Handled pay review poorly - how do I avoid same pitfalls?

LegacyUser

For those not willing to read a semi-long spiel, my situation can be summed up as: in small company, pay review coming up, feel I won't be offered market rate, how do I negotiate without causing unease.

The longer version is that I am currently employed in a reasonably small company, about 30 employees. I have been with the company 3 years now and believe I am performing well.

Last year we had a pay review period where everyone was brought in to discuss their performance... or so I thought. It turned out that they were doing performance reviews and pay reviews separately (which was not the norm) so this caught me off guard.

I was face to face with the managing director of the company in his office in a very informal environment. The conversation lasted 3 minutes max and could be summed up as "we're happy enough with your performance - here's what you're getting".

As this wasn't a formal review process I didn't know what to say and just accepted it. It was just under a 5% increase, which sounds great, but this was standard across the board after talking to colleagues. We are slowly but surely recovering from the recession and getting back to "normal" wages. I was actually expecting a small bit in excess of 5%, but didn't feel it was the right scenario to negotiate, so I just said thanks and walked out.

I don't want to repeat the same mistake this year. I would like to have a figure in mind before going in and argue my case so that they pay me that amount. What I'm worried about is that due to it being a small company, I work closely with everyone and this is a person I see every day and get on very well with. I understand when it comes to your professional life people say "look after number one" but I still don't want to rock the boat.

I enjoy the work and get on really like the people in the office, but feel I am not being paid the market rate for my position. The likely argument against a larger pay increase (if I have the guts to negotiate) is that they have paid for some training courses for me this year, and have in a way already made me feel guilty for asking, even though it's the norm with other employees. They may also say that they would offer more if I had passed exams I am sitting (which I don't get results for until a couple months time). I highly doubt I would be able to renegotiate my salary in between pay review periods, or maybe I'm being naive.

Has anyone any suggestions on how best to handle this situation, or is it best to just accept what they offer seeing as I like the job?