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Saturday, Oct. 25, 2014

Dave Ramsey says: Don't make comparisons when asking for a raise

By Dave Ramsey

Published: Tue, Aug. 19 7:30 a.m. MDT

 If you honestly feel like you deserve a raise because of your effort and performance, that’s fine. But don’t bring up your co-worker and what he or she makes in the discussion.

If you honestly feel like you deserve a raise because of your effort and performance, that’s fine. But don’t bring up your co-worker and what he or she makes in the discussion.

(tetmc, Getty Images/iStockphoto)

Dear Dave,

What’s your advice on asking for a raise at work when you have more responsibility than a co-worker but the same title on paper? After being with my company four years, I feel like I should make more money and I have the right to complain about this.

— Vanessa

Dear Vanessa,

Sorry, no. You don’t have a right to complain. You agreed on your pay, and you are doing your job the way your character and integrity tell you to do the job. If someone else is a slacker in the same position, it doesn’t mean a whole lot in terms of your personal compensation.

I’ve got several people at my company who hold similar positions and make similar money. Some of them have been here for years, while others are relatively new. I don’t pay people for how long they’ve been in the building, and I don’t want anyone on my team who doesn’t give 100 percent. Now, that may be a different issue than pay, but at the same time I don’t want someone who gives 50 percent and I pay them 50 percent. I want everyone at 100 percent, but that kind of thing isn’t your problem. It’s the company’s problem because she works for them and not you.

If you honestly feel like you deserve a raise because of your effort and performance, that’s fine. Sit down with your leader and make a logical and reasonable argument for why you deserve more money. But don’t bring up your co-worker and what he or she makes in the discussion. That’s just not relevant. What is relevant is your worth and the value you bring to the organization.

A comparative analysis with someone else on staff just isn’t a good idea. I’d stay away from that, Vanessa.

— Dave

Dear Dave,

My wife and I live in New York, and we’ve had whole life insurance for several years. There’s a 7 percent penalty if we cash out the policies now. If we wait a few years, we won’t have to pay into the premiums anymore. Should we cash out the policies anyway?

— Brian

Dear Brian,

The reason you won’t have to pay into the premiums anymore is because you built up enough savings, and they are not paying you enough on the savings to amount to anything. The amount they should have been paying you versus the way they were ripping you off will buy the life insurance.

It’s not like you can pay for it because you still have probability of death. As long as there’s a probability of death, there’s a cost to life insurance. The only question is whether you’re paying out of your savings account or your checking account. In this case, you’re paying out of savings.

The 7 percent figure is just your surrender charge, so I’d get out of that policy soon. Here’s the problem, Brian. If you die today, do you know what they’ll pay? Face value. They won’t pay face value plus the savings you paid for. In other words, you’ll lose your savings.

I’d get term life insurance in place by the end of the week. Compare prices on term because you’ll be surprised at the difference some companies charge for term insurance. Make sure you get good 15- to 20-year level terms policies valued at 10 to 12 times your annual income.

— Dave

Follow Dave on Twitter at DaveRamsey and on the Web at daveramsey.com.

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1. Johnny Triumph
American Fork, UT,
Aug. 19, 2014

@DaveRamsey - I think you miss the point in managing people. Of course you want 100% out of employees but would you purposely discount how any of your employees is feeling? If Vanessa has a good relationship with her boss then she should be encouraged to talk it over with the boss. A frustrated employee is not a good employee and it will lead to her eventually getting tired of it and looking for work elsewhere. And then you're just left with the underperforming employee.

2. SundanceKid27
OREM, UT,
Aug. 19, 2014

I disagree with the advice on asking for a raise. "Sorry, no" is poor advice. You don't owe a company anything. Just because you agreed to a certain salary a certain time ago doesn't mean it can't change or be renegotiated. If you gain more responsibilities or you begin to realize your worth is higher than you thought then you can and should renegotiate. Also time at a company should be valued. Time at a company creates experience, wisdom and potential leaders.

I have had numerous experiences when I have presented my self and asked for more and I got it. Don't leave it to your manager to get yourself a raise.

A company always looks out for it's best interest and so should you.

3. SundanceKid27
OREM, UT,
Aug. 19, 2014

I love the managers attitude of "give me 100%" while in most of their minds they are paying you about 60% of what they should be paying you.

4. Twin Lights
Louisville, KY,
Aug. 19, 2014

Companies re"negotiate" with employees based on comparisons (I could hire someone to you your job at X% of your pay). So, there is no problem playing the equity card on the other side.

5. mr.tufts
Franklin, TN,
Aug. 22, 2014

@Johnny Triumph - He missed no point, JT. The question wasn't whether or not the lady had a right, or it was a good idea, to talk to her boss. That much is a given and implied in the answer. The point was not to bring up why you're so much better than someone else, but rather to point out YOUR good qualities, and why you deserve more. When you start the comparisons directly to other employees it can be seen as insulting to a team member, and if that's all you've got, you don't deserve a raise.