Millennial Money: How to ask for a payrise

Tuesday, 3 July 2018

Join our four millennial business reporters on their money journey.

Millennials are ignoring the taboo of talking about your salary and could become richer for it.

When Maddy* sat down to have lunch with the woman whose job she had just been offered, she was surprised when the woman told her what she had earned in the role.

She was even more surprised when she realised it was $20,000 more than what she had just been offered.

This inside information pushed her to ask for more money.

'My past boss told me to always negotiate salary, because if you settle it's saying you're worth that, and that encouraged me to try and barter.'

* Professional women face biggest pay gap, new data reveals

* Millennial Money: Four investments you should be making in your 20s**

Maddy said knowing she would be earning a lower salary for the same work made it worse when the her new boss refused to negotiate.

Her starting salary had big implications for how quickly she would catch up to what her predecessor was paid, because her future pay rises came in automatic incremental steps.

While ignorance is supposedly bliss, knowledge ended up being more lucrative for Maddy in the long-run.

Knowing the job was worth so much drove her to ask for a raise much sooner.

A study from TheCashlorette.com, an American personal finance website for young women, found that 63 per cent of millennials ages 18 to 36 years old told their immediate family how much they earned, nearly half shared the number with their friends and almost a third told their coworkers.

Young men and women are not shy about sharing how much money they make.

This was in stark contrast to the habits of older workers.

In the same survey, only 41 per cent of baby boomers, ages 53 to 71 had shared their salaries with a family, 21 per cent shared with a friend, and 8 per cent had told a co-worker.

While this plays into the stereotype that we're a generation of over-sharers, the millennial propensity to spill the beans means we can at least recognise when we're being left on the lower rungs of the wage ladder.

In some cases, companies have taken it upon themselves to make salary data public.

Marketing analytics company SumAll has offered company-wide salary information in a Google Doc to employees since its first days in business in 2011.

Your starting salary can have big implications on your income for the rest of your career, because from there are usually small proportional increases.

The company's chief executive Dane Atkinson said in a 2014 podcast episode of Planet Money that seeing 'people cry and scream at each other' after finding out the difference in what they were paid prompted him to create a transparent system.

Atkinson attributed the company's low employee turnover rate to the policy.

Recruitment company Hudson's 2018 Salary Guide report found half of workers it surveyed did not receive a pay rise in the last year.

Global HR firm Mercer's annual compensation survey found 60 per cent of pay rises were less than 3 per cent, while about 20 per cent offered between 3 per cent and 6 per cent, and just 11 per cent of pay rises were for more than 6 per cent.

A quarter of workers surveyed expect not to receive a salary increase at all. However, of those who did expect an increase, their expectations were high; 16 per cent expected a raise of at least 6 per cent. Another 44 per cent expected an increase of less than 3 per cent and 15 per cent expect a rise of between 3 and 6 per cent.

ASB chief economist Nick Tuffley said it might not be the worst time to ask for a pay rise.

The current economic climate is a 'bit more favourable' to pay rise conversations, he said.

'We do need wage growth to be a bit stronger simply because inflation is stronger.'

The increasing minimum wage could also bode well for recent graduates, Tuffley said.

'A lot of people just out of university are eligible for jobs that earn well above minimum wage, but increases to the minimum wage tend to filter through and mean employers offer a bit more for starting salaries.'

The steady fall in unemployment made workers more valuable to their employer, he said.

'It means there's a greater risk companies poach employees from competitors. It's more difficult to find and retain employees. These are all things that lend themselves to an increase in salaries.'

Yet, when New Zealand pay rates are compared to wages globally, it's easy to see why so many skilled Kiwis are opting to work overseas.

In 2016, New Zealand's average wage ranked 18th out of the 36 OECD countries.

The average wage in New Zealand was 32 per cent lower than in Australia.

When considering the purchasing power, New Zealand's average wage was just two-thirds the value of the United States' average wage.

ANZ human resources general manager Felicity Evans uses big data to track employee career progression.

And when talking about pay rises, I'd be remiss if I didn't mention the persistence of a gender wage gap.

Lara Poloni chief executive of Aecom ANZ is no stranger to the pay rise conversation, having climbed to the top rung of the corporate ladder.

Women on average earn $300 a week less than men. Over a lifetime this is a difference of $608,400.

This no doubt plays a role in Auckland University Retirement Policy and Research Centre's findings that older women were the fastest growing group in its poverty statistics.

ANZ human resources general manager Felicity Evans is well known in her field as someone who is breaking barriers in how big data can be used to better understand the obstacles to women being paid more.

ANZ tracks the progression of workers to identify if a hiring manager has a bias in promoting men significantly more often than women.

'We've moved across from stop fixing the woman. It's not about the woman being more aspirational or putting herself forward or doing all those things,' Evans said.

'We've moved more toward … how are you creating those opportunities and pathways for women.'

When Aecom's Australia New Zealand chief executive Lara Poloni started at an engineering company she was the only woman there apart from the tea lady.

Since then she has risen through the ranks to be one the industries leading female executives.

Here's her guide on asking for a pay rise:

Know yourself

'Consider your value and contribution to the organisation over a sustained period, gather any supporting material or endorsements that help to demonstrate your value to date.'

Read the play

'Timing is important, so be sensitive to the current financial performance of the business before you ask. If the business is going through a tough time you may need to consider non-financial rewards, such as a mentor, external coaching or a particular position or project you would like to work on.'

Be professional

'Make it clear to the person you are meeting that you'd like to have a conversation about your remuneration, giving both you and the individual time to prepare. Remember to go in with an open mind; it should be a positive conversation about your future not a list of demands.'

Be prepared

'Do your research and be aware of the level of demand in the market for someone with your skills and experience. Take the time to role play with someone outside of the business so you can prepare for likely questions and perfect your key talking points. Consider what you will do and say if you don't get exactly what you want.'

Focus on the future

'It should not just be about the money, be clear about why you want to stay and where you see yourself in the coming years.'

*Name has been changed.