There are two reasons managers say no when an employee asks for a raise. One, the company can't afford it. And two, the employee doesn't deserve it. Whatever the reasoning may be, the outcome is always the same. Someone's leaving unhappy.
Delivering bad news is never easy. Especially when it comes to money. Asking for money from your employer can be terrifying for some people, which is why their reactions to your 'no' can range from embarrassment to downright anger.
No matter how awkward it may be, you have to do what's right for the company. Now there's that awkward tension in the air. The next few weeks are crucial for your relationship, otherwise you run a much higher risk of receiving their resignation letter.
So if you think the person has potential and hope to retain their employment, implement these strategies immediately to salvage the relationship.
Sit down and plan out the year ahead with your employee.
Saying no to a raise shouldn't end the conversation. It should begin a new one. Start mapping out exactly where the employee wants to take their role in the next year. Next, outline the core skills and targets they'll have to reach in order to get there.
Keep the conversation moving forward and always look into the future. I like to frame it by saying something like, "I'm really glad you brought your salary goals to my attention so I have a better idea of where you'd like to be within this company. I'd love to put together a plan to put you on this trajectory."
Carry on as usual.
It's normal to feel awkward after denying an employee a raise that they lobbied for. However, giving them over-the-top praise and compliments to try and patch up the relationship makes it much worse. If you're going out of your way to do so, the employee can see it as confusing, patronizing, and disingenuous.
Remind yourself that it's not personal, it's business. If you give every employee what they want when it's not warranted, you'll create a whole new slew of problems. You're not a full-time cheerleader. You're the boss. So put your leadership hat back on.
Follow up them.
If you want to keep the employee, walk the walk. The next meeting should be initiated by you, not the employee. Otherwise, you'll only build resentment -- soon followed by a resignation letter.
Set a date where you'll be checking-in on their progress and their performance. Then, set another one in advance (and so on and so forth). When the employee sees that you're invested in getting them to their next goals, they'll be less likely to look for work elsewhere and more likely to work hard for the job and salary they want.