Most professionals hesitate when writing a salary increase letter as they are concerned about making the request. Employers that value their employees will usually try their best to come to a sound compromise in order to retain top talent. Thus, in order to get your salary increase approved, it's crucial to understand how to present your argument through a well-written salary increase letter. In this article, we discuss what a salary increase letter is, why it's important, when to make this request and how to write a salary increase letter.
What is a salary increase letter?
A salary increase letter is a formal business letter that a professional addresses to their supervisor in order to request a salary increase. Usually, professionals ask for a pay raise after they contribute significantly to their company's profitability and when the company is performing exceptionally well. By putting it in writing, it formalises your requests so that your manager can go through the necessary channels to approve your salary increase. In larger organisations, this process may take time as your salary request letter needs approval from various key stakeholders.
It's also possible for your salary request to get rejected as it highly depends on your performance appraisal and the organisation's budget. However, employers who want to retain their top talent take these kinds of requests extremely seriously.
Why is a salary increase letter important?
Although writing a salary increase letter is a daunting task, it's important to go through the right channels in order to stand up for your best interests. Following the correct procedure encourages employers to investigate your request thoroughly. The more you cooperate with them, the quicker and smoother the approval process should be. Here are a few reasons detailing the importance of a salary increase letter:
Writing a salary increase letter helps you articulate your points clearly. This communicates professionalism and enhances the way your co-workers perceive your request. When requesting any changes to your employee contract, it's essential to appear deserving of them. Writing out a salary increase letter allows you to structure your reasoning logically. This way, supervisors can be more objective as they evaluate your application.
Increases quality of life
Salary increments are essential to progressing in life. First, it helps you earn a liveable wage that aligns with the current level of inflation. Second, it helps you to progress in your career. Although salary increments may seem small in the short term, they can significantly increase your earning potential in the future. Thus, writing a salary increase letter is important because it takes care of your basic needs and financial goals.
Boosts motivation and job satisfaction
Companies that show regard for salary increase letters remain successful in the current job market. They safeguard themselves from losing talented employees to higher-paying competitors. As a professional, securing a pay rise makes you feel more valued by your employer. It boosts your job satisfaction, which in return, encourages you to perform to your full potential. A salary increase is a great motivator as it inspires you to live up to your employer's expectations.
When to request a salary increase?
A successful salary increase letter is all about timing. The following is a list of circumstances when it's appropriate to request for a pay rise by writing a salary increase letter to your boss:
- Your organisation records a huge profit. Companies feel more comfortable approving salary increases when the economy is booming and their organisation is performing well. In these circumstances, your employer has a healthy balance sheet, and therefore, they can dedicate a larger budget to human resources.
- You contributed to the success of a project. If you've contributed significantly to the company's profits in the current fiscal year, this is a good way to demonstrate your value to the company. Negotiate a salary increase that you think best represents your ability.
- It's the end of the fiscal year. Companies usually give salary increases at the end of the financial year. If you haven't received a raise in the last year, it might be a good time to ask for one.
- During a performance review. If you've received an excellent performance review, this is cause for a salary increase. In your letter, highlight your strengths and personal development initiatives in the past year to emphasise your reasoning.
- You've just received more responsibilities. If you spend more time at the office handling additional responsibilities, it's important to feel that you're being compensated for the extra work. Negotiate a salary increase that suits the demands of your role.
- You want a more competitive salary package. After doing some research, if you realise that your salary isn't on par with the current market rate, this is a good reason to negotiate a pay rise. An employer that doesn't want to lose you to the competition would ensure that you're being compensated properly.
Related: How to Write a Self-Appraisal
How to write a salary increase letter
Here are a few steps on how to write a salary increase letter that is effective:
1. Follow the proper business letter format
A salary increase letter is a formal business letter, therefore, follow the correct format to ensure your points flow smoothly. Here are some key structural elements to keep in mind:
- Use a clear letterhead that includes the recipient's contact details, your contact information and the date
- Open with a respectful greeting such as, "Dear Mr/Ms Last Name"
- Structure your letter into three distinct sections, including an introduction, main body and conclusion
- Share your information in order of priority
- Write in a professional, yet assertive, tone
- Close with a polite salutation, such as "yours sincerely"
2. Introduce the purpose of your correspondence
Immediately establish your intention to request a salary increase. Remember to use a polite tone to appear constructive rather than demanding. This way, you invite the recipient to read your argument from start to finish. You can make your request stand out by highlighting a few of your most effective characteristics or achievements in your introduction.
3. State your salary expectations
Avoid stating an exact figure in your salary increase letter because this makes it difficult for your supervisor to negotiate with you. Instead, mention a salary range or a percentage increase that you're considering. To determine this range, do some research on the salaries employers are offering in the current job market. As a general rule, a realistic salary increase should be between 5-10%.
4. Build a convincing argument
The goal of your salary increase letter's main body section is to persuade the reader to consider further action. Think about how to structure your points to best represent your interests. For example, you can share a bullet point list of your key achievements in the past year to demonstrate the value you bring to the company. In this section, it's important to balance humility with confidence to appear genuine and deserving of the pay increment.
5. Use statistics to back up your points
Instead of simply stating that you increased sales in the last quarter, use statistics to convey the extent of your success. Tactics, such as statistics and examples, give your letter substance. They sound impressive, and therefore, encourage your supervisor to take your request seriously.
Another tactic you can employ is to highlight the current market average salary for your position. If this number is higher than what you're currently earning, this should convince your employer to reconsider your current salary.
6. Show gratitude and respect
A salary increase letter is a negotiation. This means that even if your employer can't meet your salary expectations, it's best to appear open to compromises. Working with them helps prevent resentment and allows you to reach a conclusion that makes both parties happy. Thus, in your concluding sentence, thank your recipient and mention that you're open to discussing their budget and thoughts in person.
Salary increase letter example
The following is a salary increase letter example you can use as a reference when writing your own:
Digicom Mars International
100 Canton Road,
Tsim Sha Tsui, Hong Kong
June 20, 2021
Digicom Mars International,
Dear Mr Leung,
I am submitting this letter to request a salary increase. As a Systems Engineer with seven years at Digicom Mars International, I have been enthusiastic about taking on additional roles and responsibilities.
My recent performance review speaks volumes. Taking into account my achievements and the industry average salary for my position, I feel a 10% increase in pay is appropriate.
My role has evolved since I began working here. Specifically, I have accomplished the following goals this past year:
- Installing, testing, configuring and maintaining the operating systems, system management tools and application software
- Ensuring the availability of infrastructure
- Monitoring and testing applications for possible bottlenecks and identifying viable solutions
- Maintaining backup, security and redundancy strategies
According to recent data, my position pays an average annual salary of $450,000, which is 10% higher than my current salary. Therefore, I am requesting a 10% increase to align with industry and regional expectations.
Thank you for your consideration.