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Vienna, Austria – How do I negotiate as cleverly as possible, and what are the consequences that could ensue from failed negotiations? Over the next few weeks, Pedersen & Partners’ Head of Compensation Consulting Conrad Pramböck continues the "Salary of 2016" series, analysing the compensation opportunities and risks across different industries.

Are you getting everything you deserve?

As autumn follows summer, the time for career talks and salary negotiations rolls around. In the best-case scenario, you could get a payrise, but at worst you could get nothing at all.

Of the 485 workers that were surveyed, 31% said they would "keep doing nothing" if their salary negotiations were unfruitful. They would simply continue to work hard and try to produce consistent and convincing results for the next round of negotiations. A quarter of respondents would try to push for an increase in bonuses or benefits. 38% would avoid initiating further salary negotiations and explore the labour market for a better-paid job. Finally, 6% plan to go on a crash course with the boss.

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What will you do if your salary negotiations fail? 485 employees were interviewed:

And how do employers react to demands for increased compensation? 161 company representatives were interviewed: 13% said that they evaluate the situation and consider making a salary offer to important key employees. 29% offer better bonuses or benefits, depending on the employee's position. 42% explain the situation to the subordinates, and show them the real perspectives. Finally, 16% strongly reject any negotiation, referring to the company's universal salary plan.

Often there is no money for significant salary increases

We discuss the options with Conrad Pramböck: Is it better to try negotiating one more time, or to accept defeat and change jobs? What are the best strategies to increase your income?

Is 2016 a good year to ask your boss for a salary increase?

CB: The mood is currently optimistic, and many employees feel comfortable with their career; however, this does not influence the salary itself. Personnel managers often argue that a raise is only possible if an employee's performance exceeds expectations or if he has expanded his areas of responsibility. However, what I often see in practice is that although employees do this, for example by increasing their sales figures, their compensation does not grow accordingly. In many companies, including very large organisations, the budget simply cannot accommodate proper salary increases. No matter how much the employees increase their productivity or expand their area of responsibility, there is no money available. Nevertheless, we can differentiate here: although 10-20% of employees receive good pay increases, these tend to occur during the first 10 to 15 years of employment. Many people have already achieved 80-90% of their career development by their mid-to-late thirties.

What strategies should employees use in order to get a higher salary?

CB: If your current job does not reward improved performance and greater responsibilities with a commensurate salary increase, the only thing to do is to start exploring the market for new opportunities. In my opinion, this is the only way to achieve a payrise of over 10%. This is best for all parties involved – employers and personnel – although not the ideal solution. For an employee, every job change is associated with uncertainty: Is the grass truly greener on the other side?

What if the only solution is to change jobs?

CB: My recommendation is to make a strategic change if the current employer no longer offers development opportunities. Of course, a new job should not only come with a bigger salary, but also interesting tasks and an exciting environment. My credo is to make a career change whenever my professional goals are no longer pursuant to those of my current employer. This sparks the question: How can I  continue to develop myself within the company? Perhaps only 10 to 20% employees enjoy a good career with significant salary increases; the others receive inflation-level raises at best.

Employees who are not tempted by job changes should at least look on the labour market to see what is on offer: which positions are available, what salaries do other employers pay? I find the BATNA concept useful here. BATNA stands for “Best Alternative To a Negotiated Agreement” and is known from the “Harvard Concept” – meaning nothing less than the best alternative to a successful negotiation, where the parties cannot agree. For example, I communicate to my manager that I would like a 10% salary increase. If the boss rejects my request, what happens then? As an employee with no other alternative, I must go back to work: Sorry to bother you, didn’t mean to interfere. However, if I know my value on the labour market, or perhaps have a specific offer on the table, I can try to renegotiate. It is important for me to know and develop my bargaining power. The negotiator who can bring the better alternative to the table will win. The more I advance in my career and improve my skills, the better my chances.

According to our online survey, 25% of employees are prepared to settle for increased bonuses and benefits if the salary increase is not granted.

CB: Although additional benefits can be more valuable than a monetary raise, employees prefer cash in hand. In many companies, there are few development opportunities and employees can effectively negotiate additional benefits. Large corporations tend to have fixed regulations governing benefits such as company cars, with strict rules stipulating who gets what model, and with which equipment. Other benefits, such as additional insurance, can be requested. The base salary and bonus are therefore the areas where there is room for negotiation, although some employers have fixed compensation plans from which they will not deviate.

Conrad Pramböck is the Head of Compensation Consulting at Pedersen & Partners. Based in Vienna, Austria, he is responsible for consulting companies on all aspects of compensation, including providing companies with up-to-date market information on salary ranges and design of bonus systems across all industries and geographies. Prior to joining the firm, Mr. Pramböck held several senior positions in international consultancy firms. He started his career with a German Consultancy firm working in management consulting and later in the Compensation Consulting business unit based in Austria. For the following seven years he worked with one of the top Austrian Executive Search firms as the Head of Compensation Consulting. He was responsible for all international compensation consulting activities and developed and maintained an international compensation database in 40 countries.

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