How to manage pay rise requests

As employ­ees begin to realise their improved hand in nav­i­gat­ing the great res­ig­na­tion by ask­ing for a pay rise, employ­ers are like­ly to receive an influx of requests. But how should man­agers han­dle requests if the busi­ness can’t ful­fil their demands?

The cost of liv­ing squeeze in the UK is set to leave many house­holds worse off. At the same time, record vacan­cy fig­ures have meant that busi­ness­es are hav­ing to com­pete more fierce­ly when try­ing to attract tal­ent, push­ing up pay for those will­ing to move jobs.

This has meant that the num­ber of peo­ple turn­ing to their employ­ers and ask­ing for a pay rise has grown. Fig­ures from data research com­pa­ny Sem­rush show that search­es for the term “how to ask for a raise” more than dou­bled between Jan­u­ary 2021 and 2022.

As a result, busi­ness­es are under increas­ing pres­sure to raise wages of their employ­ees. “With the great res­ig­na­tion in full swing, many employ­ees feel empow­ered to request pay ris­es or threat­en to go else­where if they don’t get what they’re ask­ing for,” says Bernat Far­rero, CEO of Fac­to­r­i­al HR. “If your busi­ness isn’t in a posi­tion finan­cial­ly to meet these requests, it can be real­ly dif­fi­cult to nav­i­gate this and retain staff.” 

So, how can man­agers deal with pay rise requests, while still keep­ing their sub­or­di­nates moti­vat­ed?

Provide a pathway for improvement

First­ly it’s impor­tant to enter the dis­cus­sion in the right mind­set. Enter­ing the exchange with a com­bat­ive atti­tude is not like­ly to end well. HR soft­ware com­pa­ny Employ­ment Hero’s chief peo­ple offi­cer Alex Hat­tingh advis­es: “Deflate the pres­sure and approach the con­ver­sa­tion with a trans­par­ent, gen­er­ous mind­set. Nine times out of ten, both you and the can­di­date will have the com­mon goal of com­ing to a rea­son­able res­o­lu­tion when it comes to salary.”

It’s also impor­tant to bear in mind what the rest of the mar­ket is cur­rent­ly offer­ing. There are many ways for employ­ees to find out the going rate for peo­ple in their cur­rent posi­tion, through web­sites such as Glass­door or LinkedIn and by speak­ing to oth­ers with­in their net­work. 

Hat­tingh adds: “Many will be using mar­ket val­ue to set their expec­ta­tions for what is a fair salary, so it’s very impor­tant to be at least aware of, if not aligned with, this num­ber.” If you want to keep hold of tal­ent, it will be impor­tant to offer them a salary that’s at least in line with what oth­er com­pa­nies in your sec­tor are offer­ing.

If the com­pa­ny can’t meet the employee’s pay rise demands or man­age­ment feels they are not ready for one, it’s impor­tant to pro­vide feed­back. “Get­ting passed over for a pay rise or pro­mo­tion can be demo­ti­vat­ing,” says Sonya Dine­va, busi­ness psy­chol­o­gy lec­tur­er at The Uni­ver­si­ty of East Lon­don. “Peo­ple need to be told why, so they under­stand what they need to improve upon to get the pay rise they want.”

This could involve rec­om­mend­ing train­ing cours­es or tak­ing on addi­tion­al roles and respon­si­bil­i­ties with­in the organ­i­sa­tion. 

Nudge the­o­ry can also be applied by man­agers in this sit­u­a­tion as well, accord­ing to Dine­va. “If they’re able to con­vince peo­ple that the deci­sion is in their best inter­est by focus­ing on their needs and the improve­ments, [it will] help them get to where they want to be.”

Susy Roberts, exec­u­tive coach and founder of peo­ple devel­op­ment con­sul­tan­cy Hunter Roberts, believes that trans­paren­cy is key. “Explain why it’s not pos­si­ble at the moment due to the finan­cial sit­u­a­tion, or oth­er ratio­nale. Ask what else will moti­vate them and how you can offer more val­ue in oth­er ways,” she says.

Negotiate on benefits

Sim­i­lar­ly, man­agers should remem­ber that they can offer their staff more than just pay. It can be worth explor­ing whether an improved ben­e­fits pack­age could sweet­en the deal for the employ­ee. Roberts adds: “If it’s some­one you val­ue and want to keep, then be trans­par­ent and sup­port­ive in what­ev­er ways are avail­able to you.”

Work/life bal­ance is par­tic­u­lar­ly high­ly val­ued among work­ers at the moment. Accord­ing to the Totaljobs Hir­ing Trends Index, a third of employ­ees list­ed secur­ing bet­ter work/life bal­ance as one of their top pri­or­i­ties in their cur­rent line of work – sec­ond only to earn­ing a high­er salary. Explor­ing oppor­tu­ni­ties to make the work­ing day more flex­i­ble or increas­ing the num­ber of hol­i­day days they have may make their cur­rent con­tract arrange­ments more appeal­ing, with­out the need to increase pay.

“If the lev­el of pay is already decent, a rise will only moti­vate for a short peri­od,” Roberts says. “Cul­tur­al fit, mutu­al respect, feed­back, feel­ing val­ued and hav­ing an over­all pos­i­tive employ­ee expe­ri­ence are far more impor­tant in the longer term. Peo­ple need to feel cared for as indi­vid­u­als, not just employ­ees.”

One man­ag­er who has had to deal with such requests is Simon Lan­cast­er, CEO of busi­ness insur­ance bro­kers SJL Insur­ance Ser­vices. Despite hav­ing an HR man­ag­er, Lan­cast­er still makes the final call on all hires and pay ris­es. 

Although he claims the busi­ness would “always try and meet the employ­ees finan­cial needs if pos­si­ble,” in the instance where their demands couldn’t be met, oth­er options are usu­al­ly explored. This could include ben­e­fits, career pro­gres­sion and how the com­pa­ny can help the indi­vid­ual meet their broad­er career goals. “In my expe­ri­ence this is often as impor­tant as cold hard cash,” Lan­cast­er says.

“We would talk about how val­ued they are, reit­er­ate what a fan­tas­tic com­pa­ny SJL is to work for, talk about our future goals and explain how they fit into them and offer pay ris­es at fixed dates in the future if cer­tain goals are met,” he adds. 

Lan­cast­er claims that staff usu­al­ly leave such a meet­ing “enthused and with the bit between their teeth,” even if the out­come is not the one they ini­tial­ly had in mind.