Knowing what to do when your employee asks for a raise is important. You want to handle the request in a professional manner to show you care about your employee’s needs.
How you handle your employee’s request for a raise impacts engagement, productivity, and performance. Your response also affects job satisfaction, employee morale, and retention.
As a result, you should begin preparing now to appropriately handle an employee’s request for a raise. These suggestions can help.
Implement these tips to professionally respond when your employee asks for a raise.
Listen to Your Employee’s Request
Gather as much information as possible when your employee asks for a raise. The more relevant details you have, the more appropriately you can respond:
- Look for specific reasons why your employee feels they deserve a raise.
- Ask follow-up questions and restate what you heard to check your understanding.
- Remain neutral throughout the conversation.
- Take notes to refer back to later.
Let your employee know you need time to consider their request for a raise. Provide a date by which you can revisit the discussion.
Conduct an Internal Pay Audit
Determine how your employee’s compensation compares with those of other employees with similar jobs, duties, responsibilities, education, skills, and experience. This comparison helps ensure the fairness of your raise review process. Document your findings to support your decision.
Consider Your Employee’s Value
Determine how much knowledge, skills, and experience your employee contributes to your organization. Also, focus on the likelihood of your employee looking for another job if you do not approve their request for a raise:
- Consider how well off your organization would be if your employee left.
- Include how your employee’s absence would impact your work environment and business operations.
- Focus on how much time and money would be needed to replace your employee.
- Include whether your team could pick up the slack and your training costs.
Calculate an Appropriate Raise
If you decide to give your employee a raise, determine whether it should be a percentage of their current income or a flat amount:
- If you decide to give a percentage raise, multiply your employee’s current income by the specified percentage, then add the total to their income. To illustrate, if your employee earns $50,000 a year and you want to provide a 4% raise, their net income would be $52,000 [(50,000 x 0.04) +50,000].
- If you give a flat raise, add the money to your employee’s income. For instance, if your employee earns $50,000 a year and you want to provide a $3,000 raise, their net income would be $53,000.
Respond to Your Employee’s Request
Talk with your employee about your decision to approve or deny their request for a raise. Include as much information as possible to explain your decision.
If you approve your employee’s request for a raise, consider providing examples of how their contributions and results benefitted your company. Conversely, if you deny your employee’s request for a raise, consider discussing ways to take on additional responsibility or improve their performance.
Do You Need Additional Help with Compensation Decisions?
Talk with an expert from Connectology for additional help to determine whether your employees receive appropriate compensation. Contact us today.