How To Communicate a Pay Raise to Employees

Many companies work toward growth while conducting business, which can often lead to an expanded workforce. As your company grows, it can be important to understand how to communicate a pay raise to your employees. Knowing when to increase salaries and how to inform your employees about it can help keep your workforce motivated and may allow you to attract and retain a dedicated and qualified team of staff members.

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Why is communicating a pay raise important?

Knowing when and how to communicate a pay raise is important for employers because it can help you show gratitude and support to your employees. Pay raises can also improve employee morale and can be a positive reflection of the progress your company makes. This is because being able to offer pay raises can indicate financial success. When communicating a pay raise to employees, it can be beneficial to have an open discussion during which you explain their value to the company and the reason for their specific salary.


Who communicates pay raises?

A company’s payroll protocol usually determines who is responsible for discussing pay raises with employees. For example, some companies might designate this responsibility to the manager who directly oversees the employee receiving a raise, while others might delegate the task to the human resources department. Including members of your human resources and accounting departments can help you communicate about salaries with employees and answer any potential questions about payments, as these departments typically spend the most time on payroll.

Factors to consider when communicating a pay raise

Retaining the services of your employees often means maintaining an open dialogue with them regarding their salaries and being willing to pay deserving employees more to keep them at your company and stay ahead of the competition. To keep an open dialogue, you can encourage discussion about raises and let employees know why you want to give them a raise when the time comes by identifying factors of their performance that qualify them for a raise. Here are some factors you might talk about when discussing a pay raise with an employee:

  • A noticeable increase in an employee’s productivity
  • An increase in the number of hours or change in the time of day that an employee works
  • A specific exhibition of value, such as completing a high-level project or running important meetings
  • A trend in an employee working with higher status clients who provide your business with greater income
  • The willingness of an employee to take on extra work
  • The growth of the business leading to an increase in profitability


When should you give a pay raise?

Many companies establish criteria for deciding when to offer a pay raise to their employees, so you might want to consider introducing one at your company. This can help make the process of raising pay transparent, as it can let employees know when they might expect to receive a raise. You can include these planned pay increases in an employee’s employment contract. 

You can also discuss salaries more spontaneously during evaluations and performance reviews. In these cases, you can consider offering pay raises to employees who consistently perform well in their work and contribute to the growth of the business. Employees who might deserve a pay raise can include people who:

  • Display strong leadership skills
  • Lead to an increase in company revenue
  • Foster ongoing relationships with clients
  • Support their coworkers
  • Show dedication to the company and their position
  • Accept an increase in their workload


How to communicate a pay raise to an employee

Most employees are likely to be happy to learn that you intend to give them a pay raise. However, there are a few steps you can take to ensure that your pay raise discussion is professional and respectful of other employees who might not be receiving a raise. For example, you can keep any discussion of a salary increase private between the employee and their manager. You can also invite a representative from your accounting or human resources departments to attend the discussion to ensure that the proposed raise is financially viable and that you follow all applicable regulations.


Tips for communicating pay raises

Here are some tips you can use when announcing a pay raise:

  • Explain the specific reasons why an employee is being considered for a pay raise.
  • Express your gratitude for the employee’s contributions to your business.
  • Make sure you inform all relevant departments, including payroll, once you apply the raise.
  • Use numbers when discussing pay raises rather than percentages to maintain transparency.
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