With inflation at 11% and our research revealing that half of the UK’s workers are expecting a pay rise of 10% in 2023, salary levels are set to be the dominating factor in successful recruitment in 2023. Already many industries that have struggled to recruit have responded by offering big year-on-year pay increases.
With this in mind, employers can expect to receive requests for a salary increase from staff looking to bridge the gap as the rising cost of living bites.
However, rising personal costs are not grounds for a pay rise – there has to be a business justification behind the decision.
So how should you respond to a request for an unscheduled pay rise? Here are our top tips.
#1 Give yourself time to gather information
There are several points you will need to consider before responding to an ad-hoc request for a pay rise and it’s important you don’t feel pressured into providing an immediate answer.
However, one thing you could point out up front is whether your business already has an established time and place for this discussion – for example, the annual performance/pay review.
You can also hopefully refer to the fact that the remit of their role is clear, and their salary already reflects this.
With these points made, you could follow by inviting them to tell you more: “I’ll need to look into this in some detail before I can consider your request, but I’d like to understand why you think you deserve a raise.”
This puts the ball firmly in the employee’s court to state their case.
#2 Allow your employee to justify their request
This is always going to be a difficult conversation. Your employee’s reasons for asking for a raise are important to them, and they are likely to be nervous and possibly even defensive or upset. In this instance it’s important to be professional but also open and considerate.
Listen carefully, but don’t be drawn into responding straight away. Where possible, give a timescale for your decision, and arrange a follow-up meeting.
#3 Check the market value for the role
As part of your deliberations, you need to research and understand the typical pay scale for the employee’s role. Given the fluctuations in the job market over recent years, this might have changed without you noticing!
You can find out about industry standards in many places, including salary-comparison sites and trend data published by professional bodies. If you are a CV-Library client, talk to your account manager who can help you with this.
Remember that the employee is likely to have done this homework, too, so it’s important you’ve been thorough and have up-to-date information
In addition, look at your organisation’s pay scales. If salary bands are tied to job roles, you will need to consider any salary benchmark that others in a similar position are on. If an employee is asking for more than others on the same level, do they deserve a promotion that will take them to the next pay level?
Should you find the employee’s request is compatible with the industry standard but not with your company policies, it might be time to review salary scales across your business.
#4 Assess the employee’s performance
We also recommend you look at how the employee is performing in their role. Perhaps they are putting in a lot of overtime, or exceeding their targets, which they feel gives them a legitimate reason to request a raise.
It is worth remembering that, for many people, salary is an emotive subject and represents their worth to a company. As such, how well they perform against their targets, and how much they contribute to the company’s culture (and bottom line) are important considerations for you both.
You also need to give some thought to how a negative response to their request for a pay rise might impact on their wellbeing, and on their subsequent performance – especially if they are exceeding the requirements of their job spec.
#5 When your employee has another offer
Sometimes an employee will ask for a salary raise because they have an alternative job opportunity lined up. They might even use their market value as leverage in the negotiations.
It’s important to consider not just what the employee brings to the company, but what it would mean to the company if the employee decided to go elsewhere.
You might have to balance the cost of giving the employee a raise against losing a valuable employee, as well as the time and financial cost to the company of refilling the role.
#6 Make the offer – or not
If you reach the conclusion that it’s sensible to the business to offer the employee more money, that’s fantastic and you can proceed with the salary increase as you see fit.
However, if one or more consideration prevents you from offering the requested raise, you could consider offering additional benefits to make your employee feel valued. For example, you may not be able to offer more money, but you might be able to offer reduced working hours that would equate to a pay rise.
Other benefits include more flexible working hours, additional holiday, a particular reward or incentive, or time off.
It might also be appropriate to set new performance targets, or a new schedule for pay reviews.
This is a tricky subject for anyone to have, so be kind to yourself. If you feel out of your comfort zone, it could be worth talking to HR for support and guidance. You could even ask for some line management or performance management training.
Whatever methods and decisions you choose to take, remember the top 3 rules:
- Treat the request for a pay rise seriously. Treat your employee’s request with respect and carefully consider all the options before you respond.
- Be transparent about your response. If you can offer a raise, tell them why. If you can’t offer a raise, tell them why. Explain the need to balance the needs of the business with the needs of the employees. Make it clear your decision is based on business rationale – it’s not personal.
- Set a schedule. If appropriate, let your employee know when the subject will be up for discussion in future. This will offset any discomfort on their part about having raised the issue. It will also act as an incentive, particularly if you are not offering a raise at present.