I reviewed my direct report a few months back. I wanted to give her a small raise but was denied as the company is not performing well. I didn’t mention that during review but she brought up pay and I explained now is not the time and we agreed to revisit in a few months. I recently tried again to get a raise approved and again was denied. How do I communicate this to her and keep her motivated?

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Tell her the truth. It’s important she knows you’re advocating for her. Otherwise she might think you just don’t care and quit.

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I would find out what criteria they need to get that raise and share those measurements with them. Also try and ask if you can do a bonus in lieu of a raise, wherein the person doesn't get a raise, but a one time bonus to subsidize the salary or hourly raise. I've done that in the past for those who are above market value but we want to keep happy and remain with us.

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Be transparent, tell her she does outstanding work, you appreciate her and as soon as budgets loosen up she will be first in line. Say “I’m in the same boat so I get it.”

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