When things are going well in business, and employees feel they are exceeding expectation, somewhere along the line a staff member will approach the management team with a pay rise request. This is part and parcel of management, so expect this situation at some stage during your managerial career.
Turning down a request for a pay rise is never easy. While there’s no doubt it needs to be done from time to time, to minimise any negative impacts, it’s important to tackle the situation sensitively and fairly. It’s very important to remember that the same standard of work is required from the employee after they receive the bad news, because unfortunately, the bad news might damage their work ethic.
Let’s look at some different scenarios where management cannot grant a pay rise.
We'll break it down with three reasons:
An employee calls a meeting with management and maps out his progress from company entry up to that point. He has done everything - exceeded targets, developed really good interpersonal relationships with colleagues and upper-management, customer and client relations skills have surpassed his colleagues, but there’s just one problem; the company haven’t turned over a big enough profit to start looking at pay rises.
Considering a situation like this, management should begin by expressing their gratitude for everything the employee is doing and their appreciation for his talents and skills. A full explanation should be given to the employee to show that although the employee has performed brilliantly, management's hands are tied due to budget restrictions.
To maintain morale, and considering the employee has met or exceeded expectations, it would be beneficial to inform them that you will reconsider theirs request once the company's budget constraints enable a salary increase.
Here are some suggestions to use in a situation like this:
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Letting the employee down easy, while giving them a full explanation of your decision, is vital to maintain morale for the employee. If the employee has really outdone themselves, it you should make it clear that they are a valued member of the team. Receiving bad news is never easy, they might have one eye on moving company after hearing the bad news, so it’s important to reassure them of their position and massage their ego a little.