Posts

What to do when an employee asks for a pay rise

It’s inevitable – as an employer or manager, at one time or another, an employee will ask for a pay rise. In fact, according to payscale.com, 37% of workers have asked for a wage increase from their current employer.

Perhaps the time is right as you’ve just been reviewing salaries. Or maybe, it’s completely caught you off guard and you’re not quite sure how to respond. This request is quite a common one but some business owners struggle with how to deal with it. So with this in mind, Consult HR’s Julie Pollock shares her top tips on what you should do in this situation.

The most important top tip we could possibly give you is not to react and regret it. When an employee asks for a pay rise – whether you saw it coming or it’s out of the blue – it’s important not to respond just yet! Acknowledge their request and give a commitment that you will think about it and get back to them soon. After this, take the following points into consideration to help you reach a decision…

Learn their reasons why

Usually, when an employee approaches an employer for pay rise, they are unhappy with their employment so the key is to determine why so that you can effectively manage the situation and come to the best possible outcome.

Common reasons that employees ask for a pay rise is that they are struggling financially, they feel undervalued, they don’t feel their salary is competitive or they think that other staff members are being paid more. Each of these situations requires a different response so nailing down the reasons why an employee wants a pay rise is important.

Consider your options

Perhaps the request is a good time to review what you currently pay everyone. Use the prompt to carry out job evaluations and research what similar local companies are paying staff. Carrying out a full review will give you the chance to put salary bands in place, create a fair system and prevent gender gap issues. Having a system in place will ensure that employees know what is expected of them and how they can progress within the company.

Is it an option for the employee in question to take on more responsibilities, which would justify the raise? Or, in the situation where the salary is actually competitive, are they an asset to your business that you don’t want to lose? If so, highlighting their value by giving a pay rise might be warranted. Finally, in the delicate situation where an employee asks for a rise when they are struggling financially, but it isn’t justified, consider how as an employer you can support them in other ways.

Examine pay rise alternatives

A common reason that may businesses can’t offer a pay rise, is quite simply, that they can’t afford it. If you find yourself in this situation and you want to show a deserving employee that they are valued, there are a wealth of options available, like vouchers, time off or the opportunity for training. In fact, in this blog post, we have rounded up a wealth of ways to reward staff without giving them a raise.

Communicate clearly

When a full review has been completed and you have reached your decision, it’s time to deliver the news. This should be done so in a formal manner and communicated as clearly as possible, stating the reasons you have reached the conclusion. It’s also important to show compassion in the situation where the answer is no.

If you have a staffing problem you would like a solution to, contact Julie Pollock on 07858089006 or email: julie@consulthr.co.uk to discuss further.