How to Respond to Pay Rise Requests in 2023
Unlike in many previous years, there are some unique circumstances that have made this year extremely hard for many people. The cost of living crisis is seeing inflation at a level that is making many people in full-time employment struggle to make ends meet. A lot of employees are therefore turning to their employers asking if they are able to increase their pay in line with inflation.
Some industries have acquiesced to these pay increases but others simply aren’t in a position to, having been ravaged by the Covid-19 pandemic and the ensuing lockdowns across the country.
You should strive to treat all requests for pay increases with sympathy and humanity as a great many people will view asking for a pay rise of around 10% as a last resort, having tried to cut costs in other areas of their lives.
You should understand that even if you are relatively insulated from the current crisis, there are many people who have seen their fuel bills double or treble overnight, through no fault of their own. These increases, coupled with sky-rocketing food prices, are causing severe difficulty for large swathes of the population.
Ensure You are Up to Speed on Industry Rates
It is very important when discussing salary expectations going forward to ensure that you are up to date on what is the normal range for your industry and the different jobs in your sector. If you are behind the times, you may have missed that competitors are now prepared to pay more than they were a year ago, and this may end up costing your organisation in terms of a talent drain, if you don’t get back onto a competitive salary track quickly.
When considering requests for a pay rise, you should be viewing them through the prism of what your competitors are prepared to pay for people with similar experience and the amount of money that it would cost you to replace the person who is asking for the pay rise. It may be that what they are asking for would actually be a lot cheaper and easier in the long run than having to go through a recruitment process and training someone new in the post.
Conversely, what they are asking for may be in the upper range of what is the normal salary range for their position and this may not be possible for you to fulfil. The harsh truth is that although the cost of living has gone up by around 10%, most businesses haven’t suddenly made a 10% increase in their profits. This can make it more difficult than you may like to grant the request for higher pay from your employees.
Take Time to Consider the Request
This is a big decision and one that you should take some time to think about before settling on an answer. Explain this to your employee and ask them for any information that they think should be taken into consideration when deciding on whether or not to give the pay rise. It is always good to have all of the information in front of you when making a decision like this that may affect someone’s future at the company.
You can gather the relevant information about their performance and take the time to ascertain how much they generally contribute to the company. If they are someone who regularly goes above and beyond what is expected and regularly performs well, it may even be possible to offer them a chance at career progression and a promotion within the company, rather than just a pay rise like they requested.
If it is a good worker who has requested a raise, it can also be more difficult to turn them down because this may have a negative effect on what they are prepared to do for the company. People who have been working a lot harder than their colleagues generally expect some recognition at some stage, and this often comes in the form of monetary recompense.
It can even be bad for their mental health if their hard work isn’t given the kind of recognition that they had hoped for. We live in a world where people are told that if they work hard, rewards will follow, and when that doesn’t happen, they may lose all motivation to work hard for you in the future.
Decide Whether to Give the Raise
This can be a complex decision to come to and a difficult one to explain to the employee but honesty is always the best policy, whichever decision you come to. Matters may even be complicated by them having received an offer from another company in the same space as yours and they are now looking for you to match the better offer. When thinking about this, you also have to weigh up the possibility of other people on their pay grade hearing about their raise and asking to advance to the same level. Can the company afford to give similar pay rises to employees across the board or would that be financially crippling?
If you decide not to give them the pay rise they requested, try to give a timetable for when the matter will be considered again, and help them to understand that it is no reflection on their abilities or how much they are valued at your company. Try to be as candid as possible about the financial implications of having to give everyone an extra 10% and explain how the business hasn’t made that extra 10% in profits in that time so it could be a move that would be financially unviable to undertake.
Offer them what support you can, as well as the fairest pay rise as you are able in the circumstances, even if you are unable to give one that will adequately counter the cost of living crisis. Above all, treat them with kindness and respect, regardless of which way your decision fell, as it is a difficult thing to ask for a pay rise and it takes real guts, or possibly even desperation, to do so.
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