Your money: How to ask for a pay rise - without winding up the boss

Have the confidence to ask for a pay rise - don't expect your boss to come to you. Photo / Thinkstock

So we're living in a "rock star" economy and even Finance Minister Bill English reckons we should all be in line for a pay rise this year.

But how do you broach the subject when the answer has been "no" for many workers for a number of years?

Rowan Tonkin, chief human relations officer and chief investment officer at Turners and Growers, says the biggest mistake people make is to make the request personal.

"A lot of people get into the reasons why they need the pay increase."

But the boss doesn't want to hear that your mortgage payments have gone up or that you are struggling to pay your kids' school fees.

Instead Tonkin says it pays to take a business focus.

"I had one from a staff member recently who submitted a two-page business case."

Tonkin says bosses want to know what the benefits to the company will be by giving you a pay rise.

"What increase are you thinking about and what will that enable you to do. What sort of better returns could the business get?"

Preparation is a big key, he says.

Most companies have formal performance reviews for their staff. But Tonkin says employees should look beyond those reviews and let the boss know what they can expect outside of those goals.

At Turners and Growers managers have to give their staff a rating at the end of the year and that is used as the basis for pay rises.

But motivated staff should not leave it up to their boss to remember what extra projects and responsibilities they have taken on during the last year.

"A lot leave it up to the manager to do - but it's too important."

Tonkin says getting a pay rise is not a given just because you have shown up and done your day job.

So how much should you ask for?

"People always start with a figure in mind."

Tonkin says understanding how your company sets its salary packages can be helpful - are there staff benefits such as superannuation, parking or bonuses as well as the base pay to consider?

For most roles there is likely to be a pay range which your company will pay within. Some are open about this range, others do research but keep it to themselves. If you are at the top of the range then it's likely to be harder to get more money,, says Tonkin, without getting a promotion or taking on more responsibility.

Likewise if you have been doing the same job for seven years you might also find you have hit the peak.

Tonkin says realistically people doing the same job can probably only expect a pay rise of 2 to 3 per cent a year on average.

"The only way you will get a $10,000 pay rise is if you are looking to take on a role with more responsibility."

Companies may also choose to reward staff with bonuses rather than salary increases. That means in a good year they can pay money out but can decide not to in a bad year.

Tonkin says research shows around 40 per cent of companies use incentives like this for all their staff but for many it is just the upper management which are rewarded in this way.

Tonkin says those asking for a pay rise also need to negotiate in a way that doesn't cause a rift in the relationship with their boss.

"This is a very sensitive conversation for both the company and the staff member. You have to be sensible and respectful of each other."

Tips for asking for more money
*Don't make it personal
*What's in it for your employer
*Be prepared to point out extra responsibilities you have taken on
*Have the confidence to ask, don't expect your boss to come to you
*Pick the right time - don't do it when your boss is really busy with performance reviews or at the end of the year, or at the busiest time of year for your company
*Keep the conversation respectful to maintain the relationship