How to Counter a Low Pay Raise Offer From Your Employer?

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So you have received good news and bad news.

The good news is that you’re getting a raise, and the bad is how little the raise is. Don’t worry, large organizations often lowball employees on their raises and have room for negotiation. Not many employees go back with a counter because they don’t know-how.

To counter a low pay raise offer from your employer, you must avoid accepting the offer in writing and respond within 24 hours requesting a meeting to discuss the raise. By then, you should have a proposal that describes the figure you want, why you deserve it, and why the company can afford it.

In this article, you will discover the nuances and different steps in countering a raise offer. Aside from learning how to reject a pay raise offer, you will learn the potential responses of your employer and how you can handle each outcome. But first, let’s establish why it is normal to decline a pay increase if it is low.

Can you decline a pay increase if it’s too low?

You can decline a pay increase for any reason, including the most obvious one: it is too low! But when you decline the offer, you must be polite, professional, and pragmatic. Following the three Ps can actually get you a better offer. Here’s how:

Polite – Your politeness indicates that your refusal is not emotional and that there is rational thought behind it. This can make your manager rethink their own interpretation of your value. 

Professional – By displaying professional behavior in such a situation, you can set yourself apart from the average young employee. Again, this can make the decision-maker realize that you’re worth more.

Pragmatic – Being pragmatic means that instead of demanding a specific amount, you try to find a way to work out a more palatable middle way that works for both parties. When you demand what’s practical for your employer to give, your chances of getting what you ask for are higher.

What Happens if You Refuse a Raise From Your Employer and Counteroffer?

Many young professionals are under the assumption that refusing a raise and coming back with counteroffer results in the termination of the previous offer.

That happens quite rarely and in toxic workplaces. In most organizations, the HR manager tries to explain the ground realities to the employee with unreasonable demands. But when you make a reasonable counteroffer, the result is different.

If you refuse a raise from your employer and counteroffer, they can approve your request, or you might get a better offer that falls slightly short of your demand. In an almost equal number of cases, you’re told that the initial raise is the only offer, which you can take or leave.

Here are a few ways in which the refusal can go and how you should react:

The employer’s responseThe contextYour reaction
Your counteroffer is acceptedThis is more than you expectedYou thank the manager in the meeting and with an email
Your counteroffer is refused, but the employer counters with a better raise proposalThis is less than you expected but is acceptableYou thank the manager in the meeting
Your counteroffer is refused, and you’re asked to accept the initial raise or get no raiseThis is not an acceptable raise but isn’t lower than what you would be paid elsewhereYou accept the offer and start planning an exit strategy.
Your counteroffer is refused, and you’re asked to go for the initial raise.This is lower than what other employers would pay youYou politely tell the manager you need 48 hours to think about accepting the offer or resigning. This gives them 48 hours to give you a comparable raise.
Your counteroffer is refused, and the initial raise is withdrawnThis is unprofessional on the organization’s partYou thank the manager for their time and turn in your resignation by email. You mention in the email that you don’t want to work in an organization where you’re penalized for advocating for your interests.

How Do You Respond to a Low Pay Raise Offer From Your Boss?

When you’re first offered a raise, you might be excited and in the “yes” mode, which could result in a premature acceptance of a poor raise offer. You should not reply to the offer immediately until you are completely confident that it accurately reflects your market value. If you determine that this is not the case, here is how you should respond:

When you’re offered a low pay raise in person, you should say, “I appreciate the offer and would like to process it, thank you.” If the offer is made via email, you can reply with, “Thank you for the offer. Please allow me 24 hours to draft a detailed response.”

It is crucial not to refuse the offer right away as this can be seen as impolite, which breaks the three Ps established earlier. Refusal can do more harm than good. Your strategy should be to stall and counter so you can get more out of the offer. But before we get into your counteroffer strategy, we need to establish the following:

  • Your employer appreciates you 
  • Your employer knows that you’re worth more than you’re paid 
  • Your employer is willing to make 

If even one of the above is true, you have to assume that the move to give you a raise was in good faith, and the employer didn’t offer a higher figure because he doesn’t understand the true value you offer to the firm or is unable to pay more. Either way, making a compelling counteroffer can get you a better deal.

How to Counter a Pay Raise Offer From Your Employer

1. Do Not Accept the Offer Right Away

The first step is to avoid agreeing to the raise or sending mixed signals. As mentioned earlier, mention the words “processing” instead of “accepting” so that the other party knows that you can come back with a counteroffer. If you say “thank you” and nothing else, it is seen as an acceptance. 

But even if you have shown gratitude without mentioning the possibility of a counteroffer, you can initiate a dialogue for it. The only exception is if you have agreed to the offer in writing.

2. Identify What You Believe the Raise Should Be

Your next step should be to pinpoint the exact figure you think you deserve. This has to be in line with the market realities. Before going any further into this, you should put yourself in your employer’s shoes. This could help you: How Much Is Too Much to Ask for a Raise?

If your local barista genuinely puts enough effort into making coffee to deserve five times the price for each cup, will you give him that much money? Most likely not because there is good-enough quality coffee available at a lower price. More importantly, you cannot afford to pay the markup.

Most employers are in such a position. You might be putting a lot of effort and attention into your role, but because the specific job function has a set market-value range, you cannot exceed the acceptable maximum in terms of compensation. And, of course, your employer might not be able to pay you what you think you deserve.

So this figure has to be a compromise between what you know you deserve, the market value of your position (what others will pay you), and what you think your employer can afford to pay you.

3. Make a Case for Why You Deserve the Pay Raise

Once you have decided on a reasonable amount that will make you happier and more likely to stay with the organization, you need to put your thoughts in a tangible format.

Whether you make a deck or a handout is up to you. Usually, a presentation is reserved for when there is a larger number of stakeholders who have to decide on your raise.

In other cases, you just need a one-pager that communicates clearly why you deserve a higher raise. The specific items to include when making your case largely depend on your experience and job role, but here are a few things it should cover.

  • Your impact on the bottom line – This can make the decision easier for your boss because he can clearly see that you bring more money into the business than what the business will pay you after awarding you your desired raise. 
  • The market value of your job function – When you mention the average pay for your position and experience elsewhere, you let the boss know that you might be thinking of walking away. If the raise is a measure to retain you as an employee, your boss might accept your counteroffer.
  • Potential tasks you can handle – Your boss won’t like a deal where he feels like he’s not getting anything. Even if you already put in more work, the psychological effect of promising more productivity is far more effective.

4. Promptly Meet Again With Your Boss

It is important to meet your boss not too long after he has awarded you the raise. The longer it has been since the offer, the harder it will be for management to accept your counter offer. That’s why all the correspondence examples covered earlier had a 24-hour limit. You should try not to delay the meeting request more than 12 hours after receiving the offer.

Under no circumstances should you put off the meeting for two business days because that introduces room for speculation. You don’t want your boss thinking you were influenced to demand a higher raise by another employee. If the management thinks you were happy with the initial offer, your chances of getting your counter accepted are minuscule.

5. Make Your Case

Now that you have your manager’s time and attention, you should be straightforward and respectfully reject the pay raise offer. Let the other party know that you appreciate the offer and are very glad that the management sees it fit to compensate you for the value you bring to the company. Then let them know that you believe that they don’t have the complete picture.

This is where you explain your reasons for rejecting the offer. Here you need to give tangible specifics about how you affect the bottom line, what the market value for your position is, and what else you can do for the company. 

Present your desired raise figure. To avoid prolonging the back and forth, mention that you arrived at the figure by taking into account what the company could afford to pay. Leave the final demand open-ended with only one thing for certain: that you want a higher raise than what you were initially offered.

How to Counteroffer a Low Pay Raise: Example Template

You’re likely to get offered a raise in one of two ways: verbally or via email. Here’s how you can respond in each case.

In-Person Example Script

Boss: Hey John, I got your email. Are you not happy with the raise?

John: I’m very happy that you believe I’m deserving of one, but I’m not happy with 3% because I have documented having increased my output by 15% since I joined.

Boss: I am aware that you’ve been working very hard, but 3% is what management has decided.

John: I’m not asking for a 15% raise. In my estimation, the company can afford to give me a 5% raise. And even with that, it would barely cross the income of a new hire in this position.

Boss: Okay, I’ll discuss it with the partners

John: Thank you. Here is a summary of reasons why giving me a 5% raise is reasonable. Please go over it with the partners.

Email Example

Dear [Boss Name],

I am glad that you believe I deserve a raise, but I would like you to reconsider the exact percentage. You’re operating at a high level and may not have time to pay close attention to the extent to which I have increased my output since joining. Over the last two years, I have had a 0% income increase and a 15% increase in my duties. A 3% raise doesn’t even compare with the market.

The file attached to this email summarizes the additional tasks I have taken on and how they have impacted the company’s bottom line. Please reconsider a 5% raise, which would make my income comparable to the market rate for my experience.

Regards,

John.