The day you have been dreading has finally arrived. There is no doubt, everyone is working hard. But on this day, an employee asks to talk to you and then asks for a pay rise. The request is left field and unexpected. How do you turn down an employee pay rise?

This employee is a consistent performer, but frankly, hasn’t done anything extraordinary to deserve a pay rise.

Of course, any employee is going to be disappointed after having a pay rise request turned down. It is important to tread lightly. If a raise is refused badly, it can be one of the shocks that contribute to an employee’s disengagement, disconnection, and eventual decision to leave the organisation.

You don’t want to offend the employee —or worse, lose them—by turning down their pay rise request, but you can’t approve it either. It is important to keep your employee motivated and on the job. Here’s how to turn down an employee pay rise:

Tip # 1 – don’t say no straight away

You don’t want to say no on the spot and risk offending your employee, so hear what they have to say. Ask them all the reasons they feel deserving of a pay rise. There might be projects they have worked on that you’re not aware of that could change your mind. But even if there isn’t, the very least you can do for employees who muster up the courage to ask for a raise is give them your full attention and seriously consider their side.

Tip # 2 – check their work performance

Your employee will be presenting their case through rose-colored glasses, so make sure you go through their history to check performance for yourself.

Review the number of times they have already received a raise, and why. Combing through their file will help you have clear facts to determine why they may or may not be worthy of a raise. Jot down points to support your case so you can refer to specifics during your face-to-face.

Tip # 3 – check market and internal pay rates

Conduct a market pay rate and remuneration review to see what other employers are paying for similar work to the one performed by your employee. It is also important to conduct an internal parity review. Is the pay competitive? If your employee’s earnings are comparable to what’s currently being offered in the market, you can cite this as a reason why they don’t deserve a raise at this time.

Tip # 4 – meet face-to-face to explain your decision

Sensitivity is key. It’s never pleasant or easy to turn down an employee’s pay request, so act accordingly. Remove emotion from the equation and let your employee know you thought about this and did your research as well. Presenting them with facts will help illustrate why a pay rise won’t be granted. Referencing reputable data also helps avoid making you look like the bad manager, which is vital since you still have to manage this worker in the future.
Before you let your disappointed employee leave your office, it’s up to you to dispense some good career advice.

Tip # 5 – reinforce the importance of them in your organisation

Make it clear this employee occupies an important position on the team, and offer tips on how to boost future performance to ensure a raise at the next employee review. If done correctly, you will be creating a more invested employee whose pay rise request was not rejected, but merely postponed to a date in the not-so-distant future.

Rejecting an employee’s request for a pay rise can certainly have negative results. So base your decision on facts, while still treating your employee compassionately, and motivating them to try harder to score a raise the next time.

When an employee comes into your office and asks for a pay raise, it’s a safe bet he/she has done a lot of research involving salaries. So you need to make sure you’ve done your own.

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