How to manage pay rise requests

Requests for pay rises have risen, and they can’t always be met. But there are alternative ways to meet the demands of employees


How to handle pay rise requests

As employees begin to realise their improved hand in navigating the great resignation by asking for a pay rise, employers are likely to receive an influx of requests. But how should managers handle requests if the business can’t fulfil their demands?

The cost of living squeeze in the UK is set to leave many households worse off. At the same time, record vacancy figures have meant that businesses are having to compete more fiercely when trying to attract talent, pushing up pay for those willing to move jobs.

This has meant that the number of people turning to their employers and asking for a pay rise has grown. Figures from data research company Semrush show that searches for the term “how to ask for a raise” more than doubled between January 2021 and 2022.

As a result, businesses are under increasing pressure to raise wages of their employees. “With the great resignation in full swing, many employees feel empowered to request pay rises or threaten to go elsewhere if they don’t get what they’re asking for,” says Bernat Farrero, CEO of Factorial HR. “If your business isn’t in a position financially to meet these requests, it can be really difficult to navigate this and retain staff.” 

So, how can managers deal with pay rise requests, while still keeping their subordinates motivated?

Provide a pathway for improvement

Firstly it’s important to enter the discussion in the right mindset. Entering the exchange with a combative attitude is not likely to end well. HR software company Employment Hero’s chief people officer Alex Hattingh advises: “Deflate the pressure and approach the conversation with a transparent, generous mindset. Nine times out of ten, both you and the candidate will have the common goal of coming to a reasonable resolution when it comes to salary.”

It’s also important to bear in mind what the rest of the market is currently offering. There are many ways for employees to find out the going rate for people in their current position, through websites such as Glassdoor or LinkedIn and by speaking to others within their network. 

Hattingh adds: “Many will be using market value to set their expectations for what is a fair salary, so it’s very important to be at least aware of, if not aligned with, this number.” If you want to keep hold of talent, it will be important to offer them a salary that’s at least in line with what other companies in your sector are offering.

Employees need to be told why, so they understand what they need to improve upon to eventually get the pay rise they want

If the company can’t meet the employee’s pay rise demands or management feels they are not ready for one, it’s important to provide feedback. “Getting passed over for a pay rise or promotion can be demotivating,” says Sonya Dineva, business psychology lecturer at The University of East London. “People need to be told why, so they understand what they need to improve upon to get the pay rise they want.”

This could involve recommending training courses or taking on additional roles and responsibilities within the organisation. 

Nudge theory can also be applied by managers in this situation as well, according to Dineva. “If they’re able to convince people that the decision is in their best interest by focusing on their needs and the improvements, [it will] help them get to where they want to be.”

Susy Roberts, executive coach and founder of people development consultancy Hunter Roberts, believes that transparency is key. “Explain why it’s not possible at the moment due to the financial situation, or other rationale. Ask what else will motivate them and how you can offer more value in other ways,” she says.

Negotiate on benefits

Similarly, managers should remember that they can offer their staff more than just pay. It can be worth exploring whether an improved benefits package could sweeten the deal for the employee. Roberts adds: “If it’s someone you value and want to keep, then be transparent and supportive in whatever ways are available to you.”

Work/life balance is particularly highly valued among workers at the moment. According to the Totaljobs Hiring Trends Index, a third of employees listed securing better work/life balance as one of their top priorities in their current line of work – second only to earning a higher salary. Exploring opportunities to make the working day more flexible or increasing the number of holiday days they have may make their current contract arrangements more appealing, without the need to increase pay.

“If the level of pay is already decent, a rise will only motivate for a short period,” Roberts says. “Cultural fit, mutual respect, feedback, feeling valued and having an overall positive employee experience are far more important in the longer term. People need to feel cared for as individuals, not just employees.”

One manager who has had to deal with such requests is Simon Lancaster, CEO of business insurance brokers SJL Insurance Services. Despite having an HR manager, Lancaster still makes the final call on all hires and pay rises. 

People need to feel cared for as individuals, not just employees

Although he claims the business would “always try and meet the employees financial needs if possible,” in the instance where their demands couldn’t be met, other options are usually explored. This could include benefits, career progression and how the company can help the individual meet their broader career goals. “In my experience this is often as important as cold hard cash,” Lancaster says.

“We would talk about how valued they are, reiterate what a fantastic company SJL is to work for, talk about our future goals and explain how they fit into them and offer pay rises at fixed dates in the future if certain goals are met,” he adds. 

Lancaster claims that staff usually leave such a meeting “enthused and with the bit between their teeth,” even if the outcome is not the one they initially had in mind.