Employee Wants a Raise? Here's How to Respond
Does your employee want a raise? You may be unsure of how to respond. There are many factors to consider when an employee approaches you regarding a pay increase. It's important that you respectfully review the request, and consider all positions when making your decision. Here are some tips to navigate a raise request.
Take Time
By taking the time we aren’t suggesting you drag out the process, but rather respond and not react. Listen to what the employee is telling you if they approach you with a list of reasons. Be welcoming to their request, but do not make promises. Make it clear that you will need to take a week (or however) to review their request. Don’t let the request linger indefinitely as this could make the employee feel unheard. Let them know you will have an answer by a reasonable date.
2. Do a salary comparison
If you haven’t updated a pay structure in years, now is the time to do so. Employees may be asking for a raise because of inflation or because they feel their pay is below what they can pay elsewhere. Based on their job description, do your research and find out if what your company is offering is comparable to what other similar positions offer. If the employee has been there for a long time or is a top performer you may also want to consider bonuses that need to be included or built-in. Of course, be sure to check the budget and decide what is realistic.
3. Consider the Value
Ask yourself what an employee brings to the table. If you decide not to give them a raise and they walk, are you willing to pay the cost of replacing them? Do they play a crucial role within your organization? Would it be difficult to find someone with the same level of expertise? As you look at these questions, you may find that giving them a raise is a better alternative.
4. Consider Other Options
If you’re in a situation where you can’t offer a raise, you may want to offer them something else. Could you provide more flexibility in their schedule? Could you give them more PTO? Can you offer a quarterly bonus over an annual raise? Think of ways that you can make the conversation a win-win rather than a flat-out denial.
5. Communicate the Decision
Many employers communicate the decision via a yes or no. Not providing any further communication when the answer is no can shut down communication with the employee. Provide reasons. If you need them to meet certain goals before you can offer a raise, make that clear. If the company simply lacks the budget, being honest will create more trust than giving an ambiguous reason. Employees appreciate transparency.
More Payroll or Management Questions?
Our team of experienced leaders is here to help! As part of the HR consulting we offer we can walk you through calculating a salary and doing a salary comparison with ease. We also offer payroll services to ensure the process itself is quick and simple for you each month. Make the start of the new year a time when you simplify your processes. Reach out to us today to help and information!