Salary Increase? – How to Answer the Raise Question During Tough Times

The economic status of many companies has been challenged over the past year and a half. Many companies reacted by scrutinizing the budget and slashing line items to help them “get through” this tough time. Most of these organizations decided raises should be among the first to go. Whether these were merit based or just an annual cost of living increase, these organizations went through the exercise of weighing out the pros and cons of “freezing” this annual salary change.

In many situations it’s easy to turn down a raise request: if a person’s performance hasn’t met expectations or if a person bases his request on what others are making, it’s easy to explain that everyone is treated as an individual. The more difficult scenario is when you have to deny a request from someone who merits an increase but can’t get one because of the company’s financial situation.

The secret here is to ensure the employee knows they are a valued worker, making a legitimate request that simply can’t be met right now due to the company’s financial status. A rational person will understand these kinds of circumstances. Acknowledge his disappointment by ensuring that you will come back to him with a raise as soon as the financial picture brightens.

Some tactics to help manage this situation:

  • Accept that in tough economic times, the needs of the company must come first. Sharing this line of thinking with an employee let’s them know where you are coming from and gives them insight into your decision-making process.
  • You generally have little to no warning or control over when the employee will request a meeting to discuss a raise. Once asked, don’t stall or delay this conversation. Handle it head on.
  • Be compassionate, caring and understanding but it is important to note that there is no need to apologize. It’s just a fact of life that when a company’s business is down or facing risks, its employees will have to forgo raises.
  • Let the individual make his or her pitch without interruptions or argument.
  • If correct, accept his or her assertions and numbers openly. Respond to every request, regardless of which pitch is used, with the same answer: the money isn’t there right now.
  • Accept that there will be a certain amount of anger, annoyance or disappointment – it’s understandable.
  • Make a commitment to revisit this issue and assure the employee that there will be an increase as soon as it’s feasible.
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