Inflation and negotiation – two words of the moment. Inflation is definitely upon us. From gas prices to groceries – OUCH. You definitely want your compensation to reflect inflation at the very least, not to mention your hard work and everything in between!
So how do we go about negotiation during a time of high inflation? Do inflation and negotiation go together?
With inflation up this year, you want to make sure you get every penny that’s yours. Make sure your pay doesn’t stagnate and beats inflation, or at the very least *keeps up with* it. Inflation and negotiation don’t have to be at odds. Read on to see why.
In this article on inflation and negotiation:
- 3 Inflation and Negotiation Tips: Tip 1, Tip 2, Tip 3
- Difference Between an “Inflation Adjustment” & a “Raise”
- Inflation and Your Employer
- Nuance to Inflation
- Inflation and Negotiation: Anything Goes Style
Inflation and Negotiation Tip 1: Keep it centered on your achievements
With high inflation and going in for your negotiation, focus on what you bring to the table (or… company). How have you provided value? How have you saved the company money? What unique skills do you have that set you apart from the rest?
Just like it’s frowned upon to cite another employee’s salary as a reason YOU should get paid more (although that is reason enough if you’re underpaid for similar work without justifiable rationale), it can be more advantageous to focus on the value you provide.
Inflation and negotiation DO go together, you just have to frame it right.
Negotiation Best Practice
Instead of: “Rob gets paid $X. I should get paid $X, too.”
Try: I’ve added value by increasing revenue by $X, brought in a new client base that increased sales to $Y and I created a new system to track lost customers, which led to a 15% increase in retention.
As a top performer, focus on how you bring value with tangible examples. Then ask for what you want.
*There is no disputing that this is a completely valid argument. If there is a pay disparity, you should be privy as to why. Whether this works in real-life scenarios is another story. *There ARE times and places where this is completely appropriate.
Use this same technique with inflation and negotiation.
Let’s look at this example with inflation:
Instead of: “Inflation rose 4.6%. I should get an increase of at least 4.6% to keep up with inflation, if not more. “
*4.6% is just an example, not actual rate
Try: I’ve added a lot of value this year by increasing revenue by $X, brought in a new client base that increased sales to $Y and I created a new system to track lost customers, which led to a 15% increase in retention.
*There is no disputing that asking for increase to adjust for inflation is a completely valid argument. You should absolutely have your compensation *at least* match inflation. Whether this works in real-life scenarios is another story.
Negotiation and inflation can and do go together. Practice & try it out
Inflation and Negotiation Tip 2: Show the value you bring with numbers
Numbers are powerful. Just as we’ve seen with inflation and the frenzy to negotiate, numbers command a strong reaction. Quantify what you bring to the table and the value you’ve provided. Let inflation and negotiation go together by letting the numbers tell a story.
Check out this post for more detail in quantifying your value:
From the post: “Some areas of work are automatically quantified while other areas take some creativity. Take what you do every day into consideration. Look at who you work with and the service you provide. See what’s quantified for you already. Look at different variables that can be quantified. While a lot of items are automatically quantified, you can really quantify just about any item.”
Numbers move people. We live in a capitalist society. Frame your negotiation accordingly.
Inflation and Negotiation Tip 3: Go higher than you think (inflation is eating up some of that hard earned raise)
When navigating high inflation paired with a negotiation, you want to aim higher considering inflation is higher than usual. Keep in mind that when inflation is high, this also cuts into your annual increase or raise. So factor the inflation rate in and ask for more than you intended to.
The higher you aim, the higher your result. Don’t undervalue yourself. Do your research and ask around to know how high you can aim. It’s usually higher than you think.
Difference between an “inflation adjustment” & a “raise”
Remember: An “inflation adjustment” is different from a “raise”. This is an important concept within inflation and negotiation.
A raise is when you are compensated well beyond an inflation adjustment for the work you’ve done. An inflation adjustment is usually in line with the inflation rate and solely reflects that.
Inflation Adjustment Example:
• Average inflation rate (for the year) is 4.6%
• Pay increases by 4.6%
Raise Example:
• Average inflation rate (for the year) is 4.6%
• Pay increases by 15%
*4.6% is just an example, not actual rate
PSA: In order for it to truly be a raise (or annual increase), it has to be above the inflation rate.
Nuance in Inflation and Negotiation
There is a bit of nuance to be aware of regarding inflation. Just because there is high inflation doesn’t mean you are necessarily paying for all of it (but you might be). But, if you can use it as leverage or motivation to ask for more, all the power to you.
Let’s look into some of the nuance of inflation and how it may impact some more than others.
Impacted more by inflation:
- If you had to buy a car, you may have been more impacted by inflation.
- Energy prices went up, so if you have to put gas in a car or use air travel, you may be more impacted by inflation.
- If you had to buy groceries you may have been impacted more by inflation (oh wait… that’s basically all of us…)
Even though inflation is up around 5-6%+, it doesn’t necessarily mean your costs are up that much, too (but they might be) (CNBC, 2021).
Inflation & Your Employer
Keep in mind that your employer may be hit with expenses connected to inflation, too.
Possible employer response: It’s very possible your employer will use this same reason (inflation) for not being able to give you a raise / increase. Companies may be impacted by the costs of inflation especially if they have to purchase items or services greatly impacted by inflation.
This is an important factor/ counterargument to keep in mind when asking for more. This doesn’t mean don’t ask. It just means be prepared for their counteroffer and practice your response.
To identify questions (and answers) of the financial stability of your company, check out the post: Should I Negotiate Right Now?
Inflation and Negotiation: Anything Goes Style
*Try at your own risk 😉
Tell them you need a raise because of inflation.
Have I tried this? No.
Is this reckless advice? Maybe.
Do I recommend it? Before no. But the rules are changing every damn day. Break the rules. Change the rules. They don’t serve us anymore.
#therulesarefake
Change is now. Create change.
Idea: Bring it up in a staff meeting: 🙋🏻♀️🙋🏽♀️🙋🏿♀️🙋🏼♀️🙋🏽♂️🙋
“Since inflation has risen to 6.1%, will our yearly increases reflect that?”
*(6.1% is not actual inflation rate, just an example)
See what they say. 🤷🏻♀️🤷🏽♀️🤷🏼♀️
Employers do have a responsibility to answer and respond to their employees.
If you get push back, refer to the aforementioned negotiation strategies.
Inflation and negotiation DO go together. Practice your approach and ask for all that you’re worth.
Sources:
*Article: “If you don’t get a 6% raise, are you taking a pay cut due to inflation? Here’s what experts say” @CNBC News (2021)
Author: Carmen Reinicke
*Article: “U.S. consumer prices jump 6.2% in October, the biggest inflation surge in more than 30 years” @CNBC News (2021)
Author: Jeff Cox
Want More on Negotiation?
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Want more negotiation tips? Check out these posts to help you in your next negotiation:
- The First Step In A Negotiation Isn’t What You Think
- Should I Be Grateful In My Negotiation? The Answer May Surprise You
- 5 Tips: Focus On What You Can Control In a Negotiation
- 5 Easy Steps to Take If There Aren’t Any Funds Left
- 4 Reasons You Need to Track Your Work Wins and How They Help You Do Better in a Negotiation
- What Are Your Salary Expectations? How to Best Answer
- 7 Steps to Take When You Find Out You’re Underpaid
Disclaimer: While the contents of this post and blog come from research and personal experience, each experience, situation and/or person has their own unique circumstances. This is not negotiation, financial or any other form of legitimate or official advice from an expert. Each individual should do their own independent, comprehensive research. Negotiation, career and all other decisions are the sole responsibility of each individual or party. Details found on the blog and in individual posts are opinions and should be treated as such for entertainment purposes only. Read further disclaimer information in the footer and on the Disclaimer page.
