Want a bigger pay rise? You’re probably making this mistake

Detailed summary

The ‘peanut butter raise’ usually gets spread evenly, but there are always a few extra crunchy bits for those who can make the right case.

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The end of the year is one of the most common times for pay reviews. Many businesses take the time to look back at the past 12 months, review staff performance, make forecasts and provide a small increase across the board.

This is sometimes called a “peanut butter raise” as it’s spread evenly between all workers. And while a benefit of this common practice is that everyone gets a raise, the drawback is that it’s usually so small because it has to stretch across every department.

We are in the midst of a strange economic climate where inflation is growing at a higher rate than annual wage growth, meaning that even if you do get a small increase you can still find yourself going backwards once the cost of inflation is factored in.

The latest ABS figures indicated that prices rose 3.8 per cent in the year to June, while wages only grew 3.2 per cent. And this is assuming you get a pay increase at all.

But if your company does a version of the peanut butter raise every year, there are still several things you can do to position yourself to get even more of the spread.

The most important aspect is timing. Once the pay increases have been allocated, they are usually final. This is because it’s a long process to work through behind-the-scenes, including getting sign-off with the various layers of management before it’s communicated to you.

We’re very close to the end of the year now, so it might be too late to impact a calendar year increase, but another common period for pay rises is the start of the new financial year in July. The discussions for these increases are usually determined in the first few months of 2027, so there’s still time to intercept these.

Your best bet is to understand all the factors that performance will be measured against, and work specifically to improve those.

Opening of the article, excerpted from The Sydney Morning Herald. To read the rest, open the article on the publisher's site.