There is no magic wand here, and of course every employee is going to be disappointed after having a pay raise request turned down. However, there are still a good way and a bad way to refuse a raise. 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 organization. This is why it is the job of the line manager to refuse raise requests in a way that limits the damage to the employee’s engagement levels.
Studies show that 45 percent of an employee’s performance is influenced by the direct line manager, further underlining the point that a key moment of truth in manager-employee relations is the handling of a pay raise request.
So, what can supervisors do during this key moment of truth without destroying the employee’s morale?
1. Don’t Attempt to Squash or Shut Down the Raise Request without Consideration
You are perfectly entitled to say no to a raise request, but doing so without considering the possibility of the raise will damage the employee; they may feel that they don’t have a voice and that their employer doesn’t care about their career or their desire to be paid a fair wage. This could set them on the path to disengagement. Always take time to at least consider the request.
2. Considering the Raise Request
Ask the employee why they feel they deserve a raise. Ask them if they have taken on any additional responsibilities, or whether they feel their pay has fallen behind market rate, or whether they feel they are making a larger-than-average contribution. Ask them what responsibilities they might like to take on in the future as well.
Listen to what the employee says and then ask them to set this out in writing. Ask them to supply evidence to back up any claims. This will help to educate the employee on the process of granting pay raises and show them that you have a fair and transparent pay review process, which means there are equal opportunities for all to get ahead. This employee will be reassured by the fact that their raise request will be taken seriously.
3. Explain the Reason for Turning Down the Request
Take ample time to review all the information that the employee supplies to you, and carefully set out the reasons why you are not able to offer a raise in the same way a judge explains the reasoning behind their verdict. If you are turning the raise request down, that is usually because you either have no budget or feel the employee is currently fairly paid. If there is no budget, try to justify your reasoning with figures and examples; otherwise, the employee may be skeptical. If you disagree with the employee’s rationale for a raise, then explain why. If you feel they are fairly compensated, then you must again be sure to explain why.
4. Empower Employees by Letting Them Know What It Takes to Qualify for a Raise
It shouldn’t be a guessing game, and if you disagree with and employee’s rationale for a raise, then explain what exact parameters would qualify them for that raise. This gives the employee a way to advance toward a raise.
5. Give the Employee Some Hope for the Future
Don’t leave an employee in the gutter after you refuse their raise request. Instead, help them look to the stars. Outline some performance and development goals that, if achieved, will make them more valuable, increasing their chance of promotion and/or a raise in the future. Also, inform them of when the next likely opportunity for promotion will be coming. This part of the discussion could help to give the employee a renewed vigor, focusing them on a more profitable developmental path.
Adopting this more considered and humane approach to turning down a raise can help turn a refused request into an opportunity for some inspired and well-received career guidance.