This is a guest post from Lily of The Honest Dollar, a great new personal finance blog.
The most common ways to increase your salary are to get promoted or to negotiate a raise. But promotions don't come along often, and negotiating a raise may or may not result in a salary increase. So what do you do when you want to make more, but you're between promotions and raises? The good news is that you're not out of options. The bad news is that you'll need to get creative and may have to use a little elbow grease.
Low Effort, High Reward
401(k) match. Perhaps the easiest way to get your employer to give you more money is to contribute to your 401(k), if your employer offers a match. A 2007 Hewitt Associates survey [PDF] reports that 98% of employers put some money into 401(k) plans, and two-thirds provide matching contributions. According to Hewitt, the most common type of match is 50% of employee contributions up to 6% of pay. This means that if you make $60,000, then contribute $3,600 to your 401(k), your employer will kick in $1,800. That's free money that should never be left on the table, if you can help it.
Employee referral rewards. Most companies have employee referral programs, where an employee recommends a candidate and earns a bonus if the referral is subsequently hired. This is an effective way for firms to discover great candidates without paying exorbitant headhunter fees. But referral programs are not always well-publicized. Check with your HR department to see if a program exists and what the rewards are for referrers, then consider submitting a few referrals. Tread carefully, since referring a bunch of people who are not qualified to work at your company will reflect negatively upon you.
High Effort, High Reward
Ask for a better 401(k). Maybe your 401(k) doesn't offer enough choice to fully diversify your retirement savings. Maybe the only investment options carry high fees. Maybe you have to pay fees to the 401(k) administrator. If your 401(k) plan is unreasonably awful, it may be time to speak up and ask for a change; SmartMoney offers a few tips to lobby for a better 401(k). While this does not directly increase your income, it puts your money to work more efficiently. High fees can cost you thousands of dollars by the time you're ready to retire, and bad investment options can cost even more.
Improve your skill set. Even if your company didn't give you a raise this year, the best way to score one next year is to make yourself indispensable. One way to do this is to constantly improve your knowledge and skill set. This can mean taking training classes offered by your employer, seeking additional certification in your industry, or even getting an advanced degree. The good news is that some employers are willing to pay for education. Large companies may have established tuition reimbursement programs. If you're willing to do the paperwork and put in the study hours, you can get a graduate degree at a huge discount. [J.D.'s note: Even small companies can have tuition reimbursement programs. At the box factory, we'll pay for one class per term. Nobody ever takes us up on it, though.]
Ask for non-monetary rewards. Bankrate.com notes that it's difficult to negotiate hard benefits, or “employment areas defined by statues and tax deductions [including] health benefits, pension plans and 401(k)s, stock options, insurance programs, tuition reimbursement and day care.” However, employers have more leeway when it comes to non-regulated benefits and rewards that don't necessarily require a large and lasting cash outlay, like a raise would. For example, consider asking for an extra week of vacation or a flexible work arrangement where you can telecommute once a week. After all, time is money, and getting more free time (especially free time with family or friends) can be a lot more valuable than a meager raise.
Volunteer within the firm. There are many ways to contribute to your company outside of excelling at your job. Join the recruiting team and participate in school events and interviews. Offer to write a company blog. Even organize the firm holiday party. These volunteering gigs may not have immediate or monetary rewards, but they will expand your in-firm network outside of your department. This might create career opportunities that would not otherwise have been available, and it doesn't cost you anything but your time.
Get a Virtual Raise
Taking advantage of all your company has to offer will require some effort on your part. In the short term, your paycheck may not get bigger, but you may be making more money nonetheless. On a $60,000 salary, in a single year:
- You can get $1,800 by getting the maximum 401(k) match if you company matches 50% of employee contributions up to 6% of salary.
- You can get $1,500 for referring a candidate who is later hired by your company. (Payouts vary, but the number seems reasonable given going rates in technology, nursing, and chemical engineering.)
- You can get $11,000 more out of a 401(k) contribution of $10,000 this year if you manage to lower your investment cost by 0.5% per year for the next 20 years by convincing your company to cover administrative fees or offer lower cost funds.
- You can get $5,000 in tuition reimbursement. Of course, you also get the benefit of additional education and accreditation.
- You can get the equivalent of $1,200 in salary if you get one additional week of paid vacation.
- You can get priceless career opportunities by expanding your network through volunteering opportunities within your firm.
Taken together, those are over $20,000 in non-salary benefits. Opportunities vary at every company, but you won't get a dollar if you don't try.