Salary negotiation is rarely easy, but it's especially risky in a recession, when companies are scaling back to save every penny. Asking for a raise when the economy is bad can make you look out of touch with reality and insensitive to your employer's business challenges.
" 'Are you crazy? Don't you read? Don't you watch TV? Don't you know what's happening.' That's the reaction a lot of managers would have to a subordinate asking for a raise right now," says Joe Kilmartin, Salary.com's managing director of compensation consulting.
Kilmartin says that unless you're an irreplaceable employee, asking for a pay increase at this time is a bad idea. "The danger is you become a target. If the CFO or CEO says we need to get a list of who we can do without, your name may appear on that list," he says. "In over 95 percent of cases, employees should be sitting pat right now and not thinking about asking for a raise."
Other compensation experts disagree with Kilmartin.
Jeremy Sisemore, a recruiter with SearchPath International's Houston office, says there's no harm in asking for a raise during a recession, so long as you're not pushy. "If you don't ask, you don't get," he says. "No one will damage themselves by asking."
Before you go knocking on your boss's door to pop the salary question, Sisemore and Payscale.com's Director of Quantitative Analysis Al Lee, say you need to determine your market value—what you're worth based on your skills, experience, role and location. They say you can get salary information from sites like Payscale and Salary.com, by talking with recruiters, and by asking friends who've been on your team but who are no longer with your company what they think you should be earning (a subtle way of finding out what they were paid, to see how you compare.)
"If you find out you're earning average or below market value, maybe there is a case to go to bat," says Sisemore. If you're making more than market value, he adds, you might want to re-think asking for a raise, or at least consider other factors, such as your skills, the value you bring to your organization and how difficult it would be for your employer to replace you.
"If it would be extremely difficult, if it requires relocating someone, that means it's expensive and time-consuming for the company to replace you. Then you might have a good chance of getting a raise based on your market info," says Sisemore.
Similarly, he adds, if you were placed by a recruiter, that means the company was having a hard time filling your position on their own and they were willing to pay a significant fee to hire someone.
Even Kilmartin thinks that if you have specialized skills—for example, if you're the only person in your company who knows a mission-critical system and if your company will suffer if it loses you—you might be in a good position to ask for a raise.
And if you can quantify the value of specific work you've done to the company's bottom line, you're in an even better position, says Sisemore. Performance reviews that show you're exceeding expectations also help you make a case.
One other critical factor to consider when deciding whether or not to ask for a raise in a recession is your employer's position: Is it struggling to meet its numbers? Has it had to lay off staff? Has it instituted a hiring freeze?
"If they believe the company is having a hard time, an employee may still decide not to ask for a raise, even if their wage is low compared to market value," says Payscale's Lee. He notes that an employee might opt to wait to ask for a raise until the economy rebounds, knowing the company's fortunes are going to change. "They may decide, 'I'll forgo extra income now because I recognize where the company is and I want to be part of this company's future," he says.
If you decide to ask for a raise, the best way to go about it is matter-of-factly, says Lee. Provide your boss with firm data that shows that your salary is below the market rate and with evidence of the value you bring to your company, says Lee. The conversation, he adds, should be about your skills and experience in the context of the market rate—not about how wonderful you are, how much your boss likes you or how much your employer cares about you. (For more salary negotiation tips, see Negotiating Your Worth and Techniques for Negotiating Salaries.)
"Employers as well should be aware of what the market rate is, and not begrudge employees for finding out they're being paid less than market wages," says Lee.