The Five Fundamentals of Handling an Employees Request for a Pay Raise
The first in a series of three articles designed to help Manager's manage an employee’s request for a pay raise
1. Establish the Reason for the Request
Recognise that most employees find asking their boss for a pay raise daunting so few undertake the task lightly.
Irrespective of your company’s financial situation or compensation system invite them to present their case. Let them do the talking. Listen closely and use questions to establish the reasons for their request. You may discover that salary really isn’t the issue.
2. Assess Job Satisfaction
There are many reasons an employee will ask for an increase. It may be due to a lack of appreciation, recognition or advancement. They may be dissatisfied with their job or workload or they may be experiencing personal financial difficulties. Once you have established their real motivation you’ll better understand their request and so your options to remedy the situation will open up.
3. Focus on Position, Person, Performance and Pay
Avoid being drawn into a conversation of comparisons. “Sally and I do the same job but she earns more than I do”. Employees often compare salaries from their perspective only so redirect statements like this by focusing your attention on the 4 P’s.
Position
Is the job description a complete and accurate reflection of what they do? Has the job changed? How? Has it grown in quantity, complexity and responsibility?
Person
What is the match between the employee’s skill and experience compared to the requirements of the position?
Performance
How well is the employee fulfilling the requirements of the position? Is the performance consistent? What results are they producing? What specific examples (evidence) can you reference? Where, when and how have they exceeded the requirements of the job? (Performance above and beyond the call of duty)
Pay
As an employer you first set a value (salary range) for the position. Then you determine an employee’s rate of pay within this range based on the expertise they bring to the position and then you pay for the results they produce.
In summary, evaluate the person, their performance and their pay against the needs of the position.
Then ask the question, is the employee being fairly compensated?
Don't give your answer immediately, collect the information, verify, consider the implications and then respond. This will mean meeting with the employee a second time. While they may be disappointed that you haven't given them an immediate answer, they will appreciate the fact that you have given their request serious consideration.
4. Challenge Action Results
When an employee asks for a raise they may have difficulty justifying the “Why” in their request. You need to dig a little deeper when they say, “I’ve worked hard” or “I’ve done a good job”. You need specific examples of their performance and the results they’ve produced in order to make an objective and fair evaluation. To help your employee do this well, coach them through the CAR sequence:
Challenge: What was the Challenge the company or employee faced?
Action: What Action did they take to resolve that situation?
Results: What were the Results?
5. Managing An Employee’s Expectations
It’s important to establish the employee’s expectations in relation to “How much” of an increase they want. If they don’t state this specifically, ask. Their answer will tell you one or more of three important things:
1: They don’t have a clue. They just want “more”
Identify what “more” would look like to them. Your idea of “more” and theirs could be very different so your generous 1.5% increase could prove to be a major disappointment. “Is that all?”
You’ve paid more but you haven’t solved the problem. You may have made it worse.
2: The employee’s expectations for an increase are based on their “market research”
This research could be robust and valid, in which case it makes your job easier. You need to verify this but at least you’re working with data not daydreams.
Where the employee has based their increase on Sally's salary in Accounts or their mate Joe’s from XYZ Ltd then their expectations may be unrealistic.
You need to explain that job titles alone can be misleading and because you want to respond fairly to their request you will need to check on current salaries for the employee’s profession and position, within your industry and your region.
You also need to assess any salary increases based your company’s current financial situation as this will have a bearing on its ability to pay.
3: They see the situation as a pure business negotiation
The employee may be satisfied with 5% but their opening bid is a request for 10%. Use your superior negotiation skills to surface their bottom line but always work within the salary range for their position.
And a final reminder...Don't promise what you cant deliver
Article 2: Four Pitfalls to Avoid when an Employee asks for More Money
Article 3: When your Employee asks for More and your Answer needs to be No
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