There’s a knock on your door.

Your employee sheepishly enters after finding the courage to ask for a pay rise. They know your business had a bumper year, and they think they’ve earned a slice of the profits.

How do you manage a pay rise request?

  1. Don’t say no

You probably weren’t expecting it. But resist the urge to say “no” straightaway.

To you, six months of service doesn’t justify a pay rise. Or maybe the employee in question is a top-performer who’s proved their loyalty and drive to you over the last two years.

Either way, you need to think about it. If you value that member of staff, they might jump ship if you dismiss their request without proper consideration.

  1. Talk it out

You’re a good boss, so you’ll want to understand your employee’s motivation for asking for a pay rise. It could be as simple as they’ve not asked for a pay rise before, and they’ve consistently delivered the best results on their team.

Or it’s possible that your employee could be asking for a pay rise because they’re not happy in their role, or because they’re being paid less than a colleague in the same role. You might need to take a look at salaries across the board to make sure they’re fair and consistent.

It could be personal. Raising kids, saving deposits for houses and planning weddings are expensive. Your employee’s home life will make extra demands of them that will sometimes force them to wonder if they’re being paid enough.

  1. Look at past performance

It’s easy for you to justify a pay rise or bonus when your employee performs well in their role. Holding regular appraisals and reviews with your staff lets you know who’s meeting their objectives and who isn’t.

It also means that conversations around pay increases can be framed around good or poor performance.

If you don’t work directly with your employee, speak to their line manager to get a feel for how reasonable their pay rise request is.

  1. Consider the bigger business picture

Can you afford it?

One employee’s request could signal more from other staff. So you’ll need to make sure you can justify your decision if you say no to other employees who come knocking on your door.

Nobody can force you to agree to a pay rise. But if your employee’s a real business asset, you won’t want them to go to a competitor because you were too proud to loosen your purse strings.

  1. Give them your decision

You can’t leave their request hanging in the air forever. Once you’ve made a decision, let them know.

Explaining your decision in person might be more your style, but make sure you send them a letter to confirm what you’ve talked about.

If you said “no” it could be because they’ve got room to improve their performance, and you might want to review their salary in six months.

For the employee who manages to win you over, tell them how much their new increased salary will be and when it comes into play.

Whenever a good employee asks you for a pay rise, don’t forget that once upon a time, somebody invested in you. And now you’re a leader. It’s your chance to pay it forward.