The topic of a pay rise can be a tricky and sensitive one to navigate around for employers and employees alike. Not only is this due to the impacts of an economy in which many people are feeling the strain; within your company you will have those who may feel embarrassed about bringing up the subject while others will appear more confident and headstrong.
Dealing with these situations in a way that is right for both parties may not be straightforward, but if you find yourself faced with such a scenario, it’s best to be as prepared as possible. Here are some crucial ideas and elements to consider:
Initial reaction to the request
Whether you feel an employee is justified in making a request or not, it’s important to have the right initial reaction. Remember that you’re dealing with an individual who may have struggled with their own approach to the subject. Your first reaction to their request will go a long way to setting the tone for the remaining interaction and can be the difference between a positive exchange or dissatisfaction among your workforce.
Reacting with professionalism and respect for their perspective will communicate that you’re willing to work with them to reach the best outcome. Part of this is ensuring you listen to their reasons for this request; give them a chance to outline their reasoning and they may even give you a new fresh perspective you hadn’t considered at the start of the exchange.
Your response should also give the impression that you are at least willing to consider their request rather than shutting it down immediately. Sometimes you may consider it an unrealistic request, but this is no reason not to consider other possibilities and be open to accommodating them as much as possible.
Performance reviews
A positive way to justify a pay rise, if applicable, can be combining it with a performance review. This can be motivation for other employees who see good performance suitably rewarded. From your perspective it also means you are gaining something from the request; you can fall back on a performance review if an employee is falling short of the standards required for said pay rise.
For either side, this is a way of justifying both their request and your response to it. But there is, of course, a balancing act to consider. If there is any hint of bias or unclear performance standards, this may create resentment among some employees who consider it unfair and can end up being negative for morale.
You may also create a situation in which high performing employees use this as extra leverage for future pay negotiations. This is worth bearing in mind when asking whether it is the right approach for your specific company.
Experience and value
If you’re considering the offer of a requested pay rise, certain factors should play a role in the decision. How much experience does the employee have in this line of work? What value do they bring to your company? Basically, how much of an asset are they and how big of a loss would it be to lose them? Would you be able to replace them without compromising on current standards they’ve set?
Remember that it isn’t just about the individual you’re dealing with either. Others will see how employees are treated in these situations and are likely to take note of how experienced, valuable colleagues are treated.
Consider that if they don’t get the requested pay offer, they could begin looking elsewhere if they haven’t already; setting their sights on a competitor in your field. If you can’t match their specific pay request, consider whether there are other benefits you could offer that would entice them to stay at your company.
Negotiation
The art of negotiation is key in navigating the above points and reaching a satisfactory conclusion for both parties. It can be a stressful situation as you aim for positive resolutions on either side.
Focus on clarity in communication; be honest about the realistic prospects of any pay rise while seeking to compromise where possible for employee morale if their target isn’t within your current budget.
A negotiation should of course include benefits for both sides. Agreeing to the demand for a pay rise can include an ask on your part, whether this be improvement in certain areas or slightly increased responsibility where applicable – though be wary of this last point, as an employee asking for a pay rise may already feel undervalued in handling their current workload.
Again, you are dealing with individuals who are likely approaching this with their own unique point of view, meaning there may not be a ‘one size fits all’ approach in dealing with the situation. This is why listening to their side and communicating your own clearly is vital in judging an appropriate response.
Positive Focus
If it isn’t possible at this time to offer a pay rise due to budgetary restrictions or other reasons, your employee may need another reason to stick around. Don’t take for granted their value in a role; replacing good employees requires further resources being spent in training replacements who may struggle to meet the same overall standards.
A tight labour market could mean they’d struggle to find a better role, but this works both ways for an employer; you may also find it difficult replacing with someone of similar value. What this really means is knowing the positive things your company may have to offer beyond your wage and focusing on this.
If the overall atmosphere and work culture is good, this is something employees are less likely to want to walk away from. Should this be identified as an area where improvement is needed, seek that improvement now and employees will respond positively.
An employee asking for a pay rise may also be in response to dissatisfaction with their workload or long working hours. Consider whether they may be susceptible to burnout, especially if you’re unable to meet a pay rise demand. Being generous with flexible work hours, bonus annual leave or more opportunity for remote working could be appropriate responses in this case.
Communication
Whether it’s good or bad news, how you communicate an outcome can be as important as what you’re communicating. Will it be delivered personally or by HR (which can also depend on the size of your company)?
Declining a pay rise can still leave an employee with positive impressions even when they’re dealing with a disappointing outcome. In communicating this, it’s important to show you’ve considered their point of view and advise clearly why you’re unable to meet their requirements. A straight rejection of a request they felt was justified, with no explanation offered in return, never feels nice.
Perhaps it is something you think they genuinely deserve but are simply unable to offer at this time. Therefore, the news can be delivered with a promise that they will receive their pay rise when the company is in more of a position to offer it – so long as you plan to follow through when possible, as this can backfire if you gain a reputation for false promises among your workforce.
Have a clear path
Finally, it’s important to have a plan for your business that your employees can feel involved in. If you have company goals, this should include a clear progression path for those who give their loyalty to your company.
Communicating clearly and honestly even when it’s an unpleasant outcome, while showing that you follow through on promises, displays an integrity that those around you will respect. With this kind of structure in place, you may then find that pay rise demands in fact become a far rarer occurrence as employees trust the process to reward them accordingly.