How to negotiate better pay

Compensation is based on the law of supply and demand. Use it to your advantage.

Dear Bob ...

I am putting together my case for asking for increase in my salary but I am looking for the rights words to open this up to my supervisor. I love my job and the company however I feel I am grossly under paid for what I do, and can back that statement up.

I am looking for a positive approach in this whole matter. Can you assist?

- Underpaid

Dear Underpaid ...

When I was in that situation, I sat down with my manager and said, "Right now I have a strong financial incentive to leave this company and work for a competitor. I'd prefer not to have that temptation. Can you help?"

To which he replied, "Can I use that line with my boss?"

I gave my permission, in exchange for which he and I agreed to a series of steps to get me where I thought I needed to be.

- Bob

Dear Bob ...

I love the line you suggest but to me it sounds so ... threatening. The environment here as far as competition goes is nothing to brag about, so I am not sure how well that would go over.

Do you have other opening lines that are more welcoming?

- Underpaid

Dear Underpaid ...

I think the question of whether it's threatening or not depends on your presentation. Mine was ironic and good-natured (my manager and I got along well) and he understood the point, and that I had worked hard to avoid making it into a threat.

With or without competitors, my opinion is that in most companies your strongest case is that you're underpaid compared to what the market will offer. Assuming the basic premise is convincing, if you do end up leaving your employer will spend more than it's currently spending to replace you. Then it will spend the equivalent of one year's salary bringing your replacement up to speed (if the industry's standard numbers are to be believed).

That's a persuasive economic case. Compare it to the alternative approaches to negotiating you might make instead:

• You deliver more value to the organization so it should pay you more in return. It doesn't work that way, No matter how much value you deliver, if your employer can replace you for the same pay or less, your replacement would deliver more net value. Value is a non-starter in compensation negotiations.

(Value is, on the other hand, important in retention discussions -- if your employer loses money on an employee, that employee had better think hard about what to do to change the situation.)