something like this even after they were no longer junior hires. Product management may be a business function, but PMs are not always businesspeople, and the negotiation muscle gets developed later.
Let’s interpret this situation:
The PM gave away their private anchor and upon realizing that they could get more, felt frustrated
The company wants to hire them, so they gave the PM what they asked for, but they probably have more budget for the role because companies never look for just a junior PM — the budget is typically a range that includes a more senior potential hire
Another extremely common scenario. But a much easier scenario to handle than the previous one.
This PM should thank the company for the offer, and go back asking for more, plain and simple.
Now, this PM may not get the higher end of their public anchor, i.e., the higher amount. Nor should they ask for it in this situation. We’re now talking about +5 to max. +10k on top of the existing offer, and that ask will need to be somewhat justified.
“After having learned more about the role and the requirements, I would be more comfortable with this amount and ready to close.”
“Thank you for the offer. If we could amend the amount to +5k, I would be happy to sign and finalize.”
Etc.
Many ways in which you word this, but make sure you always include that action verb at the end and the promise that you’re making things easy for the person on the other end.
After all, the sunk-cost fallacy will serve you great here, because they’ve already spent so much time and effort on this, I promise you, they’re as eager as you are to get it done with.
And that’s it. Negotiating is really more of an art than a science, but provided you have an understanding of the context, know what leverage you hold, and have an idea of your desired amount and private anchor, you can help yourself and your employer find a win-win scenario here.
All good salespeople will tell you that sales works best when creating wins for all parties involved.
And so it is with negotiation, too.
Disclaimers and Caveats
Folks may not always only be negotiating for a raise on their base salary. You can discuss stock options, vesting periods, vacation days, benefits, or whatever else might be on the table or is already part of the deal you’ve got.
Additionally, I can’t guarantee this advice is foolproof and will always work. More seasoned negotiators will break your anchor, reposition the conversation, and make you forget your first name by the time they’re done with you.
But equally as important — this is not a contract negotiation, however similar to sales it may be. At the end of the day, you always have some bargaining power, some leverage.
And sometimes, although I advise you not to do this — it’s the emotional side of things you can go for. Because maybe your boss just doesn’t want to lose you because it makes their life so much harder.
But be careful when playing this card. Honestly, I wouldn’t. Because there’s so many better things to use in negotiation. Like, say, all of the above.
Good luck out there, and feel free to reply and write me if you have a scenario and want my two cents on how I would handle it!
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Great and practical advice. All scenarios are spot on!! Thanks for sharing Mirza.
So thankful you wrote about this topic really.