How to successfully negotiate a salary increment

Negotiating a higher salary starts with thinking about the why, the what and the how much. As Amit Nandkeolyar, associate professor of organisational behaviour at the Indian Institute of Management Ahmedabad (IIM-A) says, it all begins with clarity on knowing your worth, and “finding a way to intersect with your employer’s expectations. What is your focus in relation to the company’s goals? Ultimately, what you’re doing is only a part of increasing their profits or revenues, and employers are paying you back as a function of it. You must highlight that and justify the why."

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It may seem unfair to have to justify the “why"— after all, you did the work all year. But it’s important to clearly communicate the value you are bringing to your manager and the organisation, especially when everyone else in the company is also angling for a raise during appraisal season.

Sonal Agrawal, managing partner of the boutique executive search firm Accord India, suggests doing an honest self-assessment and analysing one’s improvement in order to present a strong case for a raise to the manager. “Quantify your performance and contextualise (the salary ask) with industry benchmarks you have gathered (from research). Then approach your supervisor for an appraisal conversation. Present your case logically and factually, and listen to feedback without issuing ultimatums, which could sour relationships," she says. “If a raise is not forthcoming right away, understand why and ask how you might reasonably earn one—for example, by taking on more responsibility or explicitly defining results. Finally, agree on a review timeline."

Awareness of changes in the industry and processes within a company plays a pivotal role in negotiating a raise as well as professional growth, something Sudha Ramanan (name changed on request), a Chennai-based hospitality professional, learnt during the covid pandemic. “It was a challenging time for our industry," says the 37-year-old. “A handful of expats left India for their home countries. I took advantage of the situation and interviewed for those vacancies, and our company preferred to hire someone internally to fill those positions." She had a track record of being a top performer, but hard times meant the company was hesitant to give her a raise, even though the new role was a larger one. So, she asked for the raise to be moved into a bonus component of 35%, to be paid out only if she met certain targets. They agreed, and she did meet her targets and received the raise.

The pay package does not consist of just the take-home component, according to experts. Both Agrawal and Prof. Nandkeolyar share a tip: look beyond the number in the bank account at the end of the month. There are other categories open for negotiation during appraisals, points out Nandkeolyar, who teaches courses on negotiation analysis and leadership. One could ask for better health insurance coverage or expansion of coverage to other dependents. Another aspect to discuss could be flexible work hours, which one may value more. “Figure out your value, consider the other parts of your compensation—they are all variables to be considered," he advises.

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Whether you want a salary raise, a promotion, more flexibility in work hours or something else that makes you more feel valued at work, there are two crucial factors that should be considered during a negotiation—self-worth and timelines.

To illustrate, K.M., a senior manager at a leading retail organisation in Mumbai who wants to remain anonymous, shares a recent instance when one of his 20 colleagues capitalised on both aspects while negotiating his salary during an annual review meeting. “He (the reportee) viewed appraisals as a long-term game plan," he says. “He had prepared a year in advance." It was a two-pronged approach—professional and personal. During the appraisal process, he set expectations by asking the manager’s goals, the problems in his department, suggested ways to fill the gaps for the year ahead, and ensured the targets were met.

On the personal front, during team lunches and casual office gatherings over the year, he would mention that his children’s school fees had increased, raising his expenses. There were times he would also ask for a mid-year salary correction. “This modus operandi builds pressure for managers. We knew he was a good performer who knew his worth. Managers have an appraisal budget; and after planning every reportee’s increment, we look at the extra money in our kitty and decide who deserves slightly more. This money goes to an exceptionally high performer or somebody we would fear losing to another organisation. My reportee would tick both boxes and usually take home the highest increment. Once, we promoted him to general manager with a 35% increment. The industry standard was around 20%, and anything more than 30% was considered high," says K.M. “But we did it, because he was loud and clear about the effort he was putting into his work, and it really did show."

Retaining a high performer is in the best interest of any manager and organisation. It is up to the employee to take accountability for this as well as get recognition for their work. “At the end of the day, he says, “one who makes themselves most visible gets the gold."

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