How to Ask for a Raise When the Company Is Not Doing Well Financially?

This post may contain affiliate links, which means I’ll receive a commission if you purchase through my links, at no extra cost to you.  Please read full disclosure for more information.

Knowing that you deserve to be compensated better but not asking for a raise can cause resentment and lower your output at work. So, usually, requesting a raise proportionate to the value you provide is in the best interests of the company. But what do you do when the business isn’t doing well?

To ask for a raise when the company is not doing well, you must make a proposal showing your tangible short-term value that exceeds the requested raise. You should also prove that the company saves more money by giving you the raise than it does by finding and training your replacement.

If that sounds risky and daunting, do not worry. There is plenty of nuance in asking for a raise, and this article is all about the little things. You will learn how you can avoid creating resentment or triggering a rejection when you demand a raise, the best practices of asking for one, and what not to do when crafting your proposal. But first, let’s look at the nature of your challenge.

Why It’s Tougher to Get a Raise When Your Company Isn’t Doing Well Financially

There are two types of employees: those who think that they can get a raise under any circumstances and those that think that they won’t get a raise no matter what. How right they are, depends on their value to the company but also on the company’s finances.

It is tougher to get a raise when your company isn’t doing well because the company cannot afford to pay more or set up expectations of higher pay in a financial crunch. But if your role is related to increasing direct revenue, the perfect time to get a raise might be when the company is in financial trouble.

The two types mentioned earlier are exaggerated caricatures. In reality, employees fall somewhere in between on the spectrum. And between the two types, those who lean towards thinking they can get a raise no matter what usually get a raise simply because they ask. If you can craft a strategy to ask for a raise without seeming insensitive to the company’s condition, you might get a raise.

How to Adapt Your Raise Proposal When the Company’s Budget Is Tight

First and foremost, you need to pause the long-term value analysis because when someone is in financial trouble, they think short-term. This is true for people with their personal finances and CFOs and their companies’ finances. Your proposal should be geared toward your short to medium-term value.

This value should be tangible. We recommend doing a cost-benefit analysis that makes a case for your value to the company by committing to a tangible figure. Your performance should back this figure. 

Some candidates make the mistake of basing their raise demands on the marketplace. If your company is in a financial crisis, the decision-makers who approve raises can dismiss such proposals simply because the company isn’t in the same position as other companies.

Steps for Asking for a Raise When the Company Is Not Doing Well Financially

Now that you know that your proposal has to focus on short-term tangible value and must make a case without emphasizing the market rates, let’s look at how you can approach your raise request without worsening the company’s financial turmoil.

1. Identify Why the Company Is Not Doing Well Financially

There could be a dozen reasons that explain your company’s financial condition, but they fall into two categories only. The first category of causes is factors outside of your company’s control. Usually, these are the market conditions and the disposable income available to your average customer. 

The second type is the internal problems like a weak sales process, poor research, and development. In case the problem is internal, you can tie your raise request to overcoming the obstacles that the company is facing. But if the problems are out of the company’s control, then you can only make sure your raise demand doesn’t put the company out of business.

2. Create Your Case on Why You Deserve a Raise

Asking for a raise isn’t the same as asking for charity. You’re asking for money you deserve, which means that you should believe you deserve it and must have facts to prove your point. As mentioned earlier, one way to get the raise could be to pinpoint the problem and put a dollar value on it. 

Then you can explain how you can solve said problem. But if the problem is in another department, you do not have that luxury. That’s when you should use your own track record. Here are three ways to make your case.

  • Merit and track record – You must ask for a raise based on your performance and indicate how you have been delivering much more value than is required of you in your role.
  • Future projections – This isn’t taken as seriously and should not be used as the sole cause. Telling your seniors how you can help improve the conditions with specific action items can be a good add-on to your merit case.
  • Citing market competition – You can technically cite the market pay rates, but this can leave the management resentful because the company is not in the right financial condition.

3. Make a Case for Why the Raise Is Feasible

This is a key differentiator between asking for a raise in the standard market conditions and requesting one when the company is not doing well. You must make a strong case as to why hiring you will not impact the company’s financial situation negatively. To make this point, you must prove three things:

  • Giving you a raise for the entire year should save the company more money than training your replacement.
  • The raise you demand must increase your total compensation to a maximum of 25% of what you produce for the company.
  • The work you do in exchange for a raise should produce more medium-term income than the raise itself.

4. End the Meeting While Giving Options to the Management

Once you have handed your proposal to the concerned part and have made a case for your raise, it is time to end the meeting. Do not end the meeting while demanding a response by the end of the day. Let the management have options to increase your odds of success. The best practices section below is all about creating these options and increasing the chances of getting a “yes.”

Best Practices for Asking for a Raise When the Company Is Not Doing Well

The following steps are not mandatory, but each one increases your odds of success. You should try to exercise all of these to maximize your odds of getting a “yes.”

Ask For a Reasonable Raise 

When making your case, choose a reasonable amount for your raise because asking for a 50% raise when the company is in financial trouble might not result in approval. Don’t go too low with your demand either, because you don’t get to make a case for your raise every week. 10% might not be worth it. 15% to 20% is the sweet spot for companies that are not doing well.

Choose the Ideal Time 

There are good times to ask for a raise and bad ones. And if the company isn’t doing well, then there are more bad times than good ones. Timing is everything, and you should ask when peoples’ spirits are high. 

Usually, this means making your request after the management has received good news or the person in charge is in a good mood. If you’re the cause or the bearer of the good news, it further increases your odds of getting a nod.

Ask Directly 

Finally, you do not want to be vague when requesting a raise because there is no advantage in indirection. When you go in to ask, be direct and avoid being shy or sugarcoating. That said, you shouldn’t be disrespectful, rude, or unnecessarily blunt. You must maintain a level of respect while making a clear case for what you want.

Give Multiple Options 

You should not finish the meeting with the management having only a “Yes” or “no” option because that, even in a neutral position, results in fifty-fifty odds. By giving multiple “yes” options, you decrease the odds of getting a hard “no.” 

Some of these options include but are not limited to a performance-based raise, multiple percentage options tied to different duties, and late-release raise that kicks in at least a quarter later. All of these give management more ways to fulfill your request without hurting the business.

Final Thoughts

Getting a raise is hard, especially when a business is not doing well. That doesn’t mean you should not ask for one. You just need to manage your expectations and build a case that leaves your management no option but to give you a raise. Then you must end the meeting while giving them multiple options, including a performance-contingent raise, allowance increase, and late-release raise.

About Post Author

Scroll to Top