How to Best Communicate a Pay Increase!

Communicating a pay increase
Pay Increase Communcation Strategy
When it comes to pay increases, several factors determine the impact on both the recipient and the business. If you’re responsible for deciding the increase, your perspective will shape how you deliver the offer and ultimately how the employee receives it.
A pay increase should never be a perfunctory task. To you, it might seem like an extra £1 an hour cost to the business. To the employee, it could mean the difference between financial hardship and peace of mind.
Pay increases must be carefully considered, balancing the needs of both the employee and the business. This applies whether it’s a mandatory minimum wage increase or a well-deserved step up the pay scale.
Communicating the Value of Each Employee
Recognising and communicating an employee’s value is a crucial part of the pay increase process. Use clear, fair criteria to justify the decision and share this with the employee in a way that:
- Highlights their achievements.
- Provides recognition for their contributions.
- Illuminates a path to further improvement.
By the end of the process, the employee should feel valued, understand their role in the business, and know where there’s room to grow.
Understanding Perceptions of Self-Worth
We all have a perception of our own self-worth. Some people are highly confident in their abilities, while others may lack the confidence to assert themselves. As a leader, you must project trust and dependability, ensuring every employee feels valued.

For Employees: Understanding Your Worth.
If you’re an employee considering your value within the business, think about the broader context of your contributions. Here are key factors to evaluate:
Your Skills and Value
- Your technical skill level.
- The brands you’re qualified to work with (relevant to the business).
- The investment required to improve your skills.
Your Role and Responsibilities
- Your ability to build and maintain a client base.
- Your position in the business and responsibilities.
- The revenue you generate.
The Pay Structure
- Base Pay Rate: In the hair and beauty industry, base rates are typically low due to outdated perceptions. Look for opportunities to increase your income with bonuses or commissions.
- Targets and Bonuses: Understand your targets, if they’re unclear, ask for a breakdown or visual examples to see how you can earn more.
Top Tip:
For the fastest growth focus on two key areas:
- Great client care: Engage with clients, charge correctly for services, and maintain a friendly, professional relationship. This helps grow your client base and leads to long-term success.
- Optimum income per hour: Based on the prices you charge, work out the optimum income per hour. Aim to sell 80% of your time at that rate, this should be the minimum target you focus on. NB: if your business is VAT registered remove the VAT from the price calculation to give you a net target.

For Employers: Building a Pay Increase Strategy.
How to create a clear, fair strategy for implementing pay increases:
Key Principles
- Fairness: Pay raises reflect the overall value a team member brings to the business.
- Transparency: The pay review process and timing should be clearly communicated.
- Consistency: Ensure decisions are applied equally across similar roles and teams.
- Recognition: Pay raises should reflect work, skills, and accomplishments.
Preparation
- Research: Understand local market pay rates and potentially competitor salary package offers.
- Budgeting: Align pay rises with NMW increases, business growth (spring typically sees an upswing in sales) and consider increasing your prices at the same time.
- Policy: Create a clear policy that outlines how pay raises and rewards are structured.
Communicating Pay Raises
- Educate Managers: Ensure managers can confidently explain pay structures and incentives.
- Individual Meetings: Discuss pay raises privately and respectfully. Highlight achievements, share new targets, and outline next steps.
- Written Communication: Provide a guide or policy, available to all employees.
Addressing Difficult Conversations
- When No Raise is Given: Be clear and respectful about the reasons. Highlight other benefits and growth opportunities.
- When Comparisons Arise: Focus on individual performance and avoid discussing others’ pay.
Reviewing and Adjusting
- Periodically evaluate whether your pay structure is rewarding the right behaviours. Adjust as necessary to ensure fairness and motivation.

Document Everything.
It’s essential to document the pay increase offer, any changes to the contract, and whether it was accepted. This ensures clarity and protects both the employer and employee. Key points to document include:
The Offer
- The financial value of the pay increase.
- Any additional perks or benefits included.
- Confirmation of whether the offer was accepted.
- The effective date of the new pay rate.
Financial Targets (if applicable)
- Whether the new pay rate includes associated financial targets.
- Clear explanations of the targets and steps to achieve them.
- Expected timelines for achieving the targets.
- Outcomes if the targets are achieved.
- Outcomes if the targets are not achieved.
Detailed Records
- Record explanations and specifics, such as targets, KPIs, and behaviours. Ensure these are documented in writing and shared with the employee, ideally using tools like Loop HR’s Review feature and/or the Document management suite.
Example Templates for Communicating
Company-Wide Announcement
Subject: Pay Review Update
"We are committed to fair and competitive pay for everyone. Our pay reviews happen once a year and are based on performance, market rates, and business success. Our pay structures reward behaviours that bring value to the business and the team. Thank you for your contribution to the business, we are delighted to work with you. If you have questions, please reply to the this message, speak with your manager or review our pay policy.”
Individual Pay Increase
"Thank you for your excellent work. Based on our recent review, your salary will be increased to £[new salary] from [date]. This increase reflects your achievements and contributions to the business. You will find your new targets in your Loop HR portal (go through them with the employee). The KPIs described are designed to help you achieve your targets. We will schedule your next review in [number] weeks/months. In the meantime, use Loop HR to gauge your progress and check in with your manager at any time."
Conclusion
A clear and fair pay raise strategy builds trust, enhances employee satisfaction, and supports long-term business success. By implementing structured processes and open communication, you’ll create a positive environment where employees feel valued and motivated to contribute their best.