How to Handle a Pay Rise Request Professionally (With Tips)
By Indeed Editorial Team
Published 24 May 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
When an employee requests a pay rise, you may encounter some challenging questions or concerns that require certain tactics to navigate. It's important to consider every request while prioritising the realistic capabilities and practical needs of the organisation. Understanding how to handle a pay rise request can help you better navigate the process while maintaining good employee relationships and the organisation's financial health. In this article, we show you why employees often ask for a pay rise, discuss how to handle a request, provide some tips for navigating the discussion and address when to decline a pay rise.
How to handle a pay rise request
It's important to know how to handle a pay rise request from an employee tactfully. When responding to the request, the key is to maintain the relationship while keeping everyone's best interests in mind. Here are some steps to follow if an employee requests a pay rise:
1. Assess the employee's reason and consider their perspective
It's essential to learn why an employee is asking for a pay rise, so you can better understand their personal and professional motivations. It may be that they're looking at other offers from competitors, and you decide that you want to keep a talented employee. Listen carefully to their reasons, ask pertinent questions and show them you value their request and contributions to the company. It's also important to consider their perspective, as they might offer insight you haven't yet considered. This level of professionalism and respect can help strengthen the relationship and make the decision process simpler.
2. Compare their reasons and perspective against organisation needs
Once you fully understand the employee's reasons for requesting a pay rise, you can consider those reasons and weigh them against the organisation's current needs and capabilities. Consider whether the organisation can afford the financial burden of increasing salaries and whether the request is valid. Think about the employee's performance and the extent of their request. If they're requesting a significant pay rise, you might consider other factors, like whether their contributions justify such an increase or if you can easily replace that person if necessary.
3. Consider their unique contributions and qualifications
When you're considering a request, it's important to focus on each employee's specific contributions and qualifications for the job to determine their value to the team and whether they qualify for a raise. For example, if you have an employee who always exceeds expectations, provides high-quality deliverables and is respectful, team-oriented and always punctual, they might be a prime candidate for a pay rise. Alternatively, employees who tend to be less responsible and produce lower-quality work might need more practice or encouragement before they qualify for a raise.
4. Explore current salary levels for similar positions in other organisations
Now that you understand the employee's perspective, their direct contributions and qualifications and the organisation's needs, you can research salaries for similar positions within other organisations. The employee may also be exploring other options, which may influence their request, so it's important you consider competitors' salaries carefully. Determine the kind of salary structure other organisations offer, the average salary for a similar position and whether the competitors offer a better benefits package. This can provide you with a general benchmark and help you decide how much of a pay rise you can offer.
5. Make a decision about the request
Now that you have the relevant information, you can make a decision about the employee's request. You might discuss possible options with another manager or human resources professional to help you make a better decision and to keep everyone informed. While you can take some time to research all the options, it's important to provide an answer as soon as possible to show professionalism and respect for the employee. If you can decide within a few days to a week of the request, an employee may appreciate your efforts and feel more valued by the company.
6. Explain your reasons to the employee
When you make a decision, it's important to explain to the employee why you came to that decision. Just as it's important for you to understand their motivation for the request, it's equally important that they understand your motivation for the decision. Explain all the information you considered and show them how their contributions influenced your decision. Use encouraging language, especially if you're declining their request, so you can boost their morale and help them understand that they're still a valuable asset to the organisation.
Why do employees ask for a pay rise?
When an employee asks for a pay rise, it can be for a multitude of reasons. Pay rise requests are often based on more than simply a desire to earn more money. Some employees may feel entitled to higher pay because of their skills, background or tenure at the organisation. Here are some reasons why employees ask for pay rises:
They feel they're doing more work and deserve a higher salary. If employees feel they're doing more work than before or than their job description entails, they might ask for a pay rise to justify the extra responsibilities and additional effort.
Someone in their department is earning more than they are. Some employees may feel like they deserve higher pay if a person within their department with similar experience, background or tenure is earning a higher salary. They may feel it's unfair for that person to earn more when they both do the same amount of work.
They've received a better offer from another organisation. Employees might also be looking for better opportunities with other organisations and may receive offers for higher pay or better benefits. They might approach you for a pay rise to see if you're able to offer them a similar pay and benefits package to continue working with the organisation.
They're struggling to meet their financial obligations. Employees may request a pay rise if they're having trouble meeting their personal financial obligations due to factors outside of their control, like rising inflation.
They've completed a degree or certification and want to earn more. When employees learn new skills or complete a certification or degree, they might feel entitled to higher wages because they feel more valuable. For example, an employee who earns a master's degree in their field might request a pay rise since they spent between six and eight years at university.
The company reports higher profits and the employee feels they deserve some of those earnings. Sometimes, employees feel that it's right for a company to share higher profits with its employees in the form of a pay rise. Since they helped contribute to the company's success, the employees might expect to benefit from it.
They have a strong tenure with the organisation and seniority over other employees. Employees who've worked at the organisation for many years might ask for a pay rise as they become senior staff members. They may feel that their wealth of experience entitles them to a higher wage.
Tips for handling a pay rise request
Here are some helpful tips for handling a pay rise request:
Be professional and use courteous language, especially if you decline the request.
Focus on where the employee excels and offer helpful advice for improving.
Explain how they might qualify for a future pay rise if you're declining their request this time.
Host an in-person meeting with the employee to discuss their request to show that you consider their request important.
Try to decide within a week to show respect and courtesy.
Consider all information and options to make a fair and balanced decision.
Discuss the request with organisation leaders, direct managers and other HR professionals to garner helpful insights.
When to decline a request
Sometimes, you might decline a request for a pay rise. This can occur for a variety of reasons, and understanding those possibilities can help you better prepare to gently decline the employee's request and explain how they can qualify for future opportunities. Here's when to decline a request:
When the organisation can't afford a higher salary: Sometimes, the organisation simply can't afford a higher salary for certain positions because of market conditions, upcoming expenses or general financial health.
When the employee's contributions don't justify the pay rise: You may encounter employees whose contributions to the organisation don't match the amount of the pay rise request. You can offer tips for improvement to help them reach the required threshold for future raises.
When the employee has yet to reach a tenure threshold: If an employee requests a pay rise before they reach a specific tenure threshold, you may decline their request. For example, an employee might request a pay rise before the end of their probationary period with the organisation.
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