Managing payrise requests

In the face of both a competitive recruitment environment and rocketing inflation, employers are set to award record pay rises this year. Pay increases planned last year will now struggle to keep pace with inflation. 3% average awards were planned for 2022 but the current rates of inflation (and the reasons for them) were not. Employers have also raised wages for hard-to-fill roles. Employers are likely to see an increase in requests for payrises this year in most sectors. As an employer, how should you approach such requests?

Don’t say no

Resist the urge to say “no” straightaway, whichever employee is asking. If you value this person, don’t dismiss their request out of hand. Remember their next step after a refusal may be to look elsewhere for a job.

Discuss

Understand your employee’s motivation for asking for a pay rise and don’t forget it’s nerve-racking asking for one. Your employee may have built up a list of reasons for why they think they deserve one - and may be a bit emotional when they ask. Of course, there may be something personal prompting the request too. Salary is best discussed when everyone is calm and prepared. Arrange a meeting to discuss - better for you both.

Look at performance

It’s easy to justify a pay rise or bonus when your employee performs well in their role. Holding regular appraisals and reviews tells you know who’s meeting their objectives and who isn’t. Conversations around pay increases can be framed around actual performance. If you don’t work directly with your employee, speak to their line manager to get a feel for how reasonable their pay rise request is. Are they delivering? Going above and beyond? Under-performing? Do you have several employees in the same role? If so you’ll be sure to get requests from others if you give a rise to one. Be prepared to factor this in.

Benchmark thoroughly

What are other local businesses/your competitors paying for this sort of role? Use salary surveys, ask friendly recruiters, look at job adverts etc. Are they being paid about right or under-paid for the market? Are they actually paid very well and need to be told this? If the market is paying more, consider and analyse why. Are they asking for stronger qualifications or experience? Is the location tricky? Look into factors that may be driving the pay up.

Look at the bigger picture

Can you afford it? One employee’s request could signal others. Make sure you can justify your decision if you say no to other employees who come knocking. Nobody can force you to agree to a pay rise but if your employee is a real business asset, you won’t want them to go to a competitor.

Can you offer something else?

If you’re not willing/able to offer a rise, could you offer additional benefits instead? Increased holiday entitlement, more flexibility, cash plans and health cover are all worth considering.  Bear in mind too that in the current environment anything that focuses on individual preferences, e.g. hybrid working, flexible hours, etc is being seen by potential employees as a right not a benefit.

Make a decision then tell them

Make a decision quickly and let them know. Explaining your decision in person might be more your style, but make sure you send them a letter to confirm everything. If you said “no” it could be because they’ve got room to improve their performance, and you might want to review their salary in six months. It might be that they lack understanding of costs or sales and a bit of insight would be useful for them. For the employee who does persuade you to give them a raise, tell them how much their new increased salary will be, when it comes into play and when it will next be reviewed.

Other top tips

- Fix a regular date for salary reviews so expectations are clear and people don’t need to work themselves up to ask for a raise

- Have a transparent process for performance reviews to stop issues building up on both sides

- Review your pay structure - even go as far as asking managers and staff if it is working for them. If it’s not, why not?

- Consider other ways of helping them understand the value of their pay - e.g. financial awareness training through MAPS, benefits statements etc.