How do I say no to pay rises but keep my staff?

Dear Aunty B

I have to do performance reviews next week and I just know my staff are going to ask me for pay rises. In other years I have been able to oblige and I also have a great record in staff retention.

But changes in our industry (wholesaling) mean our margins are being slashed. I hope my situation is just short term, but how do I say no and keep my staff?

Circular Quay, Sydney


Dear CashStrapped,

Our collective hearts go out to you because we have all been in this position. Now there is a lot of advice out there on this, and I am afraid I disagree with most of it. You see, recruitment gurus keep telling us that instead of a pay rise, employees can be fobbed off with a range of wildly attractive options.

These include:

  1. Never coming to the office again (known as the work-from-home option).
  2. Arriving at work whenever you want (the flexible start or finish option).
  3. Working less and earn the same – or is it the other way around? (This is known as the four-day-a-week or the 50/52 option).

Other options could be refining a staff member’s role so they feel like they are getting more experience. Or giving staff a title with more status so they feel more important. You could promise to make work more fun (which may only set you back a pool table or so and hours in lost productivity).

Or how about engaging your employees with the company’s objectives? According to a story in The Australian Financial Review this morning, there is nothing more empowering for an employee. What a revolutionary approach! Imagine telling your staff what your company’s objectives are!

But CashStrapped, in my experience most staff are not stupid. They know it is cash – not empowerment or a pool table – that pays the mortgage.

My advice is simply to appeal to your staff’s good will. Tell them the truth and explain that they cannot have a pay rise because TIMES ARE TOUGH.

Gen-Y may look at you with amazement because they have never heard those three words used together in a corporate environment, so say it again slowly and clearly.

Now explain that your problems are short term and pay rises are back on the agenda next year. Tell them how highly you value them and offer them something extra down the track – profit share perhaps?

Lastly take them out for a beer. Remind them that you are coming last in the footy tipping AGAIN. Their pity and sympathy for you will know no bounds.


What are you waiting for? Email your questions, problems and issues to [email protected] right now!

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