How to have a salary increase conversation
Talking about salary can be one of the most uncomfortable conversations in the workplace, for both team members and managers. Team members may hesitate out of fear of rejection, while managers may feel unprepared to handle expectations, budget constraints, and fairness concerns. But when done well, these discussions can actually strengthen trust, motivation, and retention.
In this guide we explore both perspectives in order to increase empathy and show you how to successfully navigate the salary conversation - or rather, series of conversations. It aims to prepare you for the discussion, ensure that you get all your key points across, and arrive at a decision that is fair and backed up by clear rationale.
Timeline of a salary conversation, showing when each event happens and who leads what.
From the manager’s perspective
A salary conversation is actually a series of conversations, not just one. Approach this like all good product people do with first understanding the problem space, before arriving at the solution.
First it’s important to first understand your team member’s motivations. These could be:
An unmet need to feel valued by you or the company
Big life events that have financial implications, such as moving home or welcoming a new child
Comparing their salary to what is available in the market
A reward expectation related to their tenure, responsibilities or performance
The last two motivations in particular are worth treading carefully with, as they often stem from a deeper sense of unfairness. This is a powerful emotion that triggers our innate need for justice, recognition and social equity, and once activated it can override our rational thinking. As a manager, be aware of how your privilege may shape your perception of fairness in ways that your team members do not share. For example, while concepts like autonomy, purpose, and mastery are undeniably important, there are times when salary is the single most pressing concern for an employee. Dismissing this or assuming that intrinsic motivation outweighs financial needs can make the conversation feel dismissive rather than constructive.
The first conversation: understanding expectations
As a good manager, you may already have a sense of the underlying motivation, but if not, start by engaging your curiosity. Ask open-ended questions to understand their expectations and concerns:
What is important about this salary increase?
How do you feel your current compensation reflects your contributions?
Have you seen examples of compensation that feel more fair to you?
Are there specific concerns or frustrations that have led you to this conversation?
Beyond salary, what else would make you feel more valued in your role?
Where do you see your career progressing, and how does salary fit into that vision?
If we can’t meet your request right now, what other forms of recognition or support would be meaningful to you?
What would a fair and transparent pay structure look like to you?
If your team member already has a specific salary figure in mind, treat it as a starting point rather than shutting it down immediately. If frustration arises during the conversation, acknowledge it rather than becoming defensive - this isn’t about you, it’s about their perception of fairness and their future within the company.
Be as transparent as possible without overcommitting. If budget constraints exist, gently provide context while reinforcing that the discussion is being taken seriously. Finally, commit to a follow-up within a clear timeframe, and stick to it. A vague or forgotten follow-up can erode trust more than an outright “no.”
After this conversation, take time to reflect on what you’ve learned. Your role as a manager isn’t just to listen but to advocate for fairness while balancing company constraints. Before you meet with your team member again, you’ll need to gather relevant information, so you can come back with a well-informed and thoughtful response.
Between conversations: doing your homework
Before your second conversation, take the time to assess the situation properly. This isn’t just about deciding yes or no, it’s about ensuring your response is fair, well-reasoned, and transparent.
Key steps to take before responding:
Consult HR or Finance → Understand company policies, budget constraints, and any formal salary review processes.
Conduct salary benchmarking → Research market rates for similar roles within your industry and company size. Is their request reasonable? Are they underpaid compared to industry standards?
Review internal pay equity → Compare their salary with peers in similar roles. If disparities exist, are they justified?
Assess their contributions and growth → Have they taken on significantly more responsibility or delivered exceptional results?
Consider alternatives → If a salary increase isn’t feasible, what else can you offer? Bonuses, equity, professional development, or increased responsibilities leading to future promotion?
Before moving forward with a decision, take a moment to check your own assumptions. Are there biases - conscious or unconscious - affecting your judgement? For example, are you more receptive to salary negotiations from certain employees over others? Are you placing more weight on factors like confidence or negotiation style rather than actual performance and contributions? Ensuring fairness means evaluating each case objectively, not just based on who speaks the loudest.
With this information in hand, you’ll be ready to have the second conversation - where you provide a clear and well-structured response.
The second conversation: providing a thoughtful response
By this stage, your team member is expecting clarity and direction. How you handle this conversation will impact not only their satisfaction but also their trust in you as a leader.
Start with appreciation and transparency:
Open the conversation by acknowledging their request and reinforcing that you’ve taken it seriously.
Be transparent about the process you followed: who you spoke to, what factors were considered, and how decisions are made.
Deliver your decision clearly:
Your response will fall into one of these three broad categories:
(1) Yes we can offer an increase
Be clear about the numbers and any next steps (e.g. when the raise takes effect).
If it’s less than they requested, explain the reasoning but highlight the positive.
Reinforce why they earned it, tying it to their contributions and company impact.
(2) Not right now, but here’s the plan
If a raise isn’t possible now, don’t leave them with a vague “maybe later”. Instead:
Define specific goals or performance markers they need to achieve.
Provide a timeline for the next salary review or reassessment.
Offer other forms of recognition in the meantime (bonuses, development, new responsibilities).
(3) No, and here’s why
If a raise is not possible at all, explain the reasoning honestly, whether it’s budget constraints, company policy, or role limitations
Acknowledge that this may be disappointing, but frame the conversation around their growth: “While a salary increase isn’t possible now, let’s talk about how we can set you up for success.”
Be prepared for frustration, but leave the door open for further conversations.
A rejection can be tough for a team member to hear, and their reaction may not always be immediate. They might initially seem fine but later disengage or feel demotivated. Be proactive: check in with them a week or two after the conversation to see how they’re feeling and offer support for their development.
End on a positive and forward-focused note.
Regardless of the decision, show appreciation for their contributions and commitment to the team. If possible, agree on next steps - whether it’s a follow-up meeting in six months, new responsibilities, or career development opportunities.
From the team member’s perspective
Discussing salary is a normal part of career development. While it’s natural to feel uncertain, being prepared will help you navigate the conversation with confidence and clarity. First, read through the section above from the manager’s perspective if you haven’t already, so you can build empathy with their position.
The key to a successful salary conversation is understanding your value, making a strong case, and handling the discussion professionally.
Before the first conversation: preparing your case
Before speaking to your manager, take time to build a well-structured case for your salary increase. This isn’t about simply asking for more money but demonstrating why your contribution to the company warrants a review of your compensation.
Key areas to focus on (and gather evidence to justify):
Your impact and achievements
Have you taken on additional responsibilities beyond your role?
Have you contributed to key business outcomes such as revenue growth, cost savings, or process improvements?
Have you successfully led a project, mentored others, or strengthened team performance?
Have you consistently received positive feedback from colleagues, clients, or leadership?
Market comparisons
Research salary benchmarks for your role in similar industries.
If you have received job offers or been approached by recruiters, consider how your current salary compares.
Your development and progression
Have you gained new skills, qualifications, or certifications that add value to your role?
Are you performing at a level beyond your job title or salary band?
Company performance and timing
Consider the company’s financial health. If the business is struggling, it may be harder to secure an increase.
Be mindful of timing. A salary conversation is more likely to be well-received after a major achievement or during performance review cycles.
Once you have a clear case, plan how to communicate it concisely. A strong salary discussion focuses on business impact, not personal need. Instead of saying, “I need a raise because my rent has gone up”, frame it as, “Over the past year, I have taken on X, Y, and Z, delivering [measurable impact]. Given my contributions and market research, I’d like to discuss a salary review.”
During the first conversation: making your request
Approach the conversation professionally, with self-belief and openness. Always make sure you schedule time specifically for this conversation rather than raising it casually.
How to structure the conversation:
(1) Open with appreciation and intent
Thank your manager for their time.
Set the stage: “I’d like to discuss my salary and how my role has evolved over the past year.”
(2) Present your case clearly
Highlight your achievements and added responsibilities.
Provide any relevant salary benchmarking data.
Show your commitment to growth and continued contribution.
(3) Be open to discussion
Your manager will need time to consider your request, check budgets, or consult HR.
Ask open-ended questions such as, “How do you see my role and contributions evolving?”
(4) Stay professional, even if the answer isn’t what you hoped for
If your request is met with hesitation, ask for clarity: “Could you share what factors are at play?”
If an immediate raise isn’t possible, ask about alternative ways the company can support your career development.
If you receive a flat-out “no”, request feedback on what would strengthen your case in the future.
After the second conversation: what’s next?
If you receive the raise:
Thank your manager and clarify when it will take effect.
Keep a record of the discussion for future reference.
If the answer is "not now":
Ask for a follow-up discussion in a set timeframe (e.g. six months).
Agree on measurable goals that would support a salary increase next time.
Continue tracking your contributions to build an even stronger case.
If the answer is a firm "no" with no future path:
Reflect on whether your current company values your work and aligns with your long-term career goals.
If you feel undervalued, it may be time to explore other opportunities where your contributions will be recognised.
A well-prepared salary conversation is not just about getting a raise, but also about understanding where you stand, advocating for your value, and setting the stage for future career growth. If the conversation doesn’t go as planned, take time to reflect before reacting. Instead of viewing a “no” as final, think of it as useful data. If your manager has given you feedback, use it to sharpen your skills and revisit the discussion at a later stage.
Final thoughts
A salary is not a measure of your worth as a person. It reflects what a company is willing to pay for your time, skills, and experience at a given moment - not your intelligence, potential, or value to the world.
While advocating for fair pay is important, don’t let your sense of self be tied to a number on a payslip. If a salary conversation doesn’t go the way you hoped, it doesn’t mean you aren’t talented or capable, it just means it’s time to reassess, plan your next steps, and continue building the career you deserve.
