Mastering the Art of Negotiating a Raise as a Software Engineer
Cracking the code to higher pay
You've coded your way to success, but are you earning what you're truly worth? Discover the secrets to successfully negotiating a raise as a software engineer.
If you are a revenue generator or killer engineer you will never be paid == to how much revenue you generate. This is just a fact of life. The business has to underpay you to subsidize the junior engineers and the non-revenue generating employees, ahem Human Resources.
If you are the type of person who seeks alpha by changing jobs every 2-3 years, this post most likely will not provide you much value. If this is the case you are not working somewhere long enough to have your salary fall out of market. I will write a post about why switching jobs every 2-3 years is a trap for people that want to escape the W2 matrix.
Understanding Your Worth as a Software Engineer
Preparing for the Salary Negotiation
The Salary Negotiation Process
Post-Negotiation: What to Do After You've Negotiated Your Salary
Conclusion
Negotiating Salary as a Software Engineer
For most people their W2 salary is worn across their chest like a medal of honor, their defining characteristic. For you however it is not. W2 is only one piece of the puzzle in your income. You should be building a business, side hustle, wifi money, whatever you want to call it. In this time period, a W2 is not going to make you rich, with very few exceptions.
Understanding Your Worth as a Software Engineer
Firstly, it's important to understand that not all job functions are created equal. The closer you are to the product or the revenue stream, the higher your salary is likely to be. This is also true if you work in a highly regulated industry such as financial services, where cyber security engineers often command higher salaries.
As a rule of thumb, being closer to the product often equates to a higher salary. For instance, the engineer building the product usually earns more than the DevOps professional supporting the developers. However, some companies standardize pay bands across engineering roles. Knowing how your firm structures its pay can be beneficial.
The key takeaway is this: your proximity to the product or a crucial supporting function like security can influence your leverage when negotiating a raise. From management's perspective, the person building the product is often seen as more valuable than the one managing the platform and containers (DevOps). Remember, perception equals reality.
To understand your worth, you need to grasp your position in the engineering hierarchy and have a general idea of how your role is perceived across the industry. Naturally, this should align with your experience and results.
Preparing for the Salary Negotiation
Begin by researching what someone with your experience, results, skills, and location could expect to earn. Start by discussing with friends to get a sense of their earnings or what they've seen others earn. If you don't have a network for this, it's time to start building one.
Online job postings can also provide a baseline range for what a similar role might pay. More companies are now disclosing their pay bands in job postings, which can save you time. Adjust the figures if the posting is for remote work or a high-cost-of-living city like San Francisco or New York City.
If possible, access internal pay bands or speak with colleagues about their salaries. Also, note which job functions generally pay more.
Finally, you need to set a target salary. This is a crucial step in the negotiation process. It's about understanding your worth and being able to communicate it effectively. If you're already earning at or above the market rate, negotiating a raise may be more challenging.
When setting your target salary, consider the factors mentioned above. You should aim slightly higher than the figure you have in mind. For example, if you're currently earning $135k and your research suggests the market rate is around $150k, ask for $156k. It's generally costly for a company to replace an employee. If you add a cushion to your target salary, you'll still be satisfied even if they negotiate down. If they agree to your initial figure, even better.
Turbo Note: If a straight raise seems to aggressive or is not approved, you can try to scheme a new job title. If the job title gives access to a higher pay band, then it can be a long term win.
Turbo Note: Replacing you with software or AI is cheap, so hopefully that doesn’t happen.
The Salary Negotiation Process
Before You Ask for a Raise
Before you even consider asking for a raise, you should be engaging with your manager about what's needed to reach the next level. Additionally, it's important to build political capital with higher management or influential individual contributors (ICs) in your organization. Remember, promotions and salary raises are often collective decisions, not solely your manager's.
During these discussions, you should be asking your manager how you can get more involved in tasks that align with the firm’s strategic vision. If they're unsure, it's your responsibility to pitch your tasks as aligning with a larger vision or initiative. You need to find a way to align your work with your management’s goals. For example, if your manager has a KPI to “Reduce outages by 25%,” you could enhance your monitoring or observability systems to align with this KPI. Don't always wait for the perfect task to land on your plate - sometimes, you need to invent it, even if it requires some marketing.
Common Mistakes
Common mistakes include springing a raise request on your management without prior discussion or choosing an unrealistic salary expectation.
As mentioned, you should be speaking with your manager about how you can progress to the next level, areas for improvement, and what tasks you need to undertake to be perceived as ready for that next level. Ideally, your manager should be communicating your progress to higher management. If you're meeting the expectations of the next level, your manager can advocate for your promotion or raise when budget allows. The more positive feedback upper management hears about you, the more likely they are to approve and allocate budget for a raise.
Choosing the wrong salary expectation can cause anxiety. If you aim too low, you might end up with an insignificant raise. If you aim too high, it could signal that you have an inflated sense of your value and might be considering leaving the company. This could work against you. Unfortunately, in this scenario, you must take that risk and hope for the best. Remember, top performers are often underpaid and will ask to be compensated closer to their value.
Some people suggest asking for additional benefits as part of a raise negotiation, such as more vacation days. The only benefit I personally see worth asking for is more remote flexibility, or better yet, full-time remote work. I don't see much value in additional vacation days or other perks, but your preferences may differ. Feel free to follow your instincts here.
Post-Negotiation
If you've successfully negotiated a raise, congratulations! Your journey likely ends here. Be sure to express your gratitude and continue performing at your best.
However, if your request for a raise was denied, it's important to ask questions to better understand your position. Depending on the reasons given, you should seek clarity on whether a raise might be possible in the future. Here are some questions you could ask:
What about raising my salary creates a challenge for you?
When will we have the budget to support this idea?
How can I help justify this change [in the future]?
From: Source
If you're getting the sense that you're falling out of favor or not well-liked enough to secure a raise, it might be a good time to start looking for a new job. In many cases, a denied raise can indicate that your future progression is not a priority for the company.
Turbo Note: I also recommend to come with a competing offer in many cases. Some cartoons disagree with me on this, but if you’re asking for a raise and you dont get it, its hard to stay at the company. In most cases this is good signal for you to jump ship. If you have a competing offer you have a compelling reason to bump your salary up, and if they say no you get the raise. If you go this route you CANNOT bluff. Gut call on your situation. High Risk / High Reward.
Conclusion
Navigating the path to a successful salary negotiation can be challenging, but it's an essential skill to master as a software engineer.
Understanding your worth, preparing for the negotiation, and knowing how to navigate the process are all crucial steps. If you're successful, celebrate your achievement. If not, use it as a learning experience to better understand your position and future prospects within the company.
In some cases, bringing a competing offer to the table can be a powerful negotiation tool. However, this strategy comes with its own risks and rewards, and should only be used if you're genuinely *prepared* to make a move.
your move anon.
-celt