How to Ask for a Raise When Your Company Is Struggling

The February all-hands meeting ran eleven minutes. The chief executive of a software company in Columbus had two announcements: revenue growth had slowed to single digits, and salaries would be frozen for the rest of the year. A product manager in the room had spent the previous month assembling a raise case — a folder of shipped features, a spreadsheet of her output, three pages of market data pulled from Payscale. She closed the folder that night and did not open it again for six months.

She was not alone. In the spring of 2020, at the depth of the last downturn, roughly 4 in 10 American employers froze salaries or planned to, according to surveys that WTW, the compensation consultancy formerly known as Willis Towers Watson, ran at the time. Layoffs and discharges hit more than 12 million in a single month that April, a Bureau of Labor Statistics record that has not come close to being matched since. Merit increase budgets, the pools companies set aside for annual raises, fell to about 2.5 percent of payroll that year, from a more typical 3 percent.

A struggling company is the hardest setting for a raise conversation, and sometimes the answer is genuinely no. But compensation professionals who have worked through downturns describe a narrower set of paths that still move money: retention conversations backed by real alternatives, market adjustments for people paid below their range, and title changes with future pay attached. This article explains which of those conversations are worth having, how to build the case that survives a lean year, and the timing signals that separate a hopeful ask from a wasted one.

What a salary freeze actually freezes

A freeze is a budget decision, not a judgment on individual performance. Most large employers build pay the same way: every fall, they set a merit pool, expressed as a percentage of payroll, informed by the salary budget surveys that WTW and Mercer publish each year. In a normal year the pool runs about 3 to 4 percent. Companies then distribute that money across teams, and managers argue over shares of it.

When the company is struggling, that pool can shrink to nothing. WTW data from the 2020 downturn showed the average merit budget cut roughly in half, and a large minority of employers set it at zero. The same pattern has appeared in milder forms in the cooler hiring markets of 2024 and 2025, when average increase budgets settled near 3.9 percent after peaking at about 4 percent in 2023 — still real money, but a tighter envelope than workers had grown used to.

The important distinction for an employee is between a frozen budget and a frozen payroll. A merit freeze stops the annual increase; it does not stop every form of pay change. Companies still make market adjustments to keep critical roles competitive, still promote people into new roles, and still counter offers when a valued employee is about to leave. Each of those draws on a different pocket of money, and each has its own approval path.

A true pay cut is a different situation. When a company reduces salaries across the board — as some employers did in 2020 and as struggling firms periodically do — an individual request lands badly, whatever its merits. Compensation advisers suggest waiting for the cut to be reversed or for the company to announce a recovery milestone before raising the subject. The exceptions are narrow and almost always require an outside offer.

The conversations that still move money

The retention conversation is the oldest and most reliable of them. It starts with a real alternative: a written offer, or at minimum a documented interview process at another company. A recruiter in Austin who has watched comp committees for fifteen years described the dynamic plainly: when a manager brings an offer letter to a committee, the question changes from whether the budget allows a raise to whether the company can afford to lose the employee.

That logic rests on numbers most managers already know. The Society for Human Resource Management puts the direct cost of replacing an employee at 50 to 60 percent of annual salary, and the full cost — recruiting, training, the productivity gap while the seat sits empty — at up to twice the salary for senior roles. In a lean year those costs grow, because the people who remain are doing more and the market does not supply replacements overnight.

"A freeze freezes the budget, not the conversation," said a compensation consultant who has advised companies through three downturns and asked not to be identified. "I have approved raises in years when the company froze salaries, almost always because the alternative was losing someone we could not replace."

The market adjustment is the second path, and it does not require an offer at all. Compensation teams track where each employee sits inside the pay range for their role — a ratio known as compa-ratio, with 1.0 meaning dead center of the range. When a valued employee sits well below the midpoint, fixing the gap is an equity problem, not a merit problem, and equity problems survive budget freezes. The conversation is not "I deserve more"; it is "my pay is out of line with the range for this job, and the data will show it."

The third path is the title change with future money attached. A promotion in a frozen year often comes with a new title and a delayed raise — the money arrives when the freeze lifts or at the next budget cycle. The arrangement is only worth taking when the future date and the amount are written down. Verbal promises of "we will make it right next year" have a way of evaporating when budgets return smaller than expected.

Building the case that survives a lean year

In a lean year, the case that works is not about fairness to you. It is about risk to the company. The framing that compensation professionals describe as most effective has three parts: where your pay sits against the market, what you delivered that the company would feel immediately if you left, and what losing you costs.

The market part is the easiest to document. Payscale, Glassdoor, and the Bureau of Labor Statistics all publish salary data by title, level, and metro area, and a set of three or four comparable postings or range reports is usually enough to establish where you sit. Marketivate's salary calculators can convert hourly and annual figures so the comparison is apples to apples. The point is not to prove that you are underpaid in the abstract; it is to show that your role has a going rate and that the company is paying below it. In a downturn the market does not stop moving, even when budgets do — and compensation teams know this, because their own surveys tell them so.

The delivery part is specific and short. After layoffs, work does not disappear; it redistributes, and the employees who absorb it have a measurable story to tell. A supply-chain analyst in Chicago who survived two rounds of cuts in 2024 kept a running list of the systems and accounts she had taken over, and she presented it in a single page: eight bullet points, each with a number. Her manager took the page to the comp team, and she received a market adjustment in a year when her company's merit budget was zero.

The replacement-cost part closes the argument. When the company is struggling, the instinct is to conserve cash, and a manager may need help seeing that a raise of a few thousand dollars is cheaper than the alternative. The SHRM figures give that manager something to carry upward: replacing you will cost 50 to 60 percent of your salary before productivity losses, and the hiring market, however soft, takes months. The case in one sentence: the company can pay a small amount now or a large amount later.

The timing signals that matter

Timing does more work in a lean year than in a good one, because the window for pay decisions is narrow. Most companies set their salary budgets months before the money lands, and the decision about next year's increases is typically locked in during the fall. Asking after the budget is set means asking someone to reopen a closed spreadsheet. Asking before it is set means joining the conversation while the spreadsheet is still open.

Certain company signals tell you the door is open. A quarter that beat internal forecasts. The first backfill approved after a freeze. A hiring freeze quietly downgraded to a slowdown. A manager who starts talking about next year's plan in September rather than January. Each is a small admission that the crisis phase has passed, and each is a reasonable moment to raise the subject.

The signals that mean wait are equally clear. A second round of layoffs, announced or rumored. Executive pay cuts that include the C-suite. A suspended 401(k) match. Clients canceling contracts in public. In those conditions, an ask does not fail quietly; it marks you as out of touch, and the memory outlasts the freeze. The exception is the retention conversation, which is always timed by the offer, never by the calendar.

It also helps to know which levers a compensation team can actually pull when the merit pool is at zero. The patterns below come from salary budget surveys and from compensation professionals who have worked through freezes; they are not guarantees, but they describe where the approvals usually live.

What a compensation team can approve when the merit pool is frozen

Change	Likelihood during a freeze	What it usually requires
Merit increase	Rarely	A written exception from the finance team
Market adjustment	Sometimes	Pay below the range for the role, documented with data
Retention counter	Sometimes	A written outside offer the company wants to match
Promotion with delayed raise	Often	A new title, a written date, and a fixed amount
Title change, no pay	Commonly	A reset that puts future raises on a new base

When money is frozen, other things move

If the answer is no, the conversation does not have to end. A no to money in a frozen year is often a yes to something else, and the something else can be structured to become money later. The most useful of these is the future-dated raise: an agreement, in writing, that when the freeze lifts, your salary moves to a specified figure on a specified date.

The future-dated raise matters for a reason that is easy to miss: when the freeze ends, the money is allocated to the people whose promises are documented. Budgets return in uneven waves, and the employee with a signed note from the comp team is paid first. A version of this exists for bonuses too — a performance target with a written payout formula for the year ahead, which turns a frozen budget into a bet the company can afford. The value of a postponed increase is easy to underestimate, and a future salary calculator shows what a year of delay costs by retirement.

Other currencies hold value even when cash does not. A title change resets your band, which means every future raise is calculated from a higher base; the effect compounds over a career. A week of additional vacation, a compressed schedule, or a remote-work arrangement that cuts commuting costs can be worth thousands of dollars a year, and they cost the company almost nothing. Time off also buys something else: space to interview, should the market change.

What makes any of these real is the same thing that makes a raise real: a written record. The freeze is a financial event, and companies behave accordingly — they document everything. Ask for the same courtesy. An email confirming the date and the amount, or a signed memo from human resources, is not distrust; it is the difference between a commitment and a sentiment.

The mistakes that end the conversation

The fastest way to kill a raise request in a lean year is to make it sound like the company owes you for staying. The second fastest is to threaten to leave without an offer in hand. A recruiter in Austin described the pattern: an employee who bluffs about a nonexistent offer does not get a counter; they get a reputation, and the reputation travels.

Asking during the wrong week is a close third. The days immediately after a layoff announcement are not a negotiation window; they are a period when every pay conversation is read as a morale risk, and managers are instructed to defer all of them. The same applies to the week of an earnings miss. A request that would have been reasonable in November is a different creature in February.

A third mistake is anchoring on a number without data. In a good year, a raise request can be a feeling: I have been here three years, I work hard, I deserve more. In a lean year, the only numbers that matter are the market rate for your role, your position in the range, and the arithmetic of replacement. A request that opens with those numbers can be evaluated. A request that opens with a feeling has nowhere to go.

Finally, do not ask in the wrong room. The manager who can champion your case is not always the manager who can approve it, and the difference matters more when money is scarce. Ask your manager what the approval path looks like — who signs off on exceptions, what documentation the finance team wants, when the next budget review happens. A good answer to that question is worth more than a rehearsed pitch.

When the answer is no

A rejection in a frozen year is information, not a verdict. Ask what would change the answer: a quarter of growth, a reopened budget, a promotion cycle. Ask for a specific date to revisit, and put it on both calendars. Then keep the case alive — update the market data every quarter, add the new responsibilities as they arrive, and keep the document short enough that a busy manager can read it in five minutes.

The larger question is whether to stay at all, and here the data are worth taking seriously. Federal Reserve Bank of Atlanta figures show that people who change jobs have consistently captured larger pay increases than people who stay — a gap that narrows when the labor market cools and widens again when it recovers. In 2020, switching jobs was a gamble; by 2021, job switchers were again outearning stayers by several percentage points. A struggling company may recover, and the employees who stayed through the hard year often benefit disproportionately when it does. But the history of downturns says the recovery does not arrive for everyone at the same time.

The practical move is to act on both possibilities at once. Keep the case current, so that if the company turns, you are positioned at the front of the line when budgets reopen. And keep the market data honest, so that if it does not, you know your number and your options before the hiring market turns. The employees who fared best in the last recovery were not the ones who demanded the most during the freeze. They were the ones who stayed visible, kept receipts, and were ready on both sides of the door.