What to Do When an Employee Asks for a Raise

These tips can keep you from getting caught off guard.

With overall unemployment in the United States roughly half what it was a few years ago[1], professional salaries are bouncing back. In 2016, some of the nation’s largest law firms announced pay increases for new associates for the first time in years.[2] [In 2016, accountant salaries are on track to rise 3% on average, and 4–5% for more experienced positions, according to the Journal of Accountancy.[3]]

That’s great news for the economy, but it could mean more of your staff knocking on your door in search of a raise. While you may not be able to match salaries at major firms, a well-considered response could help you hang on to your most valued employees.

Take Your Time

Whatever the merits of the request, avoid making snap decisions. Treat each case individually and respectfully. If your answer is going to be “no,” the news will go down easier if you can demonstrate you’ve given the matter serious thought and have solid reasons. Ask why a raise is justified. Have employees made a strong case about the value they add to the firm, extra responsibilities they’ve taken on or revenue they’ve generated — or do they just want more money? After you review, schedule a follow-up meeting to present your response.

Set a Policy

Few things are as destructive to office morale as inconsistency on pay. Setting a clear policy for how you manage raises and reward superior performance could help stave off the impression that you play favorites. Keep detailed records of raises you’ve given, and the justifications supporting them, for future reference. You also may want to limit salary discussions to certain parts of the year, giving you (and your employees) ample time to consider and prepare for the conversation.

Stay Competitive

Steady requests from multiple staff could be a sign you need to rethink your pay structure. Stay current on what firms similar to yours offer. Even if you can’t offer what major firms do, you may be able to compensate with other incentives, ranging from a clear path to management to flexibility on hours or the option to work remotely part of the time.

You may not be able to make every employee happy, and some will inevitably move on. But having fair compensation policies in place can help you keep great employees longer and minimize regrets over those who got away.

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Important Legal Disclosures and Information

  1. 4.9% in August 2016, versus 10% in October 2009. http://data.bls.gov/timeseries/LNS14000000

  2. http://www.nytimes.com/2016/06/08/business/dealbook/two-more-top-law-firms-raise-associates-pay.html?_r=0; http://money.cnn.com/2016/06/07/news/companies/lawyers-pay/

  3. http://www.journalofaccountancy.com/news/2016/apr/raises-forecasted-for-accountants-in-2016-201614204.html

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