How to Say Yes When an Employee Asks for Raise

by QuickBooks

2 min read

Eventually every employee comes looking for a little more money. And sometimes they actually deserve it. Promoting people and upping their compensation is key to keeping your best people happy, motivated, and well-paid. But giving a raise doesn’t just mean writing a bigger check. Here’s how to think about responding when an employee asks for a raise:

1) Determine if they deserve a raise or not – Your employee may have come to you with a written list of accomplishments to justify a raise. If they’re due for one and you can afford it, discuss the time frame of the raise to show that you value his or her contributions with an immediate plan or with one that stretches over three, six, or twelve months.

2) Take their pulse when hiring them – To properly track an employee’s successes or failures, ask them some questions when you hire them and again in three or six months to log into their “Raise Score Sheet.” Are they punctual? Are they a valued team player? Do they contribute above and beyond what’s asked of them? Do they just do their job and nothing more? Are they a rising star or a burned-out meteor? Are they proactive about their projects and their job? Most importantly, where do they see themselves in two years or five years?

3) Always be aware of their contributions – Don’t wait for an employee’s work anniversary to determine if they deserve a raise. If they’re a stellar employee, you should be aware of their major contributions throughout the year; but if they’re less than an outstanding employee, remind them often that they could be doing (and earning) more.

4) Set up an annual review process – On the anniversary of their hiring date, schedule a meeting to discuss their progress against the notes you’ve been taking. If they’ve done better than expected, they obviously deserve a raise. If they’ve excelled, brought in new business, exceeded their sales or work expectations, won awards, or are otherwise exemplary employees, they deserve a bigger raise, possibly a bonus, and perhaps even more, such as an equity stake in the company. If they’ve just skated by, either give them a small raise to keep them on board or promise one on merit with certain improvements.

5) Check into salary surveys – In this tight economy, you should always know what employees are worth in your industry, so look into recent salary surveys to compare salaries, especially if you want to hold onto them. The U.S. Department of Labor Bureau of Labor Statistics tracks salaries nationally, regionally, by state, and by metropolitan area.

Not sure? Here’s how to say No when asked for a raise.

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