Know Your Market Value: Step #1 in the Pay Raise Process

This lesson is a complement to Step 1 and its worksheet in the free Starter Course.

The market value of your job is the key reference point from which to assess your current salary and negotiate your pay raise.

You’re probably familiar with market value as it relates to buying a home or a used car. So if your neighbor is selling his car and you’re interested in buying it, you’ll go to the Kelley Blue Book website to check its market value.

The car’s market value will vary, of course, depending on its market demand. Is it an Acura or an Audi? Is it two years old or 10? Does it have low mileage or high? And so on.

From all those variables, you’ll determine the market value price range for your neighbor’s car using the Kelley Blue Book data. Now you have a reference point from which to either accept or negotiate your neighbor’s asking price.

Your Job Has a Market Value and You Need to Know What It Is

Likewise, your job has a market value range, and your salary is largely determined by the market demand for that job. What would an employer pay today to hire someone to do your type of job?

(Another thought-provoking way I like to ask the question: “What would an employer pay today to hire a man to do your type of job?”)

Variables include level of education, experience, measurable achievements, geographic location—you get the idea.

All the pay raise advice you’ve ever heard or read says things like “be prepared” or “do your homework” or “research the market.” What they mean is know the market value of your job! 

You need that reference point to begin the process. Without it, you have no basis or anchor from which to negotiate a salary increase.

5 Ways + 1 More Challenging One

You'll find five ways to find out how much you're underpaid in the Step 1 worksheet inside the free Pay Raise Strategy Starter Course). That's an excellent start to getting your numbers. But there's one more way...

See if you can find out what your current employer is paying a new hire to fill a position like yours. Of course, you’ll need to be discreet with this one.

If you discover that a new-hire salary is near or above (it happens) what you’re making, add that information to your other research; don’t use it as a sole source.

And here’s a warning: don’t use specific information about a specific co-worker’s salary as the reason that you should get more. That would only sour trust and relationships.Your negotiations for anything will go better if there’s a trusting relationship in place, so you don’t want to compromise that.

When it’s time to bring up the pay disparity with your manager, present the collective data and show how your salary is lagging behind the industry standard.

How to Find the "Right" Figures

Here are a few issues you might face as you complete the market value assignment:

  • What if my job title can’t be found among the data sources?
  • Or the right job title match doesn't match my position’s scope of duties?

In those instances, aim to get salary ranges for two or more jobs that reflect your job responsibilities.

In fact, you might be able to make a case that you’re filling a broader role than is typical for your type of job. That in itself could be reason to press for higher remuneration for the value you’re bringing to the position.

  • What if the salary range figures I surface are too broad to be useful?

One woman told me that she found a range that spanned more than $50,000, from the low end to the high, which left her confused. Yet her salary matched up best with local data findings, which had a more manageable $10,000 salary range. That told me that the local data was probably the most reliable and she should use that.

Market Value → Better Raise Results 

As you complete your research, keep this in mind: researchers have found that women can improve their negotiation results substantially when they use market information to set their goals.¹

In other words, if your salary lags behind market value, and you make a solid case for earning more using objective, third-party data, it’s almost like it’s not you, the individual, asking for the higher salary; it’s simply a market correction that your company needs to make to remain competitive as an employer.

This is a nice example of a basic negotiation principle²: separate the people from the problem. You’re simply negotiating on the merits, and third-party data reinforces the merits of your request. See how that works?

From what I’ve seen among clients, for some managers, that type of objective information carries enough weight to allow for simple agreement. Mission accomplished.

You're On a Treasure Hunt

You're On a Treasure Hunt

If it helps, think of this assignment as a treasure hunt, because in fact, it could lead you to thousands of dollars more in earnings a year.

Some of the most remarkable pay increases I’ve seen among my clients over the years have come from using market value information. I’m talking about salary increases of 10%, 14% and 17% and more.

It’s a bummer to realize how much you’re being underpaid—if that's the case—but your focus now is on correcting the situation and moving forward with pay parity and more. Press on!

NOTES

1. Linda Babcock and Sara Laschever, Women Don’t Ask: Negotiation and the Gender Divide* (Princeton: Princeton University Press, 2003), 137

2. Roger Fisher, William Ury and Bruce Patton, Getting to Yes: Negotiating Agreement Without Giving In, Third Edition (Penguin Group, 2011), 19

* The later paperback edition has a different subtitle: Women Don’t Ask: The High Cost of Avoiding Negotiation and Positive Strategies for Change. Recommended reading.