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Our annual salary reviews are upcoming and I've been told by my manager that it will be a 2-3% increase across the board with a few additional percent for high performers.

I have a member in my team which I believe based on previous conversations is expecting a much higher percentage than that (closer to 20% which would certainly be in the top 1% of employee increases) . He is not a bad employee but is not my best and is already paid fairly based on market value for the job they were employed to do. I believe him to be much smarter than the job he's in however he has no drive to do more when opportunities arise even after bringing up in quarterly reviews he would like extra work.

I'm preempting him being annoyed about this. How can I handle it best when pay reviews really are out of my hands?

I don't want to lose this employee but it wouldn't be the end of the world.

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    What has he said to make you believe he's expecting close to a 20% pay rise? – Player One Mar 1 '20 at 13:03
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    How can I handle it best when pay reviews really are out of my hands? Do you mean that you have zero input into what the people you manage get paid? (You are his manager, right?) Would you pay him more if it were up to you? It sounds like you think the raise he's going to get is fair. – BSMP Mar 1 '20 at 18:39
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    Please don't forget that you're the face of the company on this very sensitive topic. Please don't say "raises are out of my hands." Instead say "we, the managers, decided together ... " When you say raises are out of your hands, you leave people wondering "if Throwy doesn't set my pay, who does?" – O. Jones Mar 1 '20 at 21:16
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I hope that you've already discussed the lack of drive issues in 1:1s and not just left it hanging until the salary reviews. Otherwise, this will be a ton of bricks, and now it's likely too late to try to fix that.

But as for how to explain it, I think your OP is pretty spot on. You can explain that while you see potential in him, he did not seize the opportunity to show what he is capable of arose - despite expressing the will to do so. And while you appreciate and value his hard work, as it is now, this is the best you can offer him, as the level of raise he is expecting is so rare that it would require some truly outstanding performance. Good to have some examples prepared for types of feat which would warranty this type of bump.

It is also a good opportunity to again pound the point that if an opportunity comes up again for him to go above and beyond his role, he should take it if he is hoping to get such a substantial rise, as 20% is extraordinary high, and it's good to start managing his expectations.

An alternative view on this situation is that the employee may have already lost interest in the current job and is shopping around. While money is always going to be a notable part of the decision making for employees, it's usually not the only factor, so it may be worthwhile to sit down with the employee and talk about his career goals, where does he see himself, what are his aspiration. This should help both of you understand each other's expectations, and whether there are common grounds between them.

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    I take a slightly different take: your employee might already have lost interest and is looking for new opportunities outside your company. While most people will join a company based on money, studies have shown money is rarely the decisive factor when leaving. While I would agree that managing his expectations is important, it might be beneficial to have a honest discussion with him about his career goals, both in and out of the company. – scuba_mike Mar 1 '20 at 13:36
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    @scuba_mike that's a good point, I'll expand the answer. – Tymoteusz Paul Mar 1 '20 at 18:25
  • @scuba_mike I'm pretty sure that not getting the raise you're expected is often a decisive factor in leaving. Especially when that number is around 20%. – Mars Mar 2 '20 at 6:56
  • I would be very cautious here. This strays quite close to suggesting that if he did go above and beyond, he would have more chance of getting the 20%. I suspect, given OP's description, that even if this employee was incredible, the % would still be out of OP's hands. If this employee is already going to be annoyed with 2-3% when he's not putting in the extra effort, imagine how much more annoyed he'd be if he does put in the effort expecting to get 20% next time and the award is still 2-3%. – delinear Mar 2 '20 at 11:33
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Regardless of what path you choose to pursue, it's important to remember that pay and performance are sensitive and personal topics. Addressing the request of your team member will require as much empathy and listening as rational persuasion.

If retaining this individual is important, and you believe not offering a substantial raise will cause them to leave, you should discuss the situation with your management team. It's good to keep in mind that it usually costs 1x-1.5x the annual salary of a position to fill a vacancy - so a raise, even if unearned, may be worth the cost.

Instead, if you believe the expectations of this individual are inflated, you should take time to help him/her understand the situation. Be transparent with what you know about how his/her pay compares with others in the organization and in similar roles in other organizations. Be direct about what is and isn't reasonable to expect at your organization with regard to pay. You should also ask about why a raise is important (perhaps they have a competing offer).

Good luck with the conversation.

  • This would be an awesome answer if there was some sort of citation for the 1x-1.5x salary to fill a vacancy claim. But still a solid answer! – Mars Mar 2 '20 at 6:57
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You don't let him play mind games with you.

Anyone with sense knows 20% is unrealistic unless it's been earned, and he hasn't done anything special so he's just trying it on.

It's out of your hands, so don't worry about it.

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    Changing jobs has always netted me with at least a 30 % salary increase, so the question will more come down to whether OP wants to pay more after hiring a new guy to replace the 20 % guy, or give him the 20 % with higher expectations (and PIP if not met). – Juha Untinen Mar 1 '20 at 16:42
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    Annual 20% raises (total cash) are on the low end in some industries (many professional services sectors) - the expectations of this individual may not be unreasonable. – Jay Mar 1 '20 at 18:44
  • @Jay OP stated very clearly in his post that this is not the case here. – Tymoteusz Paul Mar 1 '20 at 22:08

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