How do you feel when one of your team members approaches you for a pay rise? A pay rise request can lead to a range of emotions depending on the context to the request, along with anything that may be going on in your dental practice, business or life at that time. Take a step back and employ the following 10 steps to master how you respond to a pay rise request. In addition discover a way to prevent you having so many requests moving forward. Read, watch or listen!
1. Listen
Pay rise requests can create strong emotional responses within us. You may feel initially outraged at such a request. Especially if you feel like your margins are being squeezed or perhaps last month was a bit down on previous month and so this puts you in a place that could easily lead to a defensive and dismissive response.
Recognise this and interrupt that automatic response!
Not doing this may lead to the person doing something such as leaving without you really even knowing it is happening.
It is very important to listen to the request. It doesn’t mean you have to do anything, but it is important to listen to the request and understand more. At least ensure the individual feels heard. Ask questions such as the following to understand more about their request:
- What has prompted you to ask for a pay rise?
- What has changed in your contributions to the practice that causes you to ask for a pay rise?
Once they have given you this information say that you will need to go away and reflect on the request. Say that you are not promising anything either way but that you are going to go away and reflect on it. Agree on a time and date to meet up to discuss it further. If they cannot answer any of the above questions, then ask them to come back to you with their answers.
2. Evaluate performance
I previously wrote an article about objectively evaluating the performance of individuals within your team. Use this as a structure for working through the performance of this person:
Can they do the job?
- Technical
- Behavioural
Do they want to do the job?
- Intrinsic motivation levels
- Extrinsic motivation levels
What is their impact on the team around them
- Psychological safety
- Living the values
- Contribution or barrier to the vision
What is their potential?
Actually score and write down ratings for this individual based on the above structure. How has this changed over the last 6 months? Have you seen an improvement or a deterioration in their scores. If you don’t think you have enough direct visibility on this person then get some feedback from people who have seen more of their performance than you have.
3. Compare to others in the practice
You will need to look at salaries for other members of staff, especially those in similar job roles. Where does their salary sit compared to others? Are they currently being paid less than anybody else? Are they currently being paid the same or more?
I always feel that a good test of this would be if accidentally everybody was sent a list of all the salaries of everybody in the practice would you be able to explain the reasons for any differences? Having clear rationale helps you to explain those differences.
It means in general for similar roles you have a corridor within which people sit. An example of this may be that you have a corridor that you pay for nurses. They are all paid an amount within this corridor but they can sit on different ends of this corridor depending on performance and potentially on length of service, as a signal that you value loyalty.
4. Benchmark versus competition
Look at other practices to see what they are paying. It is likely they may be advertising for roles and giving the pay rate that they are offering. Whilst it is important to look at this, it is also important to understand that this is only one aspect of the employee offering. Try to understand how they are offering this in the context of their overall offering. It is only one element of the overall offering. En example might be that you offer flexible working whereas whereas they do not. Or vice versa. Weigh this up appropriately.
5. Weigh up the options
Write down the different possible options. Write down various different possible options, without immediately ruling any pot them out E.g.:
- Option 1: Refuse request, no pay rise
- Option 2: Offer a 3% increase
- Option 3: Offer a 5% increase
- Option 4: No pay rise but offer a 5% bonus
- Option 5: No pay rise at this time but will give a 5% increase on X date based on X
What would be the likely impact of each option on the practice?
- Positive: Contribution to the practice, keeping that individual
- Negative: Likelihood of leaving, cost to the business
Again write down these numbers to see the true impact. Sometimes we might not think through the full impact. As an example an increase of 5% might seem a lot but what is the absolute number cost to the business over a year? It might not be that much.
6. Make a decision and know your boundaries
Based on the above make a decision about your number 1 preferred option. At the same time also think about whether you would be willing to negotiate around that and what are your boundaries? What is the absolute bottom line beyond which you will not go?
7. Communicate clearly
Communicate clearly the decision, explaining your rationale. Be honest and open with your decision and why. Be willing to listen to their perspective on this. It may well be that this doesn’t change anything, but do listen to them. Be ready to be empathetic towards the different emotions that they may display, which may or may not be what you are expecting. Either way, try not to let these influence you into making any changes to your decision but at the same time show your empathy to how they are feeling about it.
8. Negotiate
Be open to negotiate within the boundaries you have set. Look to explore other areas which may be important to the person. What is important to you in terms of how this person performs moving forward? What else is important to them that maybe you can look at? Is there anything additional that you want to see from them moving forward which can form part of the negotiation? Are they looking for additional responsibility? Are there some additional responsibilities that you want this person to take on?
9. Agree expectations moving forward
Make sure you agree on expectations moving forward from both sides. Ensure you deliver on them from your side and ensure they deliver on them from their side. Gain real clarity around timelines of when things will be done.
If you have agreed to give an increase in salary be clear on when this will be from. Send a formal letter and make a big deal of it. Write down any agreed expectations in terms of any specific tasks or behaviours that have been agreed to. Send a formal email to clarify those expectations.
10. Follow up meeting
Put a follow up meeting in the diary. Often this step is not done. You are like phew, that is sorted. You want to ensure that what was agreed upon happened and any expectations from both sides are happening. Put a follow up meeting in the diary and make sure it happens.
These are the 10 steps to mastering how you respond to a request for a pay rise.
In addition to this I also have a suggestion to prevent these requests occurring on a frequent ad hoc basis. In many dental practices there is no real structure to the review of salary levels and what people get paid. As a result it becomes very ad hoc in terms of people asking at all different times. This means it can also be very difficult to keep track of everything and to ensure you are paying people appropriately.
Set up a structured salary review process
Put together a time every year where you will review the salaries of your team members.
Decide on a specific time of the year
Typically this could be the start of the calendar year or your financial year. Create one time where you will review salaries. Team members know this is the time and increases will not be considered at any other time unless it is for a promotion or new job.
Consider the overall picture
Consider things such as inflation, the employment market, the competition and the success of your practice when looking at potentially giving an overall increase to everybody which is reflective of these factors. You may decide that you won’t give an increase for whatever the reasons may be, but your are being proactive about this. You can communicate this appropriately.
Consider the performance of the individual
You can also review individuals to ensure there are no outliers as well as reviewing performance over the year to see if it is appropriate to give the individual a pay rise. This can tie in to any specific objectives that have been set for that individual across the year.
Communicate
Communicate clearly with that individual. Ensure this is part of the ongoing discussion with that individual about what they have done well and what could be improved.
Setting up such a structure may seem frightening and crazy to many dentists as you are proactively looking at giving pay increases which means paying out more money. Yet, it will ensure the following:
- You are being proactive about what you are paying your people
- You are more likely to retain them.
- You prevent people constantly coming to you in an ad hoc fashion.
- You will stay ahead in terms of how you treat your people.
- You are much less likely to give ‘exceptional’ pay rises that end up being a problem with the rest of the team when they find out, and they normally do
I highly recommend putting in place some kind of salary review structure to prevent ad hoc pay rise requests. However, when you do get them follow the move 10 steps:
- Listen
- Evaluate performance
- Compare to others in the practice
- Benchmark versus the competition
- Look at the impact of the different options
- Make a decision and know your boundaries
- Communicate clearly
- Negotiate if necessary
- Agree expectation moving forward
- Book in a follow up meeting
