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26th September, 2023

Tips for handling pay-rise requests from your employees

In the ever-changing landscape of business, pay-rise requests from employees are a common occurrence.

But with the current cost of living crisis facing many people, it’s becoming increasingly more common for workers to seek a higher wage.

Handling these pay-rise requests requires a delicate balance between acknowledging the employee’s value and understanding the company’s financial constraints.

You might feel that it’s a definite ‘no’ to any requests you get right now or that you only have a new team anyway.

It’s better to be forearmed with knowledge about steps to take if and when the day arrives and how to respond when it does.

pay-rise requests meeting

Examine and understand the request

Assess the request’s merit

Firstly, take the time to evaluate why the employee is seeking a boost in the first place. It’s vital to consider the request’s legitimacy.

Consider factors such as the worker’s contributions to projects, demonstrated leadership, additional responsibilities, and overall impact on the team.

You need to also consider why your employee believes they should be paid more.

Hopefully, their reasoning will align with your company’s values and goals or, at the very least, be based on solid outcomes you can appreciate.

Consider market rates

Research the industry standards for the role, too.

Are the employee’s current salary and benefits in line with what competitors offer?

Utilise salary comparison tools, research surveys, and professional networks to gauge if the request is within a reasonable range.

Understand what the employee is asking for

You also need to know precisely what your staff member is asking for.

For instance, have they requested a 5 percent salary increase or to go to a higher award level or another payscale?

Perhaps they’ve requested to reduce their working hours while retaining their current pay structure, or they’re looking to receive a company car or other perks.

Meeting for pay-rise request

Prepare before meeting with your employee

In most cases, you’ll want to sit down with the staff member who’s keen on a pay rise. Before you do, there are some steps to take:

Analyse performance metrics

Start by gathering all relevant data related to the employee’s performance.

Look at key performance indicators (KPIs), client feedback, previous performance reviews (if applicable) and personal development within the company.

A well-documented track record will make it much easier for you to provide the request with an objective analysis.

READ THIS NEXT: 23 HR metrics for businesses to track

Evaluate company pay policy

Also, it helps to review your company’s existing pay policy and guidelines.

You need to ensure the request complies with these guidelines to maintain consistency and reduce the likelihood of other employees becoming disgruntled if they think they’ve been unfairly rewarded compared to their co-workers.

Conduct the meeting with your employee to discuss pay rates

When you’re ready for a sit-down, it helps to take some care with the details. For example:

Choose the right setting

The setting for this conversation should be private and free from interruptions.

You need to ensure the employee feels comfortable expressing their thoughts without fear of being overheard or of the conversation being interrupted.

Actively listen

Give the employee your undivided attention, too.

Encourage them to share their thoughts fully, and resist the urge to interrupt, even if you don’t agree with their reasoning.

Ask clarifying questions

If certain aspects of your employee’s request or the reasoning behind it are unclear, ask for clarification.

You should make sure you understand their point of view and also show you’re engaged and interested.

Meeting for pay-rise request

Respond to the pay rise request

During the meeting, you’ll want to give your staff member an idea of what you’re thinking concerning their pay-rise ask.

Your response will vary according to your thoughts on their proposal:

If agreeing to the pay rise

Feel okay to say yes right then and there? If so, clearly outline how and when the pay rise will take effect. Will it come with additional responsibilities?

Transparency in this process helps avoid misunderstandings later on.

If needing more time

Should you need more time to consider their request, explain why, with a timeframe for a complete reply. Whether it’s to consult with other decision-makers or analyse budget constraints, keeping them informed builds trust.

If declining the request

You should provide honest feedback about why the request was declined.

It pays to offer alternative ways of recognising their hard work, too, such as additional paid time off or access to professional development opportunities.

After the meeting with your employee

If you struggle with challenging conversations or saying no, etc., you may just want to forget about the meeting after it’s done. However, don’t do this. There are some next steps to complete first:

Document the conversation

For starters, take the time to write down the key points of the conversation you had with your worker about payment.

You need to ensure both parties will be clear on what what the next steps will be.

Communicate the final decision

You need to communicate the decision promptly and respectfully, regardless if the decision is to grant, delay, or decline the request.

A well-crafted email or follow-up meeting can convey the message professionally.

This communication helps to minimise potential misunderstandings about fine print, too, and ensures everyone is on the same page.


Create and communicate a clear pay policy for the future

You must include details on how often pay is reviewed, what factors are considered, and how employees can initiate pay-rise discussions.

Put your policy in writing, ensuring it’s clear and easily understood.

After that, you need to share the document company-wide. Regularly communicating and reinforcing this policy ensures all employees are on the same page.

Navigating pay-rise requests is a nuanced process that requires empathy, strategic thinking, clear communication, and adherence to company policy.

By considering the employee’s perspective, staying aligned with market trends, maintaining consistent policies, and fostering an environment of open dialogue, leaders can handle these discussions in a manner that respects the employee’s request while safeguarding the company’s interests.

The process, handled well, can strengthen the employee-employer relationship, create a culture of trust and transparency, and contribute to a positive workplace environment, even at times when the answer must be no.