Want a bigger pay rise? You’re probably making this mistake

The end of the year is one of the most common times for pay reviews. Many businesses take the time to look back at the past 12 months, review staff performance, make forecasts and provide a small increase across the board.

This is sometimes called a “peanut butter raise” as it’s spread evenly between all workers. And while a benefit of this common practice is that everyone gets a raise, the drawback is that it’s usually so small because it has to stretch across every department.

We are in the midst of a strange economic climate where inflation is growing at a higher rate than annual wage growth, meaning that even if you do get a small increase you can still find yourself going backwards once the cost of inflation is factored in.

The latest ABS figures indicated that prices rose 3.8 per cent in the year to June, while wages only grew 3.2 per cent. And this is assuming you get a pay increase at all.

But if your company does a version of the peanut butter raise every year, there are still several things you can do to position yourself to get even more of the spread.

The most important aspect is timing. Once the pay increases have been allocated, they are usually final. This is because it’s a long process to work through behind-the-scenes, including getting sign-off with the various layers of management before it’s communicated to you.

Reminding them of your importance to the company – without threatening – can sometimes unlock additional benefits.

If you’re angling for a bigger share this year, the best time to influence the outcome are the months leading up the allocation. This is when managers and HR are debating numbers and shifting percentages on spreadsheets. Depending on your business, this can involve reviews, group discussions or ranking the performance of staff to decide whom to give larger shares of the pie.

We’re very close to the end of the year now, so it might be too late to impact a calendar year increase, but another common period for pay rises is the start of the new financial year in July. The discussions for these increases are usually determined in the first few months of 2027, so there’s still time to intercept these.

Your best bet is to understand all the factors that performance will be measured against, and work specifically to improve those. In some businesses, these are raw revenue figures, and in others they might be the results of staff surveys, or other factors you can influence.

When you walk into the meeting to discuss it, come prepared with hard data, like reminding your manager of additional revenue you brought in, or the costs that you save. Don’t make it all about you, instead connect it to what the company is trying to achieve. The more numbers you can quantify, the more compelling your argument.

Demonstrate why you’re difficult to replace. The sheer cost of a good employee walking out the door can be strikingly high. Employers need to advertise, interview, recruit, fill in the gaps and then spend time and money training the new staff member.

Even then, there’s still the risk that they’re not the right fit for the job. Reminding them of your importance to the company – without threatening – can sometimes unlock additional benefits.

The last way to get more than the standard end-of-year pay rise is to ask for a different bucket. The budget that dictates raises is usually fixed, but there are always additional areas that management can tap into, such as allocations for retention, bonuses or promotions that happen outside the usual cycle.

If a small increase has already been decided this year, and you think it’s not enough, start working through the steps above. The peanut butter raise usually gets spread evenly, but there are always a few extra crunchy bits for those who can make the right case.

Tim Duggan’s new book, Clear in Tension: How to get better at conflict, is out now from www.clearintension.com.au.

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Tim Duggan is an author, founder and optimist. He co-founded Junkee Media, is the Chair of the Digital Publishers Alliance and writes the monthly newsletter, OUTLET (One Useful Thing Literally Every Time).