How to negotiate a salary raise in a slowing economy full of layoffs

Woman happy at her laptop
Know your worth - then add what it would cost your employer to replace you.
Deepak Sethi—Getty Images

In times of economic uncertainty, when layoffs and cuts become commonplace, the mere thought of negotiating a raise may seem audacious at best, or even insensitive to those whose roles are at risk.

But just as businesses are experiencing the pinch, so too are employees. 

Inflation is rising, mortgage payments are going up, and money doesn’t quite stretch like it used to.

Struggling to meet growing costs, it’s only natural that asking for a pay rise is going to be at the forefront of most people’s minds. 

As risky as it may seem to ask for more money while leaders globally are pondering whose heads should be next on the chopping board, experts told Fortune that now’s as good a time as any.

With costs rising but consumer confidence low, businesses need to stand out from the competition now more than ever if they want to survive.

Backed with the confidence that your employer really can’t afford to lose valuable players, here are some things to keep in mind before storming into your boss’s office and asking for more money.

Know your worth (and some)

Before even broaching the topic of salary with your boss, you must first ensure you know your worth. For all you know, your pay could already be well above the going rate. 

 “Asking for a pay rise because you feel you work hard, deserve it, or are worth more money, simply does not demonstrate why the company should further invest in you,” stresses Sophia Procter a former blue-chip company manager turned founder of the children’s retailer, Munchy Play. 

Start by looking at job adverts for similar roles to your level and speaking with recruiters to find out what’s a fair salary range for the work you’re currently doing. 

You can use this data as leverage when approaching the topic of pay with your employer if it’s clear that you’re being underpaid. 

“Ideally you should conduct your research from multiple sources, to strengthen your data and avoid falling victim to a lower offer,” Ed Johnson, CEO and co-founder of the online career progression and mentoring platform PushFar says.

“Even if your research supports your case for a higher salary, it’s not enough to simply counter with a higher number – you need to explain why you deserve it, especially if a company is struggling financially.”

By noting down how your work has benefited the growth of your company, from positive client feedback to any sales you’ve generated, you can begin to quantify how much value you bring the organization.

“Any metrics will help to justify your worth as an asset and how you personally add value,” Procter asserts while adding that workers should remember to add $6,000-$19,000 into their calculations—the approximate cost for employers to find your replacement, depending on your level of experience. 

Plus, emphasizing your value and dedication to the organization, highlights that investing in your growth is not only beneficial for your own financial well-being but also the company’s long-term success.

Be rational

Deep down you may be panicking about the rising cost of rent and your maxed-out Amex card, but breaking down these issues in front of your manager won’t help win your case.

“First and foremost, and even if you do nothing else, rid yourself of any emotions relating to your request,” stresses Dr Catherine Baudino, an executive coach and author of the corporate self-help book, Stepping into my Shoes. “Emotions come in the way of any statement and take away clarity.”

She suggests communicating your request in a rational manner by sticking to the facts, instead of pouring your heart out.

“I know this sounds harsh and cold, but a hysterical or tearful request is not going to get you anywhere,” she adds.

Part of getting your tone and messaging right (and sounding rational) comes with practice.

If you’ve ever written an emotional speech, you’ll know that the first time that you recite it can be messy but the more you repeat it, the more you’ll be able to speak matter-of-factly. 

“Practice and practice again to yourself in front of the mirror and, if possible, in front of a trusted friend or coach,” Baudino adds.

“By finding a mentor that you can rehearse with, it will help you build your confidence as they can walk you through role-playing scenarios to help you feel prepared and empowered to ask for fairer terms,” Johnson echoes. “Mentors can also help you to consider unexpected questions you might get, how best to answer these, as well as to help you deliver your negotiations more confidently.”

Timing is everything

Many experts echoed that timing is everything

If your company has just gone through a round of layoffs, it might be worth waiting for the dust to settle before asking for a rise. 

“Be mindful of where your company stands at this point in time,” says Charlotte Davies, careers expert at LinkedIn. “It’s a difficult time financially for many businesses – and that could include your employer too.”

She suggests being empathetic to the company’s circumstances and the financial challenges it may be facing. 

“Read the room, but know that if you’re confident you’ve met your recent objectives and your performance is bringing benefits to the business, it’s still ok to put your point of view across while being sensitive to their current situation,” she adds.

On the topic of timing, it’s also worth thinking about your boss as an individual, who may have a lot on. The last thing you want to do is further stress them out following a meeting about the company’s poor performance.

“If your boss is not a morning person or is on a trip overseas, I dare to suggest that this might not be the best time to get their attention”, Baudino insists.

Work out your alternatives

Finally, if there is no room for a pay rise, don’t take it personally—the company is rejecting the proposal, not you.

As Martin Schweinsberg, an assistant professor of Organisational Behaviour at ESMT Berlin, says, “Sometimes, there just isn’t any room for a higher salary right now.”

He suggests thinking about what else could make you happy or indirectly help you financially. 

“What is valuable to you and potentially cheap for the company?” he adds. “Maybe you’re paying a lot of money from your after-tax income on a gym membership and it could be cheap for the company to add you to the corporate plan.”

Many companies offer perks such as discounted goods, training programs, and share options so use these as part of your negotiation wisely.

Meanwhile, most companies are more open to flexible working now than they were in previous years, which could potentially allow you to save on travel, food and other costs associated with being in the office. 

But ultimately, if you’re unhopeful that you’ll be able to negotiate anything from your current employer, then instead of looking at alternative means of growing in your current role, it might be time to look for a new job.

Having already done the tedious task of trawling the internet for relevant higher-paying roles, you may as well apply for ones that pique your interest.

“Nothing is more empowering than having alternatives because the recruiter knows they may have to pay you more to keep you,” Schweinsberg adds. “Alternatives give you power in the negotiation.”

Plus, you may even find a company that knows your worth and will pay you generously to ditch your current employer for them, negating the need to negotiate with your current boss altogether.

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