Discussing a raise with your employees
When an employee asks for a raise, it is an excellent opportunity to review an employee's performance and develop communication with a valued executive. It is also an opportunity, if the employee is not meeting expectations, to begin an open discussion - and to realign his/her expectations vis-a-vis their performance.
Nevertheless, all too often, senior managers are uncomfortable when discussing a raise, perhaps fearing that they may need to refuse. The lack of comfort can lead a manager to treat the employee's request negatively or begrudge the raise, both of which can have negative consequences.
For an employer, the two key issues to a successful discussion are attitude and preparation. Regardless of the outcome (i.e. whether the raise is given or not), it is a negotiation and positive negotiations build relationships. You should begin by establishing a meeting, far enough in advance so that you can be well prepared, and in the framework of a 'salary review' (this is important: "We will review your 'salary'", not "We will discuss your raise").
Everywhere, preparation starts with checking market salaries and compensation. In Poland this can be a bit tricky since, for mid-management jobs, the salary figures are not so transparent and salary ranges are quite substantial for many mid-management positions. Often an employee will have researched the issue and come up with significantly different numbers than you have. Good fundamental research will allow you to provide detailed feedback.
Often published compensation ranges or information available to mid-managers is not extremely accurate (which is important because raise requests are often made against an inaccurate perception of the labor market). A good way to verify salaries is to check with colleagues/contacts and a search consultant.
Then you need to evaluate the employee's progress against goals and past performance and/or compensation reviews. In a larger organization, you should have plenty of support in this preparation from your HR organization. If you do not have that support, then you should quietly review performance, not only focusing on recent performance but also over the past year. Keep in mind any changes in responsibilities, special projects or big successes.
When it comes to the discussion, ideally the employee will also be well prepared, but if not, you must take control. It is important to clarify current salary and expectations with the employee, but do not make any promises. Ask why he/she thinks he/she deserves a raise. Discuss your own review of their performance and past performance reviews.
To this point, you should keep the discussion light and positive - an unexpected and overly negative performance review will be seen as unfair (and rightly so, because if you had any serious concerns about the employee's performance, then these should have been discussed proactively from your side before the raise negotiation).
It is critical in the discussion to understand the motivation of the employee - what does he/she want and why. Do not make an immediate decision but do review the request carefully.
As you negotiate, remember the following basic negotiation techniques that should be applied to salary negotiations:
• Understand the interest of your partner (an employee's reason for asking for a raise gives you substantial insight into solutions you can offer and the key discussion focus);
• Be positive, and ask questions like "Can you live with this?" instead of using words like "demand";
• Never raise or lower your offer/counter-offer until asked to do so.
There are alternatives to a raise - a promise of promotion, additional responsibilities (coupled with a promise for a raise within a certain timeframe), a bonus, etc. However, as you consider the request, particularly if the employee is valuable and successful, remember it costs more to hire new employees than to retain them. When you give a raise, you should discuss the implications - raised expectations for the future, the importance of continued commitment, etc.
When declining a raise remember that it could result in an employee leaving. So discuss the reason for declining openly - and if you want the employee to stay, then reaffirm his/her worth to the company, set a date for re-evaluation and/or directly discuss any deficiencies and/or limitations which have been your reason for declining their request (e.g. the budget).
Finally, you must be aware of some of the cultural issues that can affect the 'raise' request in Poland. For instance, it is commonly viewed among mid-managers that in a Western environment everything is negotiable. Recently, we have also heard that many mid-managers feel the raises they have received are too 'small'. Often it seems that when mid-managers are requesting raises, their expectations are substantial (ten to twenty percent) so that a raise of one to five percent is perceived as too little. Remember that there was a hyperinflationary environment for the 90's and this mentality may still persist - even in difficult economic times.
Matthew Tebeau, the Managing Partner of Ray and Berndtson Poland and the Baltic States
Nevertheless, all too often, senior managers are uncomfortable when discussing a raise, perhaps fearing that they may need to refuse. The lack of comfort can lead a manager to treat the employee's request negatively or begrudge the raise, both of which can have negative consequences.
For an employer, the two key issues to a successful discussion are attitude and preparation. Regardless of the outcome (i.e. whether the raise is given or not), it is a negotiation and positive negotiations build relationships. You should begin by establishing a meeting, far enough in advance so that you can be well prepared, and in the framework of a 'salary review' (this is important: "We will review your 'salary'", not "We will discuss your raise").
Everywhere, preparation starts with checking market salaries and compensation. In Poland this can be a bit tricky since, for mid-management jobs, the salary figures are not so transparent and salary ranges are quite substantial for many mid-management positions. Often an employee will have researched the issue and come up with significantly different numbers than you have. Good fundamental research will allow you to provide detailed feedback.
Often published compensation ranges or information available to mid-managers is not extremely accurate (which is important because raise requests are often made against an inaccurate perception of the labor market). A good way to verify salaries is to check with colleagues/contacts and a search consultant.
Then you need to evaluate the employee's progress against goals and past performance and/or compensation reviews. In a larger organization, you should have plenty of support in this preparation from your HR organization. If you do not have that support, then you should quietly review performance, not only focusing on recent performance but also over the past year. Keep in mind any changes in responsibilities, special projects or big successes.
When it comes to the discussion, ideally the employee will also be well prepared, but if not, you must take control. It is important to clarify current salary and expectations with the employee, but do not make any promises. Ask why he/she thinks he/she deserves a raise. Discuss your own review of their performance and past performance reviews.
To this point, you should keep the discussion light and positive - an unexpected and overly negative performance review will be seen as unfair (and rightly so, because if you had any serious concerns about the employee's performance, then these should have been discussed proactively from your side before the raise negotiation).
It is critical in the discussion to understand the motivation of the employee - what does he/she want and why. Do not make an immediate decision but do review the request carefully.
As you negotiate, remember the following basic negotiation techniques that should be applied to salary negotiations:
• Understand the interest of your partner (an employee's reason for asking for a raise gives you substantial insight into solutions you can offer and the key discussion focus);
• Be positive, and ask questions like "Can you live with this?" instead of using words like "demand";
• Never raise or lower your offer/counter-offer until asked to do so.
There are alternatives to a raise - a promise of promotion, additional responsibilities (coupled with a promise for a raise within a certain timeframe), a bonus, etc. However, as you consider the request, particularly if the employee is valuable and successful, remember it costs more to hire new employees than to retain them. When you give a raise, you should discuss the implications - raised expectations for the future, the importance of continued commitment, etc.
When declining a raise remember that it could result in an employee leaving. So discuss the reason for declining openly - and if you want the employee to stay, then reaffirm his/her worth to the company, set a date for re-evaluation and/or directly discuss any deficiencies and/or limitations which have been your reason for declining their request (e.g. the budget).
Finally, you must be aware of some of the cultural issues that can affect the 'raise' request in Poland. For instance, it is commonly viewed among mid-managers that in a Western environment everything is negotiable. Recently, we have also heard that many mid-managers feel the raises they have received are too 'small'. Often it seems that when mid-managers are requesting raises, their expectations are substantial (ten to twenty percent) so that a raise of one to five percent is perceived as too little. Remember that there was a hyperinflationary environment for the 90's and this mentality may still persist - even in difficult economic times.
Matthew Tebeau, the Managing Partner of Ray and Berndtson Poland and the Baltic States
