What to do when you can’t offer a pay rise

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Turning down a pay rise request can be awkward. If you have ever had to do it you will probably agree that it felt like a pivotal moment in your relationship with that employee.

Other consequences could also result from saying ‘no’. Your employee could feel immensely disappointed and take it personally, thinking their efforts aren’t being appreciated. They may become disengaged and disconnected. What might be the end result? Probably looking for a new job.

According to a recent study, staff in the UK – almost a quarter (24%) - are the most likely in Europe to look for another job if they’re turned down for a pay rise. Followed, quite a way behind, by Germany and Belgium (11%), The Netherlands (10%) and France (5%). 

When a pay rise is not an option 

Sometimes a pay rise is simply not possible. Maybe because you feel this particular role has a salary ceiling which can’t be moved without a performance review of all your staff salaries or perhaps just can’t move at all. Equally, a pay rise might also depend on how your business is currently performing.

But when it comes to turning down a request there’s always a right way and a wrong  way of handling things. In the first place it is really important that you give consideration to the employee’s request. They will probably ask you about the reasons for your decision, so you need to be ready to give them a proper explanation about why a rise is not possible right now. It goes without saying that you should be offering a fair salary for that work to start with, of course!

In order to keep that staff member as engaged and happy as possible within your team it may be worth considering what else you could offer them.

Popular perks 

A recent survey of nearly 2,500 employees identified the top two workplace perks as more time off (41%) and money-saving benefits like gym membership (17% of those asked).

Other options might be:

  • Flexible hours. All employees are now legally entitled to request flexible working after they’ve worked at your company for 26 weeks.
  • The opportunity to work out of the office for a portion of the week.
  • Time off in lieu
  • Freelance or contract work opportunities
  • Travel and allowances
  • Additional maternity/paternity leave

You could also discuss with your employees what they would need to do in order to get a promotion and then reach a higher salary. A clearly-outlined training and development plan showing career progression might be the key to keeping them motivated.

Retain your talent

Retaining the best talent for your business means having attractive job terms back at the recruitment stage. Here at Exectec we help clients make their job offer the most attractive possible to stand out from the crowd. But remember that keeping your staff happy and engaged after a negative pay rise request can be directly related to the perks you offer them now and in the future.