leadership tipes

Top 6 Tips For Employers When Asked For A Pay Increase

Performance reviews are a method to evaluate your most useful team members that help drive business growth and determine what changes can be implemented to increase value. It is beneficial to understand that for employees, performance reviews are a point of progression and as such, you may be approached with requests to increase an employee’s salary.

Staff may be eager to discuss and highlight their contribution, which may merit a pay increase. On the contrary, a staff member may perceive they are contributing significantly however their performance evaluation says otherwise, you may be placed in a difficult position to decline their request. Nevertheless, both scenarios of pay review requests should to be handled effectively to achieve the best outcome. 

We’ve devised 6 useful tips on how to facilitate a performance review with a request for a pay increase. 

1. Acknowledge their courage for asking

This should be the first response to any pay increase request. It is important and respectful to recognise the preparation that went into asking what can be considered a daunting question. The employee is providing you with the chance to retain them before they seek a job elsewhere.

2. Don't reply immediately

Naturally, you will have a preconceived idea that you may or may not be willing to grant a pay increase for a particular employee. However, there may be others involved in the decision process. In that case, avoid saying, “I have to ask my boss” or “Its not up to me” as doing so may undermine your authority. Instead, you can say “I’ll get back to you next week” or “I’ll have an answer for you in a week” which lets the employee feel that they won’t be left hanging for an answer and gives you time to talk to those involved in the decision. Replying with “no” can make the employer feel they are undervalued and not worth considering which could potentially result in high staff turnover. 

3. Ask for more information

A simple “tell me more” indicates you are listening to your employee and provides you with more information to assist in making a decision if the request is plausible. 

4. Consider the employee's contribution and progress

The performance review will reveal the additional value the employee has contributed to the organisation. Since the employee commenced working for the company, they could have dramatically progressed in their role and accepted more responsibility but their salary may not reflect their progress and achievements. 

5. Research market rates

A leveraged business position is not the only competitive forefront. Having competitive remuneration packages can assist in employee retention. Is the company offering competitive salaries or incentives? Conduct research into what your competitors are offering for similar roles. You and the employee may also discover that their skills are in high demand.

6. Devise a goal plan

A goal plan can be implemented to help an employee reach objectives and progress in the business. For example, you may set objectives and targets the employee needs to achieve over a specified time frame before considering a pay increase. Setting goals provides employees with motivation to grow, develop and achieve personal and business success. Ensure the goals are time specific and are clearly communicated.

Requests for pay increases are a natural part of management. Implementing these tips can assist in achieving the best possible outcome for the business and the employee.

PKL Recruitment specialises in business support and call centre recruitment services to grow your organisation through high performing talent. Visit www.pkl.com.au for more information. 

About the Author – Phoebe Lane
Phoebe Lane is the Founder and Managing Director of PKL Recruitment. Phoebe founded PKL Recruitment in 1995 with a vision of creating meaningful differences to the lives of candidates and clients. PKL Recruitment is focused on producing high quality placements that benefit both the candidate and the client. Contact Phoebe today via LinkedIn or phoebe@pkl.com.au.