Dec
9
Your Employer May Not Have Money
December 9, 2009 | 1 Comment
Some people tell me that their employee is taking advantage of them in a recession. It may well be true – an employee value may have been diminished due to availability of cheaper, unemployed resources.
However, my first question to those people who tell me of their employers plans to pay them less or to torture them with a miserable 3% annual raise is:
Are they earning money? (Earning == Revenue less spendings)
In this recession, many companies are losing money. Some of them have not closed the doors just because they are hoping the economy rebounds. They may be doing you a favor by keeping you employed. They are also happy to have you – they know they are the ones taking the big risks, and your salary is the price to pay for the risk.
Public companies publish this information on the web. (Google them). The government is loosing money for decades. And Private companies may not publish their numbers — but you can find them on the grapevine / water-cooler (example: are they close to being public (earning)? or are they delaying the plans by 3 years (bleeding)?)
The second question I ask is:
How much more money do they make this year, versus previous year? Earnings (Revenue less salaries, expenses, taxes, depreciation, etc.)
If a company revenue is flat, why do you expect them to raise your salary? Reason would dictate your salary should stay flat (especially when your medical insurance may be going up, your portion and theirs).
Unfortunately, the opposite is not always true. Once the economy bounces back, the company may experience increasing margins and profit / revenue. Don’t expect a 25% raise just because they raise their earnings by that much (although they may give you a better bonus, for example). Companies start just because they are willing to take a big risk in exchange for a bit reward potential.
I just feel like I wanted to put some things into perspective today.
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To be cliché, “you can’t have your cake and eat it too” whether your the company or the employee. When times are touch people need to suck it up, but at the same time an employer must consider the opportunity cost of loosing that employee and training another and the opportunity cost of what another employer will pay that very same employee.