Declining an Employee's Raise Request — Without Losing the Relationship

Episode 39

A 2023 LinkedIn survey found that 70% of employees in small businesses accept a declined raise without significant upset when offered clear feedback and visible growth opportunities. The key word: clear. Most raise rejections fail not because of the answer — but because of the absence of context, honesty, and a path forward.

Set the Framework Before the Conversation Ever Happens

Brandon's most important prevention strategy: create the 'mortgage agreement' at hire. Define the compensation ceiling, the conditions under which pay increases occur, the KPIs that unlock bonuses, and the timeline. When an employee accepts an offer knowing the parameters — and later tries to renegotiate outside them — the practice owner has a foundation to stand on. Variable interest rates with no cap are a recipe for resentment. As Thomas Jefferson said: honesty is the first chapter in the book of wisdom.

How to Have the Conversation Well

Brandon's framework for declining with care:

• Acknowledge the courage it takes to advocate for themselves.
• Validate their contributions specifically and authentically.
• Be transparent about the financial reality — show the P&L if necessary.
• Redirect toward a collaborative path: what productivity milestones would unlock a bonus? What alternative revenue streams could increase their earning potential? What non-financial benefits (flexible hours, CE, project ownership) could bridge the gap in the interim?
• End on a high note with a written action plan and a 90-day check-in.

When It's Time to Transition With Grace

If the compensation trajectory genuinely doesn't align with what the employee needs, Brandon believes in saying so honestly — and offering to co-create a six-month transition plan that serves both parties. This approach protects the patient experience, preserves the relationship, and prevents the kind of quiet resentment that damages team culture long after the conversation ends. The goal is never to win the argument — it's to ensure the employee feels seen, the practice stays viable, and both parties move forward with integrity.