How to negotiate a raise when the boss says there’s no money
A declaration of poverty doesn't have to end the conversation.
Do your research
Before setting up a meeting with your boss to ask for a raise, dig into the company’s current financial standing and arm yourself with the information you need to combat the claim that “there’s no money.”
“For private companies, it may be difficult to find actual financial information but since you work there you should have a few clues, says Katie Donovan, founder of Equal Pay Negotiations. Instead, “listen to the reports from heads of sales and finance at company meetings, and check the corporate website. Look at information for investors and at the press releases. Both should give you a clue as to how the company’s financial standing.”
After researching your company’s financial standing, check your employer’s policies for any rules or timetables regarding raises. “Some companies only provide raises once a year, know your company policies, says JJ DiGeronimo, president of Purposeful Woman Inc. and Tech Savvy Women.
Build a case for yourself
You need to communicate that you’re looking for a salary that better reflects the effort and energy you put into your work and the benefit you bring to the company, so research and define your contribution -- the “give” for what you want to get. “Build your business case to justify your ask, include the ways you've helped the company earn or save money, and give concrete dollar amounts,” says DiGeronimo.
“Your boss is focused on the bottom line, demonstrate the value you bring,” agrees Moag Barrett CEO of Skyeteam.
In addition to communicating the value you already bring to the table, present strategies to help the company to save or make more money in the future. “Think about where the organization can do better and the way in which it can achieve goals quicker and smarter,” says Lynda Zugec, managing director at The Workforce Consultants, “what you suggest can turn out to be your raise or bonus.”
Know your best alternatives
One of the best ways to combat the “there’s no money” for a raise response is to have a backup plan that includes a list of suitable alternatives you’d be willing to take in place of pure monetary compensation.
“Knowing what you want, and knowing your BATNA (Best Alternative To a Negotiated Agreement) are key,” says Iqbal Ashraf, CEO of Mentors Guild, “is there a role change that you have been eyeing? Or a high-visibility project? Does your company give stock options?”
Explore other high-value alternatives that would add value to your life and positively affect your work arrangement, for example, “consider a change in title -- moving to a new level can help your boss provide a higher salary,” says Bennett.
Or, get creative with other value-adding options such as “flexible work hours, paid travel and reimbursements for training classes, certifications, and other continuing educations classes that will benefit both you and your company, says Laura Rose, owner and certified business coach at Rose Coaching.
Aim for an agreement
Before ending the raise discussion, push for an agreement and acknowledgment for your efforts.
“Have an agreement and business commitment upfront to bring in X money for an X raise by end of year,” suggests Rose. “If you make this agreement up front and make your numbers, it's easier to get a raise.”Bennett suggests you “ask for a timeline and what you would need to demonstrate and achieve -- then follow through!” And finally, “if nothing works, at the very minimum, get an acknowledgment that you are dropping your request for a pay raise temporarily to help the company in a tight situation. The last point is really important, it buys you an advantage in a future negotiation,” says Ashraf.