As a Human Resources manager, you often have to deal with employees requesting a salary increase. How exactly does one decline an increase without running the risk of having employees pack their bags?
Whether it’s because the business can’t afford it or simply because the employee is already being paid at market worth, there are many reasons that may prevent you from granting a salary increase. In any case, saying no to a salary increase can be tricky and the issue must be dealt with tact. Otherwise, you avoid not only loosing employee morale, but also run the risk of seeing employees leave.
Give reasons
As a rule of thumb, avoid beating around the bush. As simple as it sounds, being specific with your employees about why you cannot offer them a raise in pay is the way to go. After all, honesty is the best policy!
The National Federation of Independent Business, an American small business association, recommends sticking to the facts. Avoid such generic statements as “it was a difficult decision” or “this is not a reflection of your value to the company”. Being vague only increases the employee’s suspicion that you are hiding something from them and will make them want to run for the hills.
Manage expectations
If you can, be as transparent about your business as possible. Especially if you are running a small team where budgets are tight, scheduling weekly meetings exposes your staff to the company’s financials and its new priorities. If you are declining raises due to reduced budgets or unfavourable economic conditions for example, including employees in money talks helps to support your decision.
Stick to your guns
So you turned down a raise and now your employee is resentful? Worse even, threatening to leave? Don’t change your mind. Remain constructive and maintain a positive demeanour. Most importantly, remember why you made the decision in the first place.
Make it clear that the employee is important while offering an action plan that could lead to an eventual raise at the next performance review. Turn the negative situation into a possible opportunity for the future.
And don’t forget to “explain the consequences if he/she fails to improve,” suggests the Global Post.