Deciding whether to grant an employee’s request for a salary increase can be challenging. You may not be sure where to begin to determine whether an increase is earned. Or, there may be reasons beyond your control why you cannot fulfill the employee’s request.

Because a salary increase is one way to retain your best talent, you want a way to determine whether an increase should be given. If one is not possible at the moment, you should be able to offer some alternatives to encourage the employee to remain with your company.

The following guidelines can help you determine whether an employee has earned a salary increase and some options if an increase is unavailable.

Request a Self-Evaluation

Ask your employee to fill out an evaluation to show why they should receive a salary increase.

• This process encourages your employee to justify their request with data.
• You gain time to prepare a response.
• You and the employee can schedule a time to follow up on the request.

Review the Employee’s Performance

Thoroughly review the employee’s self-evaluation, most recent performance reviews, key performance indicators (KPIs), and related metrics.

• Remain objective about whether the employee has earned a salary increase.
• Research what the salary range is for an employee in a similar role with the same qualifications and in your geographic area.
• Determine whether your budget allows for a salary increase.
• Keep in mind whether you want to keep the employee or hire a new one.

Meet with the Employee

Privately talk with the employee at an agreed-upon time.

• Be honest about the employee’s ability to be awarded a salary increase.
• Provide the employee’s most recent performance reviews, KPIs, and related metrics as reasons for your decision.
• If you decide to award a salary increase, give the amount and the reasons for your decision.
• Prepare for the employee to negotiate a higher increase.  

Consider Financial Alternatives

If your budget does not allow for a salary increase, you may be able to offer other compensation or perks.

• Provide additional vacation days.
• Let the employee work remotely one additional day per week.
• Provide suggestions from a list of non-monetary offerings.  

Develop an Action Plan

If you want to provide a salary increase but are unable to, work with the employee to create a plan to receive a salary increase in the future.

• Clarify the next available time to earn a salary increase.
• Map the steps needed to earn a salary increase.
• Specify how the employee’s performance will be measured and how success will be determined.
• Include periodic reviews to discuss the employee’s progress, praise their achievements, and suggest improvements.
• Clarification of these steps shows you want the employee to succeed.

Looking to Hire HR Professionals?

Consideration of an employee salary increase can be difficult. Requesting a self-evaluation to use with KPIs, performance reviews, budget information, and other data can help make the process easier.

For help hiring HR professionals, turn to Arlington Resources. Learn more about how we can benefit you today.