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What to do when an employee asks for a pay rise

Just when everything seems to be ticking along nicely, you get a request from an employee asking for a pay rise. Sigh.

It could be right on time, perhaps you have been reviewing wages. Or, it’s caught you off guard and you’re left feeling stunned. A flustered “You must be joking!” can cause you even bigger problems. So it’s best to fight off any impulsive urges and take time to consider your response carefully.

At this stage, a simple acknowledgment and commitment to follow up should suffice. After which you can consider the below in order to provide a constructive and thoughtful reply.

Find out why

Ultimately when an employee asks for more money it suggests that they are unhappy with their employment. You’ll need to know the reasons behind this in order to manage the situation and find the best possible solution.

For example, are they struggling financially and don’t know what else to do? Do they feel undervalued or believe other staff are paid more? Do they believe that their salary isn’t competitive?  Are they willing to take on more work? Each of these situations necessitates a specific response.

Consider your options

Has the request prompted you to review your current salary offering? Perhaps now is the time to carry out a job evaluation on all roles and look at competitive salaries locally. Job evaluation helps you to develop salary bands, creating a fair pay system and preventing gender pay issues. You then need a pay policy to guide you. It will also help staff understand the process of how salaries are reviewed, and with performance management objectives achieved, how they may increase their salary at the next review.

Is the employee capable of taking on additional duties that would warrant an increase, and could that opportunity be offered?

It may transpire that the employee in question is receiving a competitive and fair wage for their role and you do not have the need to alter their responsibilities. But if you would like to show them they are valued, a non-monetary reward could go a long way.

With delicate situations, such as an employee struggling financially, a pay rise might not be justified. But, even so a different kind of support could be really helpful. An employee assistance programme can help here.

Communicate clearly

When it comes to delivering the news, good or bad, be sure to do so compassionately and make sure your explanation is clear. Acknowledge their determination for the initial request and clearly point out the reasons behind your decision.

It’s possible that your answer might lead to some difficult conversations. If you would like us to carry out the job evaluation for you, do enlist the help of your local HR Dept.