How you can win a raise amid layoffs and pay cuts
The recession has hit your company. Your friends have either been laid off or had their salaries cut. The company is leaking red ink around the edges. But you need a raise. How do you get it?
This is a problem an increasing number of people will be facing over the next year. In many cases, salary budgets among major corporations have either leveled off or are declining. A recent survey of 600 major US companies by Sibson & Co., a Princeton, N.J., benefits consulting firm, found that 26 percent of the companies had lowered salary spending plans from last fall. And, according to James Mitchell, managing principal, it's likely even more will do so next year, ''since salaries tend to lag the economic cycle.''
Edmund Schwesinger, national director of compensation at Coopers & Lybrand, a leading accounting firm, predicts salaries on average will rise 7 to 8 percent this year. But he notes that this is down from the 10 to 12 percent increases many corporations expected to give. ''If the recession continues,'' he comments, ''companies will tighten up even more so.'' He points out that employees with salary reviews coming due later this year could find themselves with merit raises of only 5 to 6 percent - which in real terms might be ''better than most people have received in the past because of inflation.''
Despite the bad economic news, experts say, individuals do not need to sit on their hands just because the country is in a recession. Marilyn Moats Kennedy, who has just published a book, ''Salary Strategies'' (Rawson, Wade Publishers Inc., $12.95), says that ''a lot of people assume because there's a recession, it's spread like peanut butter.'' She notes that many companies have continued to make money even during the downturn.
For example, Marsh Bates, a partner at Hay Associates, a benefits consulting company, says employees in the petroleum, financial services, utilities, and railroad industries are more likely to get raises than those in the construction equipment, steel, and auto industries. But he says, ''I think raises will still be given to the majority of employees in the majority of companies.''
In a survey just completed, Hay Associates discovered that the industrial sector is by far the hardest hit, with 80 percent of the respondents indicating they planned to take some kind of salary action. Two-thirds of the industrial companies indicated they planned layoffs, and nearly as many either had hiring freezes or were considering them. Some companies indicated they are stretching out the time between salary reviews, while still others indicated they weren't giving pay increases unless a promotion was involved.
And, as Mr. Bates notes, a downturn may be a good time for a company to reward a top performer even more. ''I don't think a company should give automatic raises to everyone,'' he states, ''but you want the high performer to stay and you want to provide significant recognition of that to the lower performer.'' Last year, he notes, Hay Associates found companies gave pay raises of 8.8 percent to employees who were average performers and 12 percent increases to those considered ''stellar.'' He says this differential should be higher.
Even though companies are likely to be parsimonious this year, experts say, there are still ways an individual can make a pitch for a healthy raise. For example:
* Show the boss you make the cash register ring. ''You can point out that it used to take you an hour and 20 minutes to do a certain job and now you can do it in 20, thus pointing out to the boss your increased productivity,'' says Mrs. Kennedy.
* The company has everything to gain by your staying. ''The boss may say there are 20 people waiting for your job,'' Mrs. Kennedy says, ''but you can reply that 'there is no question you can replace me, but you have trained me, I know how to do things the way you want them done, I think that is valuable.' '' Peggy Anderson, a consultant at Sibson, adds that the individual with some leverage over the company, such as a petroleum engineer, is more apt to get a raise, since ''it's likely they don't want to lose you since the cost of replacement is so high.'' Mrs. Anderson points out that in a company with a lot of belt tightening going on, ''it could be tricky; you may have to prove you are unique.''
* Have your research done. Walk into the salary review with papers in your hand. ''Don't go in empty handed,'' stresses Mrs. Kennedy. ''Think of yourself as self-employeed trying to sell a service.'' It's important to research what the current market is for someone in your job category. Call a trade association and get salary ranges for people doing your job elsewhere. ''If you can show the boss you are being paid 15 percent less than people doing the same work elsewhere,'' Mrs. Kennedy says, ''you may sway him into giving you the money.''
And, finally, she says, if the boss won't give you a raise, ''ask to be trained to do more things so you will be visible for a higher-level job when it's available.''