If you had to have “The Talk” about raises with your employees today, do you know what you’d say? Well, you’d better get prepared because 62% of companies will be increasing compensation for their existing employees this year, according to CareerBuilder’s 2012 Job Forecast. And, while over 40% of employees reported to Glassdoor, a business review and resource site, that they aren’t expecting a raise this year, that doesn’t mean they won’t be asking for one.
You may not have any control over your answers to their requests, but you can plan out your responses and make it as positive of an experience as possible.
Congratulations!
Of course, the easiest answer to deliver is “Yes!” But that doesn’t mean you shouldn’t have a prepared response. Employees need to know why they’re receiving pay increases. Make sure you communicate whether their raises are based on performance, cost of living, or tenure, if there are still areas in need of improvement, or if any new responsibilities or expectations go along with the increase. For star performers, especially, you need to lay the groundwork of where they go from here – top talent will need a new goal to aim for if they’re going to stay motivated.
Let’s compromise.
Sometimes due to budget constraints or bureaucratic red tape, you can’t increase employees’ yearly salaries, but you do have the power to approve bonuses or incentive programs. Explain your situation to your employees, acknowledge their accomplishments, express how much you value their work, and then present your plan. Most employees will accept this honest gesture and leave feeling appreciated. However, this option will only work for so long. At some point, employees want to be paid what they’re worth, and they will walk away as soon as a better offer comes their way.
I’m going to be honest.
There are a lot of reasons you might have to decline a request for more pay. Whatever your reasoning, be honest and explain yourself. If it’s due to lack of money, tell what your reward plans are for the future and what needs to happen in order to make them happen. And, of course, express your appreciation for all their hard work. Also consider what other ways you might reward them, such as extra days off or flexibility to work from home. If the lack of a raise is because of poor performance, you owe it to your employees to explain where they were lacking and what changes you need to see. Then, give them a date you want to see improvement by and lay out what will happen if they do or don’t meet your expectations.
It is possible to alleviate some of the stress associated with discussions about pay increases. Just make sure you’ve already considered the question, decided on your response, and compiled your reasoning before you have “The Talk.” Your employees will appreciate your thoughtful reply.
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