Following a recent report that revealed that over half of the UK workforce fears asking for a pay rise, we take a look at how employers can deal with requests.
reed.co.uk surveyed over 3,000 UK workers to ask – what would stop them from asking for a pay rise. Surprisingly, results show that over half are fearful to ask.
“Don’t know what to say” (16%), “not wanting to be seen as greedy” (15%), “scared of asking the boss” (12%) and “worried of being turned down” (12%) were all reasons why workers across the UK stop themselves from asking for a pay rise.
Even though a response of “nothing would stop me” (37%) topped the poll, the recruitment agency’s latest data shows a trend towards a lack of confidence when asking for more money.
Employees have an instinctive feel for when a company is doing well and of course they have first hand knowledge of how busy the company is by their workload if it increases or if more staff are employed, even if they are not aware of the financial details.
If there is no strategic pay structure within an organisation then it is only natural employees will at some point enquire about a pay increase.
It’s therefore advisable to regularly evaluate the performance and pay rates of all employees within your business at least once a year. You should also review comparable roles and look at what the average rates of pay together with the total reward package are within your industry – comparing yours against roles at other companies with similar characteristics.
Responding to a request for a pay rise
Many large organisations operate pay scales sometimes set out within scales/bands which employees are made aware of, and therefore there is only limited room to manoeuvre, albeit they usually have regular reviews. However, for small businesses that don’t, there is more likelihood of employees asking for a rise.
As the reed.co.uk report suggests, employees do fear asking their bosses for a rise so if they do, you need to take it seriously.
Employees should have done their homework and will know what value they bring to a business, and they want to receive some kind of recognition of that from their employers. If an employee believes they are being neglected or undervalued they may start to underperform or start taking days off sick.
Initially we suggest you respond to the request by telling them you will need some time to review it with other members of the management team, but give them a definitive timeline so they do not feel they are being fobbed off. This will give you time to review the employees performance against their request.
It’s also important to ask them what kind of realistic rise they are looking for as this will help your decision once you have conducted your research.
Employees will usually offer an explanation and examples of why they think they deserve a pay rise so as an employer you need to do your background research and look at:
- When did the employee last receive an increase in salary?
- How is the employee paid in comparison to other employees carrying out the same duties? Could this leave you open to equal pay claims if a rise is given? Are there implications for additional costs or grade drift?
- When did they last have an appraisal / assessment?
- How has the employee been performing?
- What is the employees time keeping like?
- How many sick days has the employee taken?
- Do you think the employee will leave if they do not get a pay rise?
- Could the employee be easily replaced?
- What costs would be involved in replacing the person?
- Is there anything else the company could do to reward the employee, i.e. performance/results bonuses?
- What incentives could you offer instead of a rise? I.e. other reward benefits e.g. service/loyalty related benefits, extra annual leave, private medical insurance, health and well-being services, childcare vouchers etc.
Meeting with the employee
Once you have made your decision, call a meeting with the employee and give them your feedback regardless of whether you are going to give them a pay rise or not. Show them that they are valuable to your company and provide them with feedback they can use.
Even if your answer is no, give them a reason why a rise can’t be given at that time. You should consider alternatives to an increase in salary such as bonuses, privileges such as additional holidays, time off etc. This will show the employee he/she is valued and you are trying your best to reward them for their loyalty. Also agree to re-visit the request in the future at a determined time and what the employee / company need to achieve in order for it to be a realistic option. This is a positive way to approach this by re-evaluating an employee’s contribution and responsibility and link it to a pay rise, if not immediately then in the future.
Retaining good employees is crucial for any business to grow and the cost to replace in terms of advertising, interviewing and training can be significant. Often, mere monetary reward is not just what your employees seek, it maybe career advancement/opportunities which in turn may offer an increased salary, different or more challenging work, recognition and the need to feel valued, so think carefully about the possible consequences of not being able to offer them anything.
How Centric HR can help you
Centric HR can assist you in developing a reward strategy for all your employees no matter how big or small your company to ensure reward matches and reflects company performance and more importantly – affordability! We can provide pay benchmarking, job evaluation and local market factor information to help you make informed decisions or simply respond to employee’s requests.
We have many tools and techniques to help you grow an effective and engaged workforce ensuring you avoid the pitfalls of equal pay claims and grievances – to get the very best out of your people whilst actively taking them on the journey with you.
Here’s a flavour of what we can help you with:
√ Reward strategy
√ Total reward packages with benefits advice
√ Banding/grading structures – relating to pay and benefits
√ Job descriptions, Person specifications and Job Evaluation
√ Commission structures
√ Contractual compliance
√ Employee Performance processes linking to your business objectives
If your business needs assistance relating to salary structures and reviews please contact us here.