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The truth about pay rises – why ‘textbook HR’ is never enough

The truth about pay rises – why ‘textbook HR’ is never enough

Head of People, Operations Manager, COO… whatever their job title, they’re often wrestling with the very same problems and challenges.

In The Secret HR Manager, we sit down with an anonymous industry insider to lift the lid on how HR really works.

To allow them to speak freely, we have protected their identity.

In many companies – and especially in small businesses or startups – people in the HR function are trusted to make good decisions on salaries. But dealing with a request for a pay rise is never simple… What constitutes the ‘right answer’ in these situations is hugely dependant on context, and usually involves making a judgement call.

Salaries can be a really fraught subject. Along with firing people, it’s up there with the trickiest things you’ll ever face working in the People/HR function. Over the course of my career, small businesses have always placed a lot of expectation on me to just know the ‘right answer’ to any and all People issues, and salaries are no different.

But just like firing, the ‘by the book’ solution only gets you so far. Getting those decisions right is a lot less simple than your typical HR department might want to let on.

Let’s take a look at a couple of example scenarios:

The first on my list is when someone comes to you asking for a raise, and the initial answer in your own mind is a clear and obvious ‘no’. Here’s how I approach this situation:

1 - Listen and learn

Your first priority here is to make this person feel listened to, and that their point of view has been taken on board. This is primarily to give them a chance to vent a little bit, but make sure you leave the door open for them to tell you why they are asking for a raise – that’s important context that will inform your approach further down the line.

2 - Appreciate and value

The second step is to make sure they come away from the conversation feeling appreciated and valued by the business. If they’ve come to you asking for a pay rise, there might well be a feeling of being hard done by tied up in that.

“I totally understand where you’re coming from. Obviously, I don’t want you to feel that you aren’t appreciated for the work you do here because you really are valued.”

3 - Displace the conversation

Putting in a request for a raise is a very personal and involved move… to have it turned down can be a serious blow to someone’s self-esteem or professional self-worth.

Your end goal within this whole process is to displace the conversation – to move it away from that very vulnerable place and towards a more neutral context.

You need to stop this conversation from becoming an evaluation of someone’s self-worth, and instead place it in the sphere of their career progression and the objectives of the business.

If the person asking for a raise is upset, then they might not be ready to make that transition right away. If that’s the case, you need to buy the pair of you some space.

Here’s the line I take:

“The thing is, we have a system for pay progression here. As you know, we reassess everyone’s salaries twice a year, and that’s to make sure that everyone’s pay is handled fairly… that it increases when they deserve it, not just when they ask. The next round of reviews is in [x] months time, and when we get there we’re obviously going to reflect on what we’ve talked about today – but we do have a system for that conversation. We’ll look at our salary benchmark data for a role like yours, and take a look at your career progression as a whole.”

4 - Set the stage

Most companies hold performance and pay review processes twice a year, so going down this route usually gives you at least a couple of months. In the run-up to that review process, you need to lay the groundwork for the conversation you want.

You should really already have some accurate benchmark salary data for every role in your company – if you don’t, now is the time to get it. Once you’ve assessed those benchmarks, check that you still believe this employee doesn't deserve the raise they are asking for. And if your mind hasn't changed, ask yourself what they’d need to in order to move up that pay scale.

In the weeks running up to the pay review process, be careful with the language you use to describe it. Don’t call it ‘an employee review’, which sounds overly personal – instead, it’s a meeting to discuss their career progression.

Get these things right, and when that review process does come round you have at least set the stage for a constructive conversation.

5 - Frame the conversation

When it comes to the salary meeting itself, you need to work hard to keep the conversation framed in the right terms. Don’t just tell this person that they aren’t getting a raise, which could be taken as a real blow. Instead…

  1. Show them why they are paid their current salary
  2. ...and show them what they need to do to get the salary they want.

However... don’t be a slave to process

The five steps I’ve laid out above aren’t just a way of getting you out of a sticky conversation. Regular salary evaluations, tethered to a clear and transparent performance management process, is the ‘best’ way of dealing with salary progression.

But the reality is that every once in a while, this approach isn’t the best option – for you or the business. The second scenario I want to look at is when the person asking you for a raise is someone you genuinely can’t afford to lose.

If that's the case, then the first two steps remain the same – you need to give them that same opportunity to vent, and it’s more important than ever to make sure they leave the room feeling appreciated and valued.

But the reality of the situation is that your hands aren’t tied. If you need to up someone’s salary in order to keep them, that’s an option – and sometimes that is the right decision.

Maybe that means upping their salary in time for next month’s payday. Perhaps you agree to a small increase to keep them happy them until the proper salary review process rolls around. Whatever it is, you have options available.

It’s worth mentioning that there isn’t a clear consensus amongst my peers on how to deal with these scenarios. Some people will stand firmly by their processes and salary structure, and they have good reasons for doing so – it puts you in control of when salary conversations take place and it is an inherently fairer system.

But ultimately, I think your role in the business is to create value, not to police a wage structure. Strict policies on salary negotiation often create an undercurrent of resentment, and it just makes sense to pay your best people what they are worth to your business. The more flexible you are, the more options you have – and in this role, flexibility is key.

Please note: The Secret HR Manager is not an employee of CharlieHR or in any way affiliated with The Workspace blog. The views expressed in this post are those of The Secret HR Manager alone.

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