How to Decline a Pay Rise Without Crushing Their Spirit


HR Insights for ProfessionalsThe latest thought leadership for HR pros

Wednesday, May 15, 2019

Employee pay can be a difficult area to navigate and people sometimes wanting more is inevitable. That said, companies can’t always accommodate, therefore managing this let down can be easier said than done.

Article 3 Minutes

Pay can be one of those delicate topics for any business, as organizations must balance the need to keep costs to a minimum while simultaneously ensuring staff are fairly compensated for their time and effort.

Indeed, research by Payscale in its 2019 Compensation Best Practices report shows just one in five employees currently feel they are paid a fair amount. At the same time, two-thirds of businesses believe it is now getting harder to retain top talent due to an increasingly competitive labor market.

As a result, when an employee asks for a pay rise and the company simply can’t meet their expectations, this can lead to some difficult conversations. Understandably, turning down their request will be a disappointment, but there are ways to convey this message without causing recrimination.


1. Listen to their case for a raise

Taking the time to listen to a person's case for a pay rise should be an important part of the process of any pay review. While it may be a fact that the business simply cannot afford to offer a raise at that time, it's important to understand why that individual feels they should be paid more.

Once they've put their case forward, be open and honest with any feedback or areas where you might disagree. This needn't be a damning appraisal though, and indeed it shouldn't be if you want to maintain morale, but it should be viewed as an opportunity to put forward a realistic response based on the company's own situation and opinion.

2. Base your decision on facts

When turning down a pay rise, it's important for the employee to know that the decision has been properly reviewed and considered. For this reason, it's essential to show there has been a degree of work put in before coming to any decision.

One way to demonstrate this is to come armed with facts like industry pay levels that relate to their position and level of responsibility, experience, etc. In addition, managers should carry out their own assessment of the individual's performance to date, as the person asking for a raise will sometimes view their own achievements through rose-tinted glasses.

3. Never say never, but don't make promises

Nobody wants to hear that their pay well never go up, so when turning down a pay rise managers should aim to show employees how their own efforts can lead to a different answer next time.

In order to achieve this, it's important to come into the meeting with a plan to talk about not just their performance in the past, but any potential new opportunities, skills or efforts that could lead to a pay rise in the future. However, managers should never commit to any future pay rise at that time, as you don't want to be creating expectations that could come back to haunt you in the future.

Ultimately, turning down a pay request will always run the risk of jeopardizing an individual's commitment to stay with a company if they feel they're not being fairly compensated for their time and effort.

That said, when the process is carried out in a professional, realistic and, above all, sensitive manner, there is every chance that the conversation can be a positive one. In the end, companies have to realize that they want that person to stay, so being open and honest about the reasons they can't be given more money is always the best policy.

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