How to Negotiate a Salary Increase for Your Employees?

Do you know how to negotiate a salary increase for your employees? This is a moment that every boss has to face, sooner or later. This is more likely when we find ourselves in a context of widespread inflation like the current one.  

This implies that most executives or middle managers will receive a request for a wage increase in the next few months. Therefore, the key lies in dealing with that employee’s aspirations. Is it a deserved raise? Is it financially feasible? And above all, How should a manager negotiate a possible salary increase?

How to negotiate a land increase: Follow these steps

First of all, it is worth distinguishing between the two types of salary increases that are most common in companies: the one that is granted based on outstanding performance (or as a counteroffer for the employee to stay) and the one that is linked to a new position or increased responsibilities. 

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In this sense, the most common objective of any worker is to advance professionally, so it is always possible to expect them to ask for a salary increase since a change in category usually entails an increase in responsibility, salary, or work conditions. Work incentives. For all these reasons, before a salary negotiation with an employee, we should follow a series of steps:

Research the market

The first step is, without a doubt, to find out what the market says about our employees. Is it above or below the median salary for your position and industry? Does your salary reflect your qualifications and experience? Using tools like Glassdoor or LinkedIn Salaries is a good starting point. Although it is always good to have information from other sources that avoid bias or inflated data. To do this, the best way is to know first-hand how much each profile is paid in the competition.

Analyze the impact of your decision

Once the market research has been carried out, we must assess the particular context of the employee and the company. What effect would it have on employee performance? What would happen if you do not agree to his request? Is it an isolated case, or would increasing your salary lead to an avalanche of requests from other workers? Does the company have the financial capacity to face its rise? When granting a salary increase, we must always take into account the impact that your decision will have.

Listen to the employee

In reviewing salary conditions, the next thing would be to listen directly to the employee and learn about their demands and needs. Are we talking about a considerable increase? Is there a significant salary difference with colleagues in the same professional category? Is there any other particular condition that justifies this salary increase? Establishing direct communication with the employee is the only way to weigh exactly what they want and what potential for salary improvement, present or future, can be offered.

Reward work and effort

Another no less important question is: Does that employee deserve a raise? At this point, it is about collecting his merits and assessing to what extent a salary increase makes sense when there is no change in the professional category. In the end, if you know who brings value to the company, you should reward their efforts, and a salary increase is the best way.

Think about possible alternatives to the salary increase

But what happens if there is no financial capacity to afford a salary increase, even if you consider that the employee deserves it? Possible alternatives should be considered in these cases, especially if they respond to the worker’s demands. For example, if you intend to use part of that increase to hire a person to pick up your children from school, offering more flexible hours is the solution. It is also essential to take advantage of this moment to remember the importance of continuous training. Offering training from the company to develop skills or specialize in new skills can motivate the employees and allow them to grow in the short term.

What factors should be taken into account in a salary increase?

In any case, when deciding whether or not an employee deserves a salary increase, it is essential to have an argument. To this end, a series of more or less common factors must be taken into account when dealing with these situations.

Quality of work: Perhaps the most essential element to assess. It is about not only checking if the employee has achieved the objectives or KPIs set but also considering whether he has done so based on guidelines and colluding with corporate values.

Efficiency: Another important aspect is the profitability of an employee. This is measured through efficiency: the time spent versus the results obtained. In this sense, it is not worth much for a worker to spend 10 hours a day heating the chair if it does not translate into excellent productivity.

Attitude: The employee’s attitude is also essential. Suppose someone is collaborative, empathetic, responsive, and able to manage as effectively as he executes. In that case, he’s a candidate for a raise (or promotion).

Proactivity: Similarly, it must be assessed if that employee is involved in the business strategy beyond their immediate tasks. Do you propose ideas and get involved in projects beyond your scope of action?

Commitment: Finally, knowing to what extent you are committed to corporate objectives is essential. Both internally, with attitudes that favor a good working environment, and externally, acting at all times as an ambassador for the company.

In summary, when assessing a possible salary increase for an employee, it is essential to carry out a prior investigation of the market, the company’s financial situation and the worker’s particular context. Next, objective performance and intangible data must be assessed, that accumulation of elements that make someone an essential asset for the company.

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