If you are a business owner with a team behind you, you will inevitably have to deal with pay rise requests. These can be uncomfortable for all parties involved so being prepared for when they do occur makes good business sense.
In this article, the UK’s top company formation agent – Rapid Formations – look at how you should navigate pay rise conversations with your employees. Perfect for when that knock comes at your door or you receive a ‘Can we have a chat?’ email. Let’s get started.
Whilst you may feel that a pay rise request has been sprung on you without warning, it probably wasn’t a spur-of-the-moment decision on your employee’s part. There’s a fair chance that they’ve been sitting on this thought for a while, second-guessing if they are deserving of a pay rise, wondering how to go about asking, and generally stressing themself out about the situation.
So, regardless of whether the employee warrants a pay rise, you need to be understanding – and recognise that it does take a level of courage to ask for one. There may be times when, frankly, the request is laughable due to the individual’s performance, but even in these circumstances – there’s nothing to gain from immediately shooting them down.
As an employee of your business, this person has a right to put their case forward. You need to give them this chance.
Make proper time for the discussion
You should not give a response to the pay rise request there and then. Adequate time needs to be set aside so everyone can prepare. Doing this is simple enough if the employee asks for a discussion regarding their pay, as you can say yes, and pencil in some time in due course.
However, it’s possible that an employee instigates a conversation but doesn’t provide further details. If the request for a chat is made through email but further information is lacking, state that you would be happy to meet but ask if they can indicate what the meeting is to be about. You can then schedule it accordingly.
Perhaps the most awkward scenario is if you’re blindsided, and the employee asks for a raise without any advanced warning. If this happens to you, express that you’re willing to have the discussion but now is not an appropriate time, then, again schedule time for a proper meeting where everyone is suitably prepared.
Prepare for the meeting
Once the meeting has been scheduled you need to ensure that you’re ready for it. It should not be a case of you walking in without any preparation and letting the employee convince you that they deserve it. Whilst there certainly should be room for your employee to put forward their pitch, this should only make up part of the meeting.
Look into the current industry standard pay and where your employee falls within this. Think about your employee’s overall performance and how they stack up against their colleagues (and what their colleagues’ salary is).
If you don’t know already, find out when their last pay rise was – the general advice is that a new employee should wait for at least six months until they ask, they can then ask around once a year. And of course, delve into your business finances to evaluate whether you can afford an increase.
Finally, if pre-meeting you are erring toward rewarding a pay rise, decide on a figure. Your employee should have one in mind too, so it will be useful for you to come prepared with this.
Listen to your employee
Even if your mind is made up before your discussion (perhaps the employee’s performance genuinely does not warrant a pay rise), when the time comes, you absolutely must let the individual explain why they deserve a raise.
If your employee gets any inkling that the decision has already been made, not only will they feel aggrieved that their request has been rejected, but they will also think that their time has been wasted. Give them a chance to talk. You never know, what they have to say may be illuminating and reveal something that changes your mind.
Alternatives to a salary increase
It may be that your employee does deserve a reward but a direct financial one is not possible. This could be for several reasons, including budgetary constraints or to maintain parity with the rest of your team. In these circumstances, consider if there are any other benefits that you could offer.
Would flexible working appeal to the team member, an increase in annual holiday, or a one-off bonus? The latter is particularly appropriate if the request has been made because a specific piece of work or project has gone well.
If you do need to reject a pay rise request, the employee in question will be disgruntled. If the individual is a valued member of the team who consistently delivers, we suggest alleviating some of their anger by looking at other routes for reward. Failure to do this could result in them handing in their notice.
Respond as soon as you can
If you can’t give a response regarding their request during your scheduled meeting, give the employee a clear time frame on when they can expect to hear back from you. Then make sure that you stick to this.
It can be tempting to deliver your response via letter or email, especially if the news is bad from the perspective of the employee. However, if possible, we recommend doing this face-to-face. Then, when doing this, you should provide clear reasons why as well as clarity on what the employee can do to qualify for an increase in the future.
You should also indicate when you will be happy to review their salary again, with 6 – 12 months being a fair amount of time.
Implement annual pay reviews
Having a company culture where employees feel comfortable asking you for a pay rise is a positive thing. The problem is, as a business and its team grow, these conversations can become a burden on your time, and inefficient as individuals seek reviews at sporadic times across the year.
To remedy this, it’s good business practice to implement an annual salary review for all employees. This allows everyone to have their pay assessed fairly, plus – will reduce the unwanted knocks on your door.
So, there you have it
That’s how to navigate pay rise conversations with your employees. Whilst you will never fully eradicate the awkwardness from these discussions, we hope this article will help remove some pain from the process. Thanks for reading.