It’s inevitable. When you least expect it, a valued employee asks a simple question — “Can I get a raise?” — that immediately ignites your defensive tendencies.
You’ve just entered a very sensitive and important negotiation. The more prepared you are to react and respond appropriately, the better the outcome will be for everyone.
A win-win solution is best, of course, but winning can be difficult to define and the short-term outcomes may not look and feel like a win.
Still, pre-thinking a reaction to this tough question will help resolve it in the most favourable manner for all. Here are some suggestions on how to deal with an unexpected request for a raise:
Do your homework: You can expect the employee has done her homework before raising the issue. Assuming you are not prepared to respond on the spot, acknowledge that you need to do your homework and ask for some time. This will allow you to review the employee’s personnel file and history, speak to her manager and review any available market data. You will then be better prepared to discuss the matter and come to a reasonable conclusion together. This is not a delay tactic and it should not be used as such — the emotions that come with the sensitive area of a raise request will continue to churn within the employee, usually in a negative manner, especially if you take too long.
Listen carefully: It is important to give the employee an opportunity to deliver her request. She wants to be heard. She has likely rehearsed her proposal several times and will feel better having delivered it as intended. However, don’t just let her speak — listen intently and collect information from her proposal to better understand her concerns and respond appropriately. It may turn out a raise isn’t really what the employee is after or perhaps isn’t the best solution to offer. On the other hand, it might be the only solution and quite justified.
Confirm total compensation opportunities: Quite often, employees do not understand their total compensation packages and the value of everything in their employment deal. They may look at the higher base salaries at another company but not understand the pension, incentives or other elements of compensation. Take this opportunity to reiterate the compensation philosophy, approach and total package to ensure she has the full picture. For example, depending on the nature of the organization, a compensation program may have been purposely designed to be less sensitive to economic volatility.
Don’t forget the softer side: Many important elements of the employment deal are not clearly valued because they don’t show up on a pay stub. Well-communicated programs, such as career development, training or flexible work arrangements, can have significant value for employees. Sometimes these programs are taken for granted and forgotten in such negotiations or have a different value depending on people’s personal circumstances. For a young, up-and-coming employee with great promise and a big mortgage, a modest base salary increase may appear quite attractive. If the company offers good development opportunities this employee doesn’t understand or if she is unclear about her potential career progress, she may be swayed by the simple prospect of a few extra dollars in each paycheque. Many studies have declared pay isn’t the most important element in an employment relationship. This is only true when the non-pay elements of the employment deal are understood — often pay is the only feature that is understood. Ensuring pay does not become a primary, problematic issue should be the goal.
Consider the impact on the organization: It is also important to understand the impact of any potential resolution on the rest of the organization. Internal equity among peer employees can be a very sensitive issue that can be upset quite easily. An unexpected raise request should not result in a squeaky wheel being greased. It should be seen as an opportunity to rectify an inequity, perceived or otherwise.
Remember it’s not business, it’s personal: Despite all the preparation you may have made for this challenging conversation, it is important to recognize and acknowledge this is a very personal matter for the individual making the request. It should not be dismissed lightly. In most cases, it requires a good deal of courage for the worker to raise the matter to begin with. Understanding the employee’s perspective will help address the concern. You may find it is a great opportunity to continue a valued employee’s development or reinforce the compensation philosophy. On the other hand, you may find the gap between an employee’s expectations and the company’s needs are too far apart and a parting of ways is best for all. Be prepared to consider this as a good outcome, at least in the long run.
Agree on a conclusion: To make the most effective use of the time dedicated to this question, and get a fair result, you need to agree on a conclusion or at least how to get there. Leaving the discussion in limbo will only raise more doubt and may be an excuse to delay further confrontation in hopes the situation will resolve itself. You might get lucky and it might simply go away — but don’t count on it. Or, it may result in the loss of a valued employee. Either way, structure the conclusion and agree on how and when it will be resolved. Make it clear what the next steps will be. Be proactive in communicating progress on any outstanding issues. Demonstrating your commitment to the process is important to the integrity of the outcome. Whether the result includes a raise or not is almost irrelevant.
Reaching the best conclusion for all stakeholders will depend on your process and commitment to getting it right. With a little planning and preparation, you’ll have made that journey easier for all concerned.
Phil Yores is a partner and senior consultant at Meridian Compensation Partners, one of the largest independent executive compensation consultant firms in North America. He can be reached at email@example.com.