How to Say No When an Employee Asks for Raise

by Gil Zeimer on February 21, 2011
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There are dozens of reasons to deny an employee a raise. Some are financial, some are based on merit, and some are social – how they fit in with or compare to their fellow employees.

If you find yourself asked for a raise but you’re not yet ready to give one (but want to keep the employee around), here are some tips that may be helpful:

1) Give a bigger title – This may keep many an employee contented for the near future without additional money involved. Granting someone a more important sounding title is a very common practice in just about every type of company and across industries. The cost is minimal: Printing new business cards.

2) Give a timeframe for improvement – Give the employee a schedule and specific goals to meet to earn the raise. For example, ask him or her to bring in a few referrals a week that can possibly lead to some business for your company, or set benchmarks to be met to earn a raise. Then let the employee know when a raise is actually possible.

3) Give more responsibility – A great way to justify a raise is to have the employee prove his or her worth on the battle lines. Let the employee interact more with clients or the public. Give your worker a project so he can learn new skills to succeed. Ask the employee to do something beyond what you would normally expect. In all three cases, a motivated employee will succeed.

4) Give the employee hope – During my early years in the corporate world as I was paying my dues while slowly moving up the ladder of success, I heard several supervisors say, “You remind me of myself at your age, but we give raises on your anniversary, not sooner,” or “You’re obviously talented and will go far but I can’t afford to give you a raise right now.” These positive messages made me want to succeed even more instead of hearing someone say something negative like, “You haven’t given me any reason to give you a raise.”

5) Give extra vacation days or other rewards – If you can’t wave your magic salary wand and give someone a raise today or soon, give the next best thing – a few well-earned vacation days, a gift card to a local restaurant, tickets to a sporting event, or something else of value. This small investment will be repaid in stronger loyalty and the urge to strive to become a better employee.

Changed your mind? Here’s how to say Yes when asked for a raise.

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