At some point, an employee may demand a higher salary or hourly rate. Conversations about salary increases can be awkward for both you and your employees, but you should know how to handle them. What to do if an employee asks for a raise.
What to do if an employee asks for a raiseAccording to one report, 37% of his workers have asked their current employers for a raise. Your co-workers may also be asking you for a raise. If you're not prepared, you won't know what to do when an employee asks for a raise. Whether you accept or deny the request, mishandling a salary increase request can result in employee turnover, termination, or disqualification.
The following seven tips will help you avoid awkward or damaging "raise-her-request" situations.
Listen to employees, but wait to answerWhen an employee approaches you with a request for a raise or an interview, you may not expect it. Take time to think about your employee's demands before giving them a definitive answer. Some employees will be prepared before asking for a raise and will elaborate on why they think they deserve it. Other employees may ask you for a raise without providing any further information. Gather as much detail as possible from your employees about why they feel they deserve a raise. Get information from employees. Also, take notes when talking to employees. Wait again for the agent to reply. Take notes and try to remain neutral when talking to employees. The more neutral it is, the less likely employees are to bet on a raise. Let your colleagues know that you need time to deal with the situation. Consider giving them a date where you can reunite to discuss their requests.
Conducting internal salary reviewsDo your due diligence after talking to the employee. Find out if you are paying your employees less than other employees. Conduct a salary check to see your employees' salaries in comparison to their colleagues' salaries. Internal salary audits compare employee titles, education, experience, seniority, and salaries. By comparing factors, you can ensure that your raise review process is fair. Avoid bias during salary reviews by using a standard compensation comparison process. If your salary reveals that your employees are earning less than their peers, analyze them and ask questions such as: Did the preliminary hearing affect wages? Did differences in education, experience, and seniority determine wage disparities? If a salary review reveals that an employee's salary is comparable to that of their peers, document that information. After conducting an internal payroll review, withhold the results.
Analyze external wage ratesThe next step in your salary application is to find out what your employees are making at other companies. If your employees' salaries are well below the industry average, you can apply elsewhere. Be competitive when it comes to employee compensation. Do research to find out which companies in your area and industry are paying. View published job descriptions and compare employee responsibilities, skills, and requirements. Additionally, you can find average and median wages by industry using data from the Bureau of Labor Statistics. In addition to the BLS, you can use other guides (such as PayScale) to determine if your employees' current wage rates are fair. Integrate job pricing tools into your payroll process.
Value your employeesA denial of a raise can result in you looking for another job. According to the Harvard Business Review, 70% of employees who have been denied a raise for little or no reason say they plan to start looking for a new job within the next six months. Before making a decision, you should consider the knowledge, skills, and experience that your employees bring to your organization. Is your company okay if an employee quits? How much does employee absenteeism affect your work and workplace? By looking at historical data, you can assess the value of your employees. For example, if an employee is a salesperson, calculate how much money that employee brings to the company. Also consider the non-monetary value your employees bring. B. generate innovative ideas, dedicated brand ambassadors, or superior customer service. Think about how much time and money it would take to replace an employee. How long does the hiring process take? How much money do you spend on recruiting new employees? Do your employees need to fill gaps? How much does training cost?
Investigate alternatives to pay raisesIf you can't afford a raise but want to show employees who deserve it that you appreciate their work, you have options. Consider offering an alternative to a raise. B. Bonuses, more paid time off, and flexible working hours Many employers choose to pay their employees bonuses rather than raises. One-off bonuses can have a higher initial cost but can save you money in the long run. You can also soften an employee's desire for a pay raise by increasing paid time off. 80% of workers would consider a job with more time off than a high-paying job. Flexible scheduling can include employees being able to adjust their working hours. Alternatively, you can include a work-from-home option. Before offering this pay raise option, consider whether your small business can accommodate flexible scheduling.
Calculate a reasonable salary increaseYour employee can come to you with a specific size in mind. However, it is the customer's responsibility to ensure that the request is not too high or too low. Before you can proactively respond to employee pay notifications and inquiries, you need to understand how salary increases are calculated. Next, determine the employee's new annual salary or hourly rate. Pay raises can be calculated by giving employees a percentage or flat raise. If you give your employees a lump sum, add the extra money you want to give them to your annual income. For example, if an employee earns $50,000 and gets a raise of $3,000, his new wage will be $53,000. Analyze average salary increases or cost of living adjustments if you want to increase your employees' salaries. To calculate the salary increase percentage, multiply the employee's past salary by the desired percentage increase. Then add this total to your previous salary. For example, if you give an employee with a salary of $50,000 a 4% raise, your new salary will be $52,000 [($50,000 x 0.04) + $50,000].
Respond to employee demandsWhether you accept, reject, or adjust an employee's request, you should discuss the reasons. Her 33 percent of employees who were denied pay raises received no explanation. Not talking to employees about why they are denying requests can lead to high turnover and low engagement. On the other hand, giving an employee a raise without giving a reason can create entitlement. Employees can also tell their colleagues and encourage them to ask for a raise. Provide employees with as much information as possible when submitting a pay raise request.
Denial of increase request:
If an employee doesn't deserve a raise, take on more responsibility or talk about improving their work ethic. Alternatively, you should tell the appropriate employees that the company's budget is currently short. Customize your boost request. You can decide to give the employee a raise, but you can change the request. You can give employees less money than they requested. Or maybe you need to offer your employees an alternative to a raise.
Accept a raise request:
If you accept an employee's request for a raise, tell them why. Consider giving examples of the great work they've done and how it's helped your company. You can also consider giving employees more responsibility for salary increases.