5 min. read

December 31, 2020

salary

How to Negotiate for Salary Increases as a Software Engineer?

Are you happy with a 5% salary increase? What about a more tempting 10% increase? Perhaps there is room for negotiation, or will this frame you as a greedy person? 

Michiel_mulders_picture

Michiel Mulders, Software Engineer

When negotiating a salary increase as a software engineer, you have to find a balance between the company’s goals, individual qualities, and the HR team. It’s tough, we all know this! Whether you are negotiating your first salary increase or you are a veteran engineer, this article talks you through different aspects of your salary increase negotiation.

  • How to approach a salary increase?

  • Should you collect metrics to showcase your worth?

  • Can I use the “years of experience” metric as leverage?

  • Is it allowed to use a job offer to add pressure?

  • What should you do if a salary raise is rejected?

So, let’s clarify the first question.

How to approach a salary increase?

When approaching your HR team for a salary increase, make sure to know a couple of things at first. 

  1. What’s your company’s policy on salary increases?

  2. Does your company have budgeting goals for salary increases?

  3. Is there a formal review process in place?

Some startups implement a strict policy on salary increases to create a uniform system for all software engineers. It’s a great system as you don’t have to worry about asking for a salary increase. 

However, some companies prefer a review process where both HR personnel as colleagues share their honest feedback about your performance, behavior, and cultural fit. The outcome of those reviews determines your final salary increase, which can shift within a specific range. In the end, it’s a fair process that removes the pressure from employees to seek a salary increase.

Moreover, I’ve experienced tight budget goals where some years were just worse than others. If there’s no room for a significant salary increase, don’t ask for it. You know best how the company you work at is performing.

When it comes to approaching a salary increase, your first contact point is the HR team. If there’s no HR team in place, discuss this with your team lead or CTO. They act as trusted persons with whom you can discuss this topic.

Make sure, however, to first review your company’s situation before demanding a salary increase. It’s best to approach this topic carefully.

How to establish your worth when negotiating a salary increase?

Your company has offered you a 5% salary increase. Yet, you aren’t happy with the offer as you hoped for a 10-15% increase. What can you do?

You have several options to showcase your worth.

  • Journaling - I like to maintain a weekly journal where I write down important events, major milestones or code contributions, or improvements. It helps me track my overall progress and knowledge. Also, it allows me to use this journal as a reference for requesting a salary increase. It’s hard to remember all the important events over the past year. A journal is a great way to track these events.

  • Metrics - I’m not a major fan of tracking individual metrics for software developers, but they can still come in handy. Tracking the number of commits, opened PRs, or solved bugs can give the HR team a good idea about your worth. However, tracking these metrics is often perceived as comparing apples and oranges. For example, you can easily cheat the number of commits by committing smaller code increments. Therefore, only use metrics as guidance, not as hard evidence.

  • Peer reviews - Ask for a peer review from a colleague or team lead you work with closely. You can ask them to describe your biggest achievements, how you behave in the team, or what they think is your most valuable skill for the organization. Backing up your salary increase by employee review evidence is a great move!

  • One-to-one meetings - This is something your company should implement if they haven’t done so. It’s a great chance as it allows your team lead to track your performance on a monthly or bi-monthly basis, discuss problems, and monitor your overall “company health”. Further, this information is often beneficial for the HR team to decide about a salary increase. 

Some engineers tend to use their “years of experience” metric as leverage to receive a salary increase. Please avoid using this argument as it tells nothing about your skill set or value. Anyone can work for multiple years in a company while not progressing at all. A junior employee who works at a company for two years may add more value than a 10-year old colleague.

In summary, show your worth at all times. Help colleagues where possible, actively share knowledge, contribute to the company culture, and show initiative. These are the most valuable skills for a company to grow.

Can you use a job offer to add pressure?

Be careful when using a job offer as leverage to land your desired salary increase. In some cases, it makes sense. If you are a stellar developer who acts as a reputable source within a company, it’s worth trying.

In most cases, however, it’s not recommended to use a job offer to increase pressure. You show signs that you value salary more than the company’s goals and culture. Remember, it’s not all about the money, enjoy your job!

When you decide to use a job offer to increase pressure, you also show the company that you are actively looking for a new position. Therefore, it might have an adverse effect. As you’ve shown an intention to leave the company, why would they hand you that extra salary increase? Make sure to consider the impact on the trust relationship between you and the company.

If you still want to add pressure, you can compare your job position with similar market positions. If your position is valued lower than the average market value, it’s an excellent argument to add that little extra pressure without breaking the trust relationship. A good place to start is Glassdoor, LinkedIn, or Indeed.

Conclusion: What if your salary increase is denied?

If they reject your salary increase, make sure to behave responsibly and professionally.

I’ve seen cases where employees start to become sluggish after being denied a salary raise. Stay professional and show your commitment to the company. 

A company that can’t afford a raise this year might be in a different situation six or 12 months in the future. And remember, you can make a significant impact on your company's journey, especially in startups.

Key takeaway: Stay professional and don’t take a salary increase rejection personally. Many parameters determine the ability to hand out raises besides your skill set.