When I was in high school I worked for a restaurant. The owner of the restaurant once told me that he did not believe in giving raises unless someone asked for one.
I was a fairly timid high schooler and didn’t have the assertiveness skills to ask for a pay increase – so I didn’t
After I had been on the job for a few years, my boss called me into his office and gave me a raise – totally out of character for him.
He did this because he recognized that I was a reliable, competent employee and that he valued my contribution to the organization.
While I don’t agree with his approach to rewarding employees, I do think his point was valid – if you don’t think you deserve a raise enough to ask for it, you may not deserve one.
This was decades ago and the work environment has changed drastically.
Today it is not uncommon for people to ask for a raise, if they feel like they deserve it, and if the organization is not acknowledging their effort and performance.
So how do you respond if an employee pops in your office and says, “I want a raise”?
6 Things to Consider When an Employee Asks for a Pay Increase
1. Compensation Strategy
An organization’s compensation strategy should dictate how and when raises are distributed.
This includes an organizational approach to budgeting, benchmarking, and distributing a total employee benefits package. This should also include the organization’s approach for awarding raises in the middle of a raise cycle.
For example, what is the policy for employees who are employed after raises are distributed?
Are employees bumped up in pay after 6 months of good performance?
2. Job Performance
I’m a firm believer that every organization should have a structured process for assessing employee performance and that raises should be an outcome of good performance.
A well-designed employee performance management process aligns job responsibilities with performance expectations and employee goals and, employees should be systematically rewarded for achieving objectives.
3. Salary Range
Salary ranges are a tool organizations use to determine the appropriate rate of pay for employees based on experience, education, and level of competency.
Where an employee lands in a pay range should be considered when making pay adjustments.
4. How the Employee Compares to Peers
When assessing an employee’s pay, consider what other employees in the same job are being paid and whether there are differences in tenure, competency, or performance to justify pay differences.
For example, if one employee performing the same job has taken on a leadership role it may be reflected in their pay.
5. Consistency in Practice
Another thing to consider is consistency in pay practice.
Make sure there aren’t any biases in raise distribution and consider pay practices as it relates to all employees.
The Lilly Ledbetter Fair Pay Act of 2009 addresses pay discrimination practices and mandates equal pay practices for all employees.
6. How Well is the Employee Valued
Assuming all other things are equal, consider how the employee is valued by the organization.
For example, if an employee is about mid-range in their pay, are in line with other employees in the same position and is still asking for more money, consider if a slight bump in pay would be in line to keep them or risk losing them.
These are tough calls because you don’t want to bump them unless their value to the organization dictates such a move.
Pay adjustments that are made off-cycle should be taken up the decision-making ladder and approved.
It’s always good to have a second person evaluate a change like this to ensure there is no bias in decision making.
Once all these things are taken into consideration, make sure you communicate any decision that is made.
The last thing you want to do is leave an employee hanging without an answer.
Lastly, a structured performance management process that is administered consistently and unbiased is the best defense against that unexpected employee demand – I want a raise!