How to Respond When an Employee Asks for a Raise

Kate Conroy
May 18, 2023

How an employee feels about the money they make is rarely just about the money. There will always be another career opportunity that pays more. The paycheck will never feel like enough. When an employee asks for more money, it’s not only about the cash. It’s about the “feelings” we associate with compensation: feeling respected, heard, and valued.

When an employee asks for a pay increase, consider the needs of your business, but make your decision and communicate your answer in a way that hears the employee, demonstrates respect, and reinforces their value.

What to Do When an Employee Asks For a Raise 

Budgeting is a delicate balancing act for a business. When an employee asks for a pay increase sometimes it feels like this balance is about to be thrown off. It doesn’t have to be this way. When an employee asks for a raise, avoid reacting immediately and consider all of the options you have available.

Three Tips on Responding to When an Employee Asks For a Raise 

Your gut instinct might be to simply respond with “no” when an employee asks for a raise. However, before responding, consider the potential impact your reaction will have on your team member. A quick “no” leaves your employee feeling unheard and undervalued. Instead, communicate in a manner that leaves the employee feeling respected and leads to the most productive outcome. 

1. Acknowledge the Person’s Courage 

Asking for a raise is not easy for most employees. They have been working up the courage to have this conversation for some time and may be afraid of a negative reaction. Start by acknowledging the employee’s courage and their transparency in bringing this request forward. If you treat the employee with respect and dignity, even if you deny the raise, you will not have damaged your relationship with them.

2.  Don’t Say Yes or No Right Away

You don’t have to say yes or no on the spot, nor should you. Although your first instinct may be to say no, approach the conversation with curiosity. Ask them why they deserve a raise. Often their answer will fall into two categories:

  1. They’ve increased their contribution. They’ve taken on more work or higher levels of responsibilities beyond their job description.
  2. Their lifestyle needs have grown. They’re impacted by inflation. They’ve grown their family. They’ve increased their cost of living.

Even if you know that a raise is out of the question, tell them you will think about it and follow up. This allows the emotions of the conversation to cool down and reinforces your value for and respect for the employee, even if you can’t meet their request. 

Take time to consider their request. If their contribution has grown significantly, consider what you would offer a new employee hired to fill their shoes. If their reason is driven by personal reasons, it’s a different matter. Lifestyle and personal factors, even inflation, do not warrant a raise.

3.  Be Honest 

When you do communicate your decision to the employee, be honest and transparent in your rationale. If you are able to give them an increase, reinforce that their contribution has increased. Let them know you may not always be able to honor their raise requests, but in this case, you are happy to be able to provide them with the raise because they provided a strong business case.

If you are not able to give them an increase, explain why. Maybe they haven’t increased their contribution enough or in the right areas. Help them see the path to reaching the next level. If their request was based on their lifestyle, empathize with them, but let them know that lifestyle changes aren’t reflected in salary bands and aren’t a key criteria in deciding pay increases. Provide the employee guidance on what they can do to increase their contribution and earn a raise.

An HR Consultant Can Help Navigate Difficult Conversations

Compensation can be a minefield. Money is finite, but what it represents, an employee’s value to the organization is not. This seems like a problematic contradiction. However, with a strategic plan in place, compensation can be used to drive results and be communicated in a way that strengthens employee morale and culture. If you need help navigating conversations around raises or developing an overall compensation strategy, it’s time to consider working with an HR Consultant. Contact us to get started.

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