Pay reviews are important factors in your professional journey, as they go way beyond being discussions about salary increments. Instead, they’re also about evaluating your overall compensation package and financial well-being. When you have a proper understanding of your pay review, you’re able to take more control of your long-term financial health. So, discover more about some of the things you should know during your pay review. 

Understand Your Market Value

First and foremost, you need to understand how valuable you are in the current employment market. You can get an idea of your market value by researching what others in your role with similar experience and in your industry are earning. Glassdoor, PayScale, and LinkedIn Salary are just some of the sites that can provide the insights you need. It’s also important to consider regional variations and company size, as these factors also play a significant role in compensation. When you know your market value, you’re able to negotiate with confidence and ensure that your salary aligns with industry standards. 

Evaluate Your Total Compensation Package

Salary is just one part of your overall compensation. So, you need to think about more than pay increases; it’s also important to consider other benefits that contribute to your financial well-being, including the following:

  • Bonuses and commissions – Whether they’re performance-based, company-wide, or discretionary, you need to have an understanding of the earning bonus criteria. 
  • Health insurance – Think about the quality of your health insurance and whether there have been any changes in coverage or premiums. 
  • Retirement contributions – Evaluate your employer’s contribution to your retirement plan and how this affects your long-term financial goals. 
  • Stock options or equity – If you receive stock options or equity, you need to understand their current value and potential growth. 
  • Paid time off and work-life balance – Think about the value of your vacation days, sick leave, and overall work-life balance, which can indirectly affect your financial well-being.  

Be Prepared to Justify Your Request

When you ask for a pay raise, it’s not uncommon for employers to want a justification, and you’ll need solid evidence to do this. This might include documenting your achievements, highlighting how you’ve added value to the company, and more. Some standout points might include the following:

  • Meeting or exceeding targets – Provide data or reports that show you consistently meet or exceed performance targets. 
  • Taking on additional responsibilities – If you’ve taken on more work without a formal promotion, make sure this is recognized. 
  • Skills development – Highlight any new skills or certifications you’ve acquired that benefit your role and the company. 

Consider Tax Implications

Higher salaries can impact your tax bracket, which leads to increased tax liability. As a result, you’ll need to have an understanding of how a pay raise will affect your take-home pay. Gaining this understanding might require you to do the following:

  • Review tax brackets – Make sure you understand the tax brackets and how a raise may push you into a higher one.
  • Adjust withholdings – It might be a good idea to adjust your tax withholdings to avoid underpayment or overpayment. 
  • Explore tax-advantaged accounts – You may consider increasing contributions to tax-advantaged accounts like a 401 (k) or Health Savings Account (HSA) to reduce your taxable income. 

Those detailed above are just some of the things to bear in mind when walking into your pay review. With these things in mind, you’ll be able to navigate yourself through the pay review process and achieve the best outcome for you. So, make sure you know your stuff when the time for your pay review rolls around.