How to ask for a pay rise in an accountancy firm
Apparently we are now starting to come out of the recession and there is a war for good accountancy talent hotting up (actually, there really is a war for talent in the accountancy marketplace). However, your salary may have increased since the beginning of the recession. If you are thinking about asking your partners for a pay rise, here is our essential guide to asking for a pay rise in an accountancy firm with dignity and confidence.
1. Know the process for pay rises
Many accountancy firms have established points in the year when they will do an annual salary review. Most mid to large accountancy firms will only give a pay rise after the annual pay review OR if you get promoted, or if there are exceptional circumstances such as having a job offer with a higher salary on the table . Very often the annual pay review will have a small set range for pay rises. If you believe that you deserve a pay rise which will be significantly above this range, you will need to make a case BEFORE the pay review happens.
2. Check how your performance is viewed
I’ve seen many accountants come a cropper by asking for a pay rise only to be refused because they are seen to be under performing. You will be in a much stronger position to ask for a pay rise when you are viewed as a strong and essential member of the firm. For example I remember when one of my team members was heading up a core firm project. She then got a job with a higher salary. The boss of our team then effectively asked her what pay she would want in order to stay in the firm and see the project through. This doesn’t happen that often!
3. Remember to actually ask for a pay rise
I’ve seen so many quietly competent accountants wonder why their more vocal and pushy counterparts are on a higher salary than them. Ultimately sometimes you need to back yourself and ask for a salary which reflects what you are actually worth. If you have been at a firm for a long time it is not unusual for your salary to drift well below the market value over time. Pointing out the gap between your salary and the market rate for your role may be just what is needed to get a decent pay rise.
4. Build a business case
Before you head into your partner’s office to ask for a pay rise, STOP. It is time to do your homework. Firstly, what is the overall confidence level within the partnership? If people are concerned about the firm’s performance or the forthcoming economic climate it is going to be much harder to get a pay rise signed off. A typical rule of thumb used within many accountancy firms (and other professional service firms) is that you need to be generating or servicing fees of at least 3 times your salary. Don’t worry if you can’t justify a pay rise based on your billed hours or new business brought into the firm. Look at your track record over the last 12-24 months. Where have you delivered exceptional performance or gone the extra mile? Have you turned around a poorly performing team or project? Another good source of data when building your business case is to look at the market rate for someone with your level of skills and experience. As I mentioned at the start of the blog post, if you haven’t had a rise in the last few years, your salary is probably materially below the market rate. It becomes a powerful argument if a firm will need to fork out 10%+ (not including recruitment fees, time lost etc) more than your salary to recruit someone to replace you.
5. Pick your moment to ask
The worst thing you can do is ambush your boss and ask for a pay rise. This never normally works and often produces a negative response. You need to do a mini personal PR campaign in the build up to asking for a pay rise. Therefore, start by finding out how you are performing and viewed. Then, in the few weeks before you ask your boss, make sure you are being exceptionally helpful and diligent. If you can send to your boss a few emails with some great feedback about yourself, this is an added bonus. Then, ask your boss if you can have a face-to-face meeting to discuss your performance, and talk about the potential for a pay review for you. It is often easier to ask for a pay review rather than a ‘threatening’ pay rise. Before the meeting send to your boss an outline of the business case you have put together to discuss in the meeting.
6. Look for alternatives if you get a ‘no’
Getting knocked back for a pay rise isn’t the end. The first thing you need to understand is why. After all, your partner may not have the authority to give you a pay rise as the whole firm could be in a ‘pay freeze’. Remember, as suggested in the first point, to check out the firm’s pay process. If your boss can’t say yes, but your performance is strong and you are seen as a valued member of the team, think laterally. For example, can they sign off some extra training for you? An extra day of holiday? A shorter working week? A secondment? A pay rise at a later date?