Pay raises are an inevitable aspect of managing employees but that doesn’t make handling them any less complicated. Whether it’s determining which employees to give raises to or considering how much of a raise is ideal, the process typically makes the top of the list of dreaded tasks for HR professionals and managers. To make matters even more difficult, employees don’t always wait until their performance review to request a raise. Even though it may not be the best time for you, when employees request a raise you are faced with decisions that you may not have considered before that moment.
Take a look at these three steps for handling requests for raises without losing your most valuable employees:
- Be prepared – but don’t be afraid to say “I don’t know”
To handle these requests with poise and professionalism, develop a strategy for how you’ll answer these questions before they even come up. Know what your company’s policy is and what the chain of approval is before you’re ever faced with the question. It’s ok not to have all the answers but you should know how the organization handles these requests. Employees can respect that you may have to look into it further, but they won’t hold much respect for a manager that can’t answer any of their questions.
- Do your homework
If an employee asks for a raise and you tell them you’ll look into it, you have just assigned yourself homework. Now is the time to look into whether or not the employee is deserving of a raise, whether or not it can happen at the moment and how much the raise will be. This really is the hard part of the process, especially when the answer to the question of whether or not an employee is deserving is a resounding yes, but the market-based pay ranges or your budget don’t support that. As you’re evaluating how much of a raise to offer employees, it’s a good time to benchmark your pay ranges against the competition in your region and industry using PayScale’s Cloud Compensation Software. The findings will be an indication of what kind of raise to pursue and how to handle the conversation that follows.
- Handle the conversation
When it comes time to have the follow-up conversation, you should be prepared for almost anything to happen. In an ideal world, you’re able to approve an employee’s raise and offer them at least the amount they requested. However, the more realistic conversation may be that you aren’t able to offer a raise or the market or their performance doesn’t justify one. The most important thing to keep in mind is that transparency is key. Using a Total Compensation Statement will help make that conversation a lot easier. Even when the answer is no with no foreseeable raise in the near future, a good explanation as to why is key because it will come out eventually.
Whatever the content of the conversation, it doesn’t hurt to decide how you will present your answer and what the possible outcomes of that conversation may be. Is it possible that your employee may threaten to leave the organization or feel slighted by your decision? Are they valuable enough for that to be a major issue for the company? How will you ensure that no matter how tough the answer, employee morale isn’t negatively affected? The best way to field any response you may get is to work with the employee to develop a plan for getting from what you propose to where they want to be. If you’re able to offer a lower amount than what they’re looking for, discuss how graduated raises will get them to where they want to be. If it’s a performance issue, this is a perfect opportunity to discuss an improvement plan and get them engaged in raising the level they’re performing at. If the issue is timing, let your employee know what type of timeframe you’re looking at. Last but not least, if the answer is a no, and will be a no for as far as you can see into the future, explain why this is the case.
Handling these types of questions is always difficult but when handled the right way, it can be relatively painless. The most vital part of the whole process is taking the time to help employees understand how you came to the answer you present and to consider not just the here and now but what the future holds.
How have you handled these types of questions? Let us know in the comments section below.