Asking for a Raise During a Downturn

Asking for a raise during even the best of economic circumstances can be one of the toughest undertakings an MBA executive may attempt. Making that request in a chaotic economy can be even more daunting, and frustrating.

Editor’s tip: Though this excellent article from ExecuNet covers the topic of asking for a raise, these same principles and negotiation skills can work for you when you seek employer support for your Executive MBA degree.

While the challenge of receiving a raise today is great, it is certainly not impossible. There are several ways in which executives can increase their chances of securing a pay increase, and in some cases, alternative forms of recognition. Advanced planning, as part of a solid game plan, is crucial.

Know your worth

Before you walk into your boss’ office, it is imperative to do your homework and confidently know the true value of your position. According to Lee E Miller, author of Get More Money on Your Next Job…in Any Economy, your checklist should include the following:

• What you are worth in the market
• Compensation for similar positions at other companies
• Your own marketability
• Other job opportunities available
• Your company’s compensation philosophy

Miller says it is also important to know if your company favours a base salary or a bonus. “If it is a bonus, you may want to focus on an increase in bonus potential or bonus criteria rather than asking for a raise,” he says. Chuck Csizmar of USA-based CMC Compensation Group adds that executives should know the salary range of their current position and how their base salary compares to the midpoint. “If you’re below midpoint, you have a stronger case than if you’re already paid above the going rate,” he says.

When should you ask

For most companies, salary increases are only given after annual performance reviews, and requests for raises are typically only responded to during such a time. Csizmar stresses the importance of knowing the schedule of your company’s performance review and “how the timing of your request fits, or doesn’t,” he explains. “Ad hoc, out-of-schedule increase requests should be reserved for extraordinary circumstances, because the employee raising the issue is often perceived as a challenge (criticism) to how he or she has been treated by the boss. You don’t want to surprise the boss and put him or her on the defensive.”

It’s important to time raise requests to coincide with increased responsibilities and recent achievements. “Asking for more responsibilities or learning new skills through training are good predicates to asking for a raise,” says Miller. “The best way to set yourself up for a raise is to ask for more responsibilities in an area which the company and your boss values.”

Preparing and having the conversation

Well before you decide to ask for a raise, it’s important to make a conscious effort to build your case for a salary increase. Experts agree that executives need to be diligent about keeping track of their accomplishments so they can use them as reasons why a raise is well-deserved and appropriate at that particular time.

“I recommend that all clients keep an accomplishments file,” says Pat Schuler, president of The Gemini Resources Group. “The rapid pace of business life today makes it almost impossible to remember last week, much less months ago. My clients are invariably surprised when they look back over the months.”

Miller adds that executives shouldn’t just collect accomplishments and hide them in that folder. “The best way to present the accomplishments is not when you go in and ask for a raise, but as they occur,” says Miller. “That way, you are constantly creating a favorable impression, reinforcing the image that you are a high-performer. When you ask for a raise, you simply need to remind them of what they already know.”

Negotiating an increase in a new job

Typically, executives (all employees, in fact) will seek a salary increase when they are working to secure a position with a new company. And oftentimes, this can be the perfect time to ask for an amount of compensation not possible through employment with a former company. The starting salary at a new company sets the precedent for earnings within that organization going forward.

While you need to understand the marketplace and your position within it when seeking a raise at your current company, you must have that knowledge (and more) when investigating potentially higher-paying positions at other organizations. According to Brian Walker, president and managing director, life science practice at The Wise Search Group, a Connecticut-based executive search firm, executives need to consider the role title, the size of the company, what others in the company are earning (if it’s a public company and the information is accessible) and then compare this to your current or previous company.

Walker says it’s important to ask about base compensation, bonuses, benefits, and other perks that are still being awarded. According to ExecuNet’s 2009 Executive Job Market Intelligence Report, 29% of executive-level positions filled in 2008 included compensation packages that contained signing bonuses; 32% had stock options/equity and 39% of executives who filled those positions received other perks.

Your current salary will likely be the jumping-off point for any salary increase amount. Many recruiters say they ask to see a candidate’s W2 forms so a starting point for salary negotiation is established before the recruiter presents candidates to a client. “As a recruiter, I always discuss general salary parameters in the very first conversation with a prospect,” says Patricia Lenkov, founder and CEO of Agility Executive Search, a New York-based executive search firm. “There is no point in getting into lengthy discourse, interviews and other meetings if the salary of the job is not going to be sufficient.”

Enabling a smooth transition

Some recruiters say that the leverage executives have in regard to compensation at a new company is determined by their current employment status. “If a person is out of a job involuntarily, then he or she may have less bargaining power,” explains Lenkov. “If he or she is employed and not looking for a job and gets called by a recruiter, the salary discussion will have a very different flavor.”

Attitude also makes a difference in the negotiation process when it involves an executive in transition. “The only difference between an executive in transition and one with a job is confidence,” says Miller. “You are the employee bringing the same value to the employer regardless of whether or not you are currently employed. If you convince a prospective employer of that value, you can get what you are worth if you know how to negotiate it.

“Timing the discussion about compensation until after the employer decides to hire you is important,” adds Miller. “Actively talking to other employers, even if you do not actually have another offer, greatly increases your confidence and ability to negotiate. Actually having another offer increases your leverage dramatically.”

The bottom line is that executives need to demonstrate their value to a new organization very clearly and accurately in order for that company to justify the new (and increased) starting salary requested.

Csizmar refers to this as the supermodel syndrome: “Get the decision-maker to fall in love with you via a combination of resume, articulated accomplishments and personality, and you might find HR being told by senior management to make a deal, whatever the cost.”

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