How to deal with requests from employees for a pay rise

You could almost hear the sharp intake of breath from employers up and down the country last month when David Cameron made a call to business leaders at the British Chambers of Commerce annual conference to consider pay increases for employees.

By Karen Credie, KMCHR.

Cameron used his speech at the BCC conference to rally business leaders; saying that now is the time to reward staff with pay rises as economic conditions 'have not been this good for a long time'.

Of course, wages across the UK are a recurring source of debate; whether in relation to equal pay for men and women, the 'pay gap' between the North and the South or the 'living wage' debate.

But what should you do if an employee asks for a pay rise? And how can you avoid an onslaught of pay increase requests? Here are some of our top tips.

Be considered If an employee threatens to leave your organisation unless they are awarded a pay rise, it can be tempting to agree to their terms to avoid the headache – especially if they are a valued employee. Rather than this approach, you could schedule a review meeting with the employee, at which you can discuss their reasons for wanting a pay increase and what contributions they have made to the business to warrant the rise. Ultimately you may still award the pay increase; but by pursuing a more formal structure, you will put yourself back in the driving seat and put some meaning behind any agreement that is made.

Do your research Larger employers often have set ‘salary bands’ that determine how much an employee can be paid up to. SMEs, however, tend to have a less rigid approach. It is important that you do your research and ensure that the level you pay your employees is competitive within the market/for the function of an individual role. Underpaying your staff can mean that you will lose your most talented employees to other offers, which may cost you dearly in the long-term.

Set targets If you are not in a position to meet the pay rise request, or if you are reluctant to offer the increase for performance reasons, you need to manage the situation carefully. You could consider setting targets for the employee to achieve over a set period of time, after which they will be granted a pay increase or bonus. Rather than leave the employee despondent, the creation of clear goals and something to work towards will likely motivate them and keep them on side.

Keep a level playing field It is important to adopt a fair approach when considering any pay rise for employees and anybody that requests a pay rise should be treated in exactly the same way. You also need to consider other people in your organisation; a reactionary stance whereby only those that ask are awarded pay increases can leave you open to potential claims – especially if it so happens that you end up paying more, or less, to a person of a specific gender/race/religion than another employee with a similar role and responsibilities.

Consider non-monetary rewards A request for a pay rise can be borne out of an employee’s feeling that they are not being recognised for their achievements in the workplace. Employees do not come to work solely to get paid; the atmosphere, camaraderie, recognition and reward are all part of the overall enjoyment and therefore commitment to work. A series of staff benefits or a reward system that recognises hard work can go a long way to keeping employees engaged and happy at work and therefore less likely to look for alternative employment or feel undervalued. We are currently working with a number of clients on developing pay strategies and staff incentive schemes. If this is something you are interested in discussing further, please get in touch.