FAQs
A pay raise increases the hourly or salary pay your company offers to its workers. For any business owner or manager, knowing how to discuss increases to a paycheck is proof of your ability to be a strong leader who considers the needs of your staff.
What qualifies you for a pay raise? ›
Performance-Based Pay Raises: These pay raises are based on an employee's individual performance, such as meeting or exceeding goals or demonstrating exceptional skills. These pay raises may be tied to performance reviews or other forms of evaluation.
When to give an employee a raise? ›
There are several important factors to consider when deciding when and where to offer raises, including:
- Your budget. ...
- The employee's level of experience. ...
- How many years the employee has worked for the company. ...
- The employee's qualifications and expertise. ...
- The competitive pay rate. ...
- The employee's performance.
Make sure you're prepared if you're going to ask your boss for a raise. Pay increases tend to vary based on inflation, location, sector, and job performance. Most employers give their employees an increase of around 3% per year. Consistent job switching may have an impact on the rate at which your salary increases.
What is the justification for giving an employee a raise? ›
Give a raise to retain your best employees
- they're recognized for good performance.
- their job is important and valued by the business.
- they're keeping pace with their colleagues.
This can be trickier than it has any right to be. As a matter of general principle, yes, you should be able to say that you don't want to take on additional responsibilities unless you're paid appropriately for them, particularly when those responsibilities are clearly part of a higher-level, higher-paid job.
How long should you work without a raise? ›
How Long Should You Work Without A Raise? Every worker is different but most find that they should expect a raise every 1-2 years. However, comparing your salary against those of your coworkers and industry as a whole will highlight whether you are underpaid or not.
How to determine a raise for an employee? ›
Calculating a raise as a percentage of an employee's salary is as simple as these steps:
- Convert the percent increase to a decimal number.
- Multiply the decimal amount by the current salary.
- Add the result to the old salary.
You're reliable. Companies often look for employees they can trust to do their job well without micromanaging them, and they typically want employees they know can always deliver what's asked of them. You may deserve a raise if you consistently turn in high-quality work on time or even early.
How to justify a salary increase? ›
The below strategies provide a solid framework for how to justify a pay rise so you can come to the conversation prepared.
- Research industry standards. ...
- Highlight your achievements. ...
- Outline Professional Growth. ...
- Emphasise Your Future Value. ...
- Request a Performance Review.
Companies typically offer employees a 3-5% pay increase on average. Even if this range doesn't seem like a reasonable raise to you, keep in mind that consistent wage increases can add up over time, providing you with a higher income than what you received when you started at the company.
Who decides if you get a raise? ›
Employers should review employee compensation on a regular basis and determine whether employee pay raises are warranted. Whether raises are the same across the board, performance-based, or calculated using another method, a competitive compensation package is necessary to retain and attract the best employees.
How much of a raise is acceptable? ›
Aim for a 5% to 10% raise for a standard increase. If you're underpaid or have extra duties, 10% to 20% could be fair. Back it up with research on sites like Glassdoor and highlight your achievements. Pick the right time to ask, like after a big project win.
When should employers give raises? ›
Conventional wisdom suggests that the best time for pay raises comes during performance reviews or at the end of the year. However, tying raises to performance reviews may have an inverse effect. “Consider moving away from annual salary reviews.
How to tell employees no raises? ›
Dear [Employee's First Name], Based upon current performance reviews [Business Name] is unable to provide a salary increase in line with the annual pay review. We will continue to work with you to achieve improved performance in [key areas such as communication, leadership etc] over the course of the next year.
What is one thing to do when an employee asks for a raise? ›
How to respond when your employee asks for a raise
- Treat the pay rise request seriously.
- Diffuse the stress of the situation.
- Consult a Salary Guide.
- Review the employee's past performance.
- Offer an alternative to more money.
A 5% raise is decent, especially if it matches or beats inflation, boosting your buying power. But if you've taken on more work or are below the market rate, you might aim higher. Judge it based on your performance, the company's status, and what's usual in your industry.
What is an acceptable amount for a raise? ›
The average pay raise is 3%. A good pay raise ranges from 4.5% to 5%, and anything more than that is considered exceptional. Depending on the reasons you cite for a pay raise and the length of time that has passed since your last raise, you could request a raise in the 10% to 20% range.
How do you prove you should get a raise? ›
Demonstrating your value: Show your boss why you deserve a raise by highlighting specific and quantifiable evidence of your achievements since your last pay increase. Focus on exceeding objectives, completing successful projects, and taking on additional responsibilities.
