How to Handle Employees Asking for Excessive Raises

The salary is the primary reason most people work. Raises motivate employees and allow them to continue increasing their income to stay financially stable. While companies often award raises during annual reviews, some employees ask for raises at other times. When the request is excessive for your company's budget or for the employee's position, your response is crucial to avoid losing the employee. Analyze the situation from a business standpoint to find an acceptable response.

  1. 1.

    Read the company's compensation policy if one is in place to determine when and how raises are handled. Write a policy if one doesn't already exist, especially if you have several employees asking for unreasonable raises. Inform all employees about the new policy to reduce the number of excessive raise requests you receive.

  2. 2.

    Meet with the employee to determine what she feels is a fair raise for her. Ask her for reasons that she deserves a raise. Let her know that you will review the situation and inform her of your decision.

  3. 3.

    Review the employee's records to determine when she received her last raise. Review her performance and any issues in her employee record, such as disciplinary action that was taken previously.

  4. 4.

    Evaluate the reasons the employee gave for the raise to determine if they have validity. For example, if she claims she is not paid enough based on industry standards or compared to her colleagues, research to see if she is correct.

  5. 5.

    Determine if a raise is warranted based on the research you conducted. If you decide to give her a raise, calculate the specific amount based on the company compensation policy, company budget and merit. This amount will likely be less than what she asked for if her request was excessive.

  6. 6.

    Schedule a private meeting with the employee to let her know your answer to her raise request. Explain your reasoning for not giving a raise or for giving a smaller raise than she requested. Give concrete examples to back up your reasoning.