What to Do When an Employee Asks for a Pay Rise

The ‘pay rise’ conversation can be equally as daunting for employers, as it is for employees.

In a recent study by REED, over half of the UK workforce reported fearing to ask for a pay rise. Most respondents stated the reason they’re scared is because they either don’t know what to say (16%), they don’t want to be seen as greedy (15%), they’re simply scared of asking their boss (12%) or they’re worried about being turned down (12%).

Either way, it can be a difficult and sometimes confronting conversation.

There are obviously various reasons why employees could be asking for a pay rise, it could be that time of year, they could have undertaken a period of development and growth, or more negatively; they feel undervalued. Whatever the reason may be, no matter the end result, there is a certain way to navigate the conversation.

When an employee asks for a pay rise, it’s important to let them make their case and demonstrate why they believe they deserve a raise. After that, it’s usually best to take some time to consider your decision and liaise with certain stakeholders, then get back to the employee.


Be sure to ask why

When an employee asks for a pay rise, they’re often unsatisfied with an aspect of their employment. It’s important to determine the reasoning behind the employee asking, as the solution may be different. For example, an employee could feel as though they’re undervalued, or that other employees are getting paid more than them, or they could be experiencing financial hardship. Each of these situations would be approached differently and may result in varied outcomes.

Ultimately, businesses need to recognise and acknowledge employee’s individual needs and motivators. Therefore, it’s important to hear them out and encourage them to explain why they’ve come to this conclusion.


Consider the consequences of the outcome

It’s important to weigh up the cost of the pay rise, versus potentially losing a great employee. If they have a justified reason for wanting a pay rise, careful consideration needs to be employed.

If the company simply can’t afford a pay rise but really wants the employee to stay, they could have an honest conversation with them and ask what it would take to keep them. They could also counter offer with a non-monetary based incentive, such as more paid leave, shares in the business or paid development training. Equally, they could be looking to take on more responsibility, and with that, earn more money.

Alternatively, if it’s not the right time for reviewing remuneration, however performance reviews are scheduled for later in the year, you could consider delaying the conversation.

Whatever the outcome, take the time to evaluate each option and determine which makes more sense.


Take a logical and respectful approach

When undertaking the final discussion with the employee around whether they will receive a pay rise or not, it’s important to be respectful and considerate. Communicate your appreciation for their honesty and acknowledge why they believe they deserve a pay rise. Then outline your decision-making process, so that they can see the logic behind the decision and that their request was taken seriously. One useful way to determine whether the request is justified is to conduct an internal pay audit and benchmark salaries against industry standards.

New research from the Harvard Business Review found that 70% of employees who were denied a pay rise, with little or no explanation, stated that they planned on searching for a new job within the next six months.

If the outcome is negative provide the employee with reasoning and some constructive criticism, to let them know what they can do to improve. On the other hand, you may offer them a lesser amount or a different type of reward, which equally needs explanation.

Ultimately, the only way to navigate this type of conversation is by being honest, understanding and focusing on strengthening the employer-employee relationship.


Author: Melanie Beckham

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