How to Handle Salary Increase Requests
“I Need a Raise”
When an employee asks for a raise outside of the annual cycle, managers often panic. HR needs to provide a script and a process to handle this objectively, not emotionally.
The “Hold and Validate” Method
Managers should never say “Yes” or “No” in the moment.
Script: “Thank you for sharing that. I value your contribution to the team. Let me review your current compensation relative to the market and our internal bands, and let’s schedule a follow-up meeting next week.”
Criteria for Off-Cycle Increases
Only grant raises if:
- Market Discrepancy: They are significantly below the market rate for their role.
- Scope Creep: Their job duties have expanded significantly (e.g., they are now managing people).
- Retention Criticality: They are a top performer and losing them would cost more than the raise.
Denying the Request
If you have to say no, explain the “Path to Yes.”
“We cannot adjust your salary right now because you are currently at the midpoint for this role level. However, to get to the next level (Senior Manager), we need to see X, Y, and Z. Let’s build a plan to get you there.”
FAQ: Management
Should we mention inflation/cost of living?
Be careful. If you give a raise purely for “inflation,” you have to give it to everyone. Focus on “Cost of Labor” (the market rate for the job) rather than “Cost of Living” (the price of milk).