I need a better way to say no to a pay rise

Dear Aunty B,

It’s tight and we’re coming up towards Christmas when I traditionally give pay rises at my office. But I have just looked at my budgets and I really cannot afford it.

Is there a smarter way to say, “I can’t afford to give you a pay rise?”

Stephen, Brisbane




Have you ever had a boss give that, “I think you’re great but I can’t afford to give you a pay rise” conversation. You go away almost swallowing their bull, understanding how you just have to hang in there for the team – then you find out later about their fat bonus for keeping the salary costs down.


Remember if you are going to spin the “we can’t afford it” line, you better have a rock solid strategy, unless of course you don’t give a stuff, but then you wouldn’t be writing to your online Agony Aunt, would you…


Look, I am a gal who likes to assume that 95% of staff do do the right thing and are reasonable, so let’s talk about how to deal with those valuable staff members to whom you won’t be giving a pay rise anytime soon. Before you meet, make sure you know the employee’s salary history, when their last pay rise was, and scrub up on their recent performance. There’s nothing worse than having a conversation with a boss who barely knows your employment history.


When you can’t offer a straight pay rise, it is worth having some alternatives to soften the blow.

  • Deal 1: No pay rise now, but this much in six months if you meet these performance hurdles.
  • Deal 2: No pay rise now, but a half-day off every second Friday or school pick-up once a week.
  • Deal 3: No pay rise now, but I can send you on this training course/conference.
  • Deal 4: No pay rise now due to company performance. Here are the figures. If the company reaches these targets, we can reconsider in six months.
  • Deal 5: No pay rise now, but a parking space.
  • Deal 6: Offer leave without pay or sabbatical.


If the employee is furious/upset, use the following technique:

“I understand you are upset INSERT THEIR CONCERNS HERE …,
…however, the company is just not in a position to INSERT POSITION HERE …,
…therefore we can only offer you INSERT OFFER HERE.”


Finally, remember you are the boss and you don’t have to give anyone a pay rise, but just be aware of the world we live in, the skills shortages we face and the value of a committed employee. Talented, hardworking staff need to be recognised, acknowledged, appreciated and incentivised or they will go elsewhere.


Aunty B - Your problems answered by SmartCompany's business bitch
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