The truth is simple: you want a raise. Your employees want a raise. Everybody wants a raise. Unfortunately, it’s not always as simple as recognizing excellence and coming up with the money. There are budgets to maintain, executives to answer to and other employees who might be due for some more money as well.
As a leader, part of your job involves fielding these kinds of requests, but the conversations can become awkward, unproductive, and even off-putting if you’re not the one suggesting a raise to your employee. So how do you handle these requests? Here are some tips for handling raise requests in a positive way—whether you’re delivering good news, or bad.
Control Your Reactions
If you want to avoid hurt feelings and other issues, it’s crucial to remain neutral when you first receive the request. If it’s one of your best employees coming forward, it’s natural to want to assure them that they deserve a promotion. However, when you give in to their request right away, it can come back to bite you if you’re not able to work it out. Thank them for communicating with you, and let them know you’ll get back to them about the issue. Schedule a meeting to discuss the request, after you’ve had a chance to approach any decision-makers. That will give you some time to assess the situation.
Hone in on the Why
It’s important for both you and your employee to know exactly why a raise is warranted (though of course, you may not agree!). During your meeting, ask for more information. Experts recommend asking an open question like “tell me more,” over something like “tell me why you deserve a raise.” This gives your employee a chance to give you all the information you need, in their own words, without feeling like they’re being accused of something. Getting all the information will help you respond in an appropriate, positive way.
Create a Path
If you think the employee might be a candidate for a raise in a few months instead of immediately, it can be an opportunity to create a growth path for them—with specific timeframes. Discuss some extra responsibilities or skills like improved tech literacy that would warrant growth in compensation. If your employee meets those terms that you agreed on, then a raise will follow. Creating a path makes the process more collaborative and positive for everyone, rather than a flat “no”.
Consider Alternative Compensations
In some cases, it may not be possible for you to fulfil a raise request due to overall funding/revenue, particularly in startup scenarios. If you’re trying to retain talent, and you know you won’t be able to meet the raise request, then try adding benefits in lieu of a raise. Some employees won’t be satisfied with this solution, but others will see it as a valuable opportunity.
Keep it Quiet
Whether or not you’re able to grant a raise, you’ll need to keep those conversations confidential. You may need to encourage your employee to do the same. One outcome could make others feel hopeful, hopeless, jealous, or otherwise upset. It’s best to keep those reactions to a minimum by keeping raise discussions between you and relevant parties only.
Be Respectful—and Never Condescending
Your employee doesn’t want excuses, financial advising, or anything that sounds condescending during your conversations. No matter how outlandish the request, it’s important to keep your cool and stay respectful. Becoming condescending and uncommunicative is never productive, and it can grind the whole process to a halt. Even if you respond respectfully to raise requests and have to deny a few of them, some employees will leave, and that’s okay. You need to know that it’s not always going to work out. But if you make the process positive, you’ll prevent a lot of potential pitfalls—and prevent morale from taking a hit.
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Andrew Deen has been a consultant for startups in almost every industry from retail to medical devices and everything in between. He is currently writing a book about scaling up business and his experience implementing lean methodology.