How to Turn Down a Raise Request (And Not Lose an Employee in the Process) - HRM online (2023)

67 percent of employees expect a pay rise this year. If you can't give it to them, follow this expert's advice on how to turn down a raise request without putting employees at risk of flight.

An employee approaches you with a request for a raise, but the timing isn't right.

Your organization may not be able to pay for this at this time. maybe your actingIt's not up to date. or maybe youI disagree with your suggestion.Whatever the reason, you must deny their request. But how can you ensure they don't react badly?

"Denying a raise request can yield some results," says Karen Gately, founder of corporate dojo, a leadership and people management consultancy.

“Either the employee leaves the company, or the employee starts doing what is necessary andlose motivationgo beyond".

Disengaged employees almost cost Australia's economy2 billion dollarsYearly. In times of economic uncertainty, companies cannot afford to lose staff.

AccordingHays Salary Guidefor 2021/22,67% of employeesThey expect a pay rise of three percent or more this year. Therefore, if your organization cannot do this, contact Human Resources. HH. You must be willing to let them down gently.

Luckily, Gately has some suggestions on how to have that conversation without accidentally sending her home.

Need to share unpleasant news with an employee? AHRI short course,How to Have Difficult Conversations, will equip you with the tools for a positive outcome. Register for the next course on September 6th.

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1. Listen to them

Don't immediately dismiss the prompt the first time it appears, says Gately.

"If you turn it off and just say, 'It's not time for a salary review,' or if you're not open to conversation on any level, they'll feel ignored and think, 'I'm going somewhere where 'I'm valued.' 🇧🇷

"If you think it's reasonable for the person to receive a raise [but you're not in a position to offer one], be sure to check to let them know you've been seriously considered," she says.

This is to ensure that the employee feels heard, even if no salary increase is planned for the foreseeable future. This is your opportunity to discuss with your manager or other leaders what you could offer them, in addition to financial compensation, to make them happy. More on that in a moment.

Don't be afraid to dig a little deeper either. Are they asking for the raise because they feel their role has been expanded and they want to be rewarded fairly? Or are you in a difficult financial situation? For example, has your rent increased?

This will inform further conversations.

“Some people make the mistake of asking for a raise for personal reasons, like 'I have a lot of bills right now, I really need to earn more money.' But that's not your employer's problem."

But that doesn't mean you should give up on compassion, he adds, or find other ways to help them, like giving them free time to look for a home.

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"You have to assess what value they bring to the organization and what you're willing to offer them when it's not about the money."

Which brings us to our next point.

2. Reward or Recognition

Sometimes when employees ask for a raise, it's not always because they are unhappy with their current salary. You might be looking for more recognition, for example, or maybe they yearn for a more challenging job.

Finding the real reason behind your request is important for two reasons. First, if you can give them more money and you do, it's probably just a temporary solution.

Investigatesuggests that the effects of a wage increase last only 43 days. So if more recognition is what they're really looking for, a raise won't do much.

Second, if you can't offer them more money but want to recognize their efforts, there may be other ways to sweeten the deal.

At this point, you might want to consider alternatives such as, for example, a title change to better reflect your role, a one-time bonus, or an extension of your current additional leave or subsidized training/fitness programs).

In the case where the reason for the “no” is not financial, but related to a lower level of achievement, you need to be honest.

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"You may need to tell them that you feel you are paying them the standard level of performance and point out areas they can improve to potentially move into a higher paying role."

Gately also suggests coming up with a plan for them, saying that a conversation where a raise is turned down can be the start of a longer discussion about new opportunities open to the employee in your organization.

Here are some temporary alternatives you can offer an employee to prepare for a future raise:

  • Training (internal or external): AHRI has a large number ofShort courses available.
  • mentoring opportunities
  • Possibility of a side job for someone in a higher position
  • Skip level meetings

“If your circumstances mean that a raise is not appropriate – for example, if your salary is already equal to that of your colleagues – then you can say, 'I see you're already doing this and that and that.' If you start learning this and that, we could probably consider a promotion within the next 12 months."

"When you turn down a raise request for financial reasons, you want to be able to say, 'We think we'll be in a better position in six months, so let's talk about it.' - Karen Gately, Founder, corporate dojo

3. Research before saying no

You must be able to provide a valid reason to deny a raise request, says Gately.

"You should look at the current market salary for this position and find out what employees at the same level are earning," he says.

Many recruitment agencies publish annual salary guides, such as:

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These guides can give you a general idea of ​​salary expectations. If you want more specific information, Gately suggests finding a recruitment agency that specializes in your industry and hiring them for expert advice on current rates.

With this information, you can not only give the employee a data-driven reason why you're not giving the raise, but you can also identify what the employee needs to do to move up to a higher pay tier.

This is also a great way to protect your talents as it makes them realize they are being paid based on their experience or a similar level of experience and eliminates the notion that they are greener on the other side. 🇧🇷

It's important to remember how stressful it can be to ask for a raise. Employees are likely to react emotionally to the news that they won't get a raise. Using dates can act as a buffer and help you show them that the rejection isn't necessarily a reflection of them.

4. Give them hope

Don't turn down a raise without letting the employee know you're open to further conversation. If possible, give them a specific deadline so they have something to work on.

"When you turn down a raise for financial reasons, you want to be able to say, 'We think we'll be in a better position in six months,' so let's talk about it," says Gately.

"You trust your co-worker to trust you, and you like his work enough to go without the raise, so don't ruin it by stopping him from visiting."

However, make sure you only make promises you can keep. whathuman resource ManagementI already got in touch if youbreadcrumb team(i.e. making promises just to keep changing the goalposts) they will eventually get it and frustration may lead them to give up.

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After all, you always end the meeting with a plan. Whether it's to implement the training or promise a return to the conversation; The two of you should talk to find out exactly what the next steps are.


How do you politely decline a raise request? ›

Explain briefly why you did not grant her the raise. You don't need to go into exhaustive detail. If performance was an issue, avoid focusing on the negative. If the budget won't allow it at this time, just state the facts and let her know that while you wish you could, you cannot grant her a raise at this time.

How do you tell an employee they don't deserve a raise? ›

Telling a direct report that they're not getting a raise is especially tricky if you disagree with the decision. You can go back to those who made the call, explain again why you think the increase is merited, and ask them to help you understand where you're off base.

How do you counter a raise offer? ›

How To Negotiate a Counteroffer
  1. Know your value and the industry rate for your position. ...
  2. Don't rush it. ...
  3. Don't forget non-salary benefits. ...
  4. Don't push too hard. ...
  5. Don't say too much. ...
  6. Know what's really important to you. ...
  7. Use a template to frame your request.
Dec 3, 2022

How do you respond to a rejected salary increase template? ›

You might say: “Thank you for sharing that. Not surprisingly, I'm disappointed that the company won't be able to honor my request. Nevertheless, I'm committed to bringing my best to the organization and hope to continue the conversation about how I can be an even more valuable contributor.”

When should you decline a raise? ›

Someone may turn down a raise for philosophical or equity reasons. For example, and employee may feel that pay rates are not fair within the organization and may want to make a statement by declining a raise until those who are compensated less are brought up to parity.


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