When I last posted about how to ask for a raise, I put some tough concepts out there. Some concepts that probably are offensive to a lot of people who work hard and just want to make a little more money. So I felt compelled to explain a little further some of the concepts on the business side, so that you can understand where your employer is coming from. It has been said of war, “know thy enemy”. The same is true in working any business relationship. It isn’t a war/hate relationship, but if you know what your employer is thinking, then you can structure your approach to cater to that line of thinking.

Why Businesses Pay Low

Businesses don’t like to pay their employees for several different reasons. The first is that they only make a certain amount of money, so if they pay their employees more, then they get to keep less. When looking at it from your side, you continue to work harder, getting more done for the company, and therefore expect to get a raise. Another reason companies don’t want to give raises is the fact that if they give you a raise, you might tell others, and then they could have many employees wanting to get the same raise. You might not ever tell anyone, but the employer can’t bank on that. On the same note, if the employer gives in to your request for a raise, they might think you will just come back in a few months and ask for another raise.

Understanding the Need for the Company to Get a Return on Investment

Just like you investing in the stock market, your employer is looking for a return on investment. That is true of its employees as well. The company needs to make money from the work that you do. If you are not generating more money than they are paying you, you are in the danger zone. Think about this simple example:

If you run an ice cream truck, and you are making enough sales to run a second ice cream truck, and you hire someone else to run the other truck, will you pay them more than they are generating in profits? Absolutely not. You aren’t going to lose money on running the second truck, it would be better just to run one truck than to lose money running a second truck. Simple business principle.

The same is true of a company that employs you. They must get a return on your work, otherwise it is better for them not to have you on staff.

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