There will be times when one of your employees asks for a raise. Preparing for these conversations helps them be efficient and productive.

Properly handling your employee’s request for a raise positively impacts engagement and retention. This benefits your bottom line.

Find out what to do when your employee asks for a raise.

Listen to Your Employee

Let your employee explain their reasons for wanting a raise. Take notes on what they have to say. Provide a time to get back together to further discuss the matter.

Research External Pay Ranges

Find out what employees of other companies earn:

• Use Arlington Resources’ 2023 Human Resources Salary Survey.
• Look at local job postings to compare your employee’s duties, skills, and qualifications with what your competition requires.
• Include data from the Bureau of Labor Statistics to find the mean and median wages in your industry.
• Visit PayScale to uncover average pay rates for your industry.

Determine where your employee’s pay is in relation to the area and industry average. Include this information when deciding whether to approve a raise.  

Determine an Appropriate Raise

Your employee may share a figure for the raise they desire. If so, ensure their request is reasonable before deciding whether to approve it.

Keep in mind the following statistics:

• The national average raise is 3%.
• 56% of employers in 2022 planned to give a raise of 3%.
• The cost of living adjustment (COLA) for 2023 is 8.7%.
• 92% of employees expect pay increases greater than 6%.

Focus on Alternatives to a Raise

If approving a raise is not in the budget, find other ways to show you value your employee’s work. You may want to offer a bonus, additional paid time off, or a flexible schedule. Any of these options would cost less than a raise.

Meet with Your Employee

Privately talk with your employee about your decision regarding their raise. Include your reasons for your choice.

If you approve the raise:

• Share your reasons for granting the raise.
• Provide examples of your employee’s work and how it benefitted your organization.
• Give more responsibility along with the raise.
• Update your payroll information.

If you feel your employee does not deserve a raise:

• Discuss methods to take on additional responsibility.
• Share ways for your employee to improve their work ethic.
• Mention there is no room in the budget for a raise at this time.

If you want to approve the requested raise but cannot:

• Provide less than the desired amount.
• Offer an alternative such as a bonus, extra paid time, or a flexible schedule.

Looking for Guidance with Employee Salaries?

Listening to your employee and researching external pay ranges are important steps to determine whether to approve a raise. You can use your findings to determine an appropriate raise or an alternative that better fits your budget. Then, you can meet with your employee to discuss the rationale for your decision.

Talk with Arlington Resources for additional advice on employee raises. Contact us today.