Your employee is working incredibly hard, they’ve been with the company for some time, and now they’re asking for a raise…what do you do? Whether you’re reading this because you’ve had the request or you’re researching ahead just in case, we have help for you today. It’s a difficult situation to handle, so we’ve broken it down into steps!
Step 1: Always Listen First
When an employee approaches you asking for a raise, you can be sure that they have considered it for some time. Knowing how to manage an employee in this situation will help both of you identify a solution that works.
With this in mind, the worst thing you can do is reject them outright without even pretending to think about it. Instantly, they will feel demotivated and unvalued.
Instead, wait until they’ve finished talking and ask them to explain why they think the raise is deserved. Invite them into your office, make them feel comfortable, make notes, and remain neutral.
Make sure the employee is happy they got everything off their chest, and then tell them that you’ll consider the request; no decision is necessary immediately.
Step 2: Consider the Raise
Next, you need to think about whether the raise is deserved, whether there’s a risk of losing the employee if you reject, and whether you have the money. Therefore, here are some tips for considering a request.
1) Look at Rates Outside the Business
What do employees earn with competitors and similar businesses? If you’re underpaying, it won’t be long before your worker jumps ship and gets what they deserve. To retain high-quality staff, you need to be competitive with wages and salaries.
2) Assess Pay Internally
While looking away from the business, you can also look inside to see whether the employee is paid less than everybody else. Do they have more experience, training, and service time than others in the business? Is their pay comparable to co-workers?
3) Consider Employee Value
As the third tip, think about the value of the employee in question. Remember, rejecting the raise will lead them to question their position.
If the employee is invaluable to your business on a day-to-day basis, you might want to consider an increase more seriously. As well as financial value, employees can bring value to customer service, motivating a team, being an ambassador, and more.
Step 3: Make a Decision
This third step is split into two; raise and raise alternatives. If you have the money for a raise, use all the research you have so far and make a decision on what size they should get.
Will you offer a percentage or just a flat increase on their salary? While a flat increase will add $2,000 to their $30,000, for example, a percentage will need to consider cost-of-living adjustments and whether this is a one-off or yearly percentage.
If you can’t afford a raise, can you keep them excited with pay raise alternatives? Some examples include.
- Flexible scheduling.
- More time off with family (paid).
- Gym membership.
Step 4: Inform the Employee of Your Decision
From here, all that’s left to do is have a follow-up conversation with the employee. If you can offer a raise, tell them the good news. If you’ve gone for an alternative or are rejecting, explain the decision, so they don’t walk away confused.
If you’re unsure of how to deal with an employee or even need help with payroll/HR, you could also consider outsourcing to a web-based payroll provider that can help manage these requests for you. This shortens your to-do list and helps to keep all employees happy by dealing with requests in the right way!