Q: Our performance review time is coming up. We do not have formal process, preferring a more casual setting where we meet with employees individually to discuss their work over the last 12 months. Our company has downsized and some employees have taken on new responsibilities. How should we proceed if someone asks for a raise?

A: First off, your employees should be pleased that they still have a job. If your company has recently downsized, it could be difficult to entertain the idea of employees asking for a raise. But, having said that, remember such requests generally come from the employee perspective.

If an employee remains on the payroll and is assuming more responsibilities, it appears that you need this person. The questions to ask are: how badly do you need him and how willing are you to see this person leave if not given what he wants? Not knowing the nature of the job position, I will assume other people in the marketplace have the skills but what they lack is your employee's knowledge of the organization. Also, hiring a new employee does have costs attached. So, if asked for more money, you will have to decide if it is worth the headache of replacing the employee. Is it?

As for the discussion, even if you don't have a formal review process, start with an overview of what the employee has done over the course of the year, explain how you appreciated the employee's willingness to step up after the downsizing. Perhaps the employee will come prepared and explain how what he or she has done contributed to your company's bottom line and detail the new responsibilities he or she had to assume. The employee may already have figured out in his or her mind as to the value of the additional work.

If the employee asks for a monetary raise—whether he or she mentions a specific dollar value—respond honestly and appreciatively. If you believe the employee deserves additional compensation, tell him or her so. Explain how you know the employee understands that the organization is going through a tough time and you know that he or she has been sharing in the help needed to get through this difficult period.

(Here's where the negotiation comes in.) Tell the employee you are unable to award any raises at this point due to the circumstance. Explain how long this temporary period could last and how you expect to provide an eventual bump in salary to compensate for the additional responsibilities. Let the employee react. Then detail your best guess as to when the company will be able to accommodate the employee's request.

Vague, noncommittal answers from you could result in your employee sending out his or her resume that same day. If you detail everything about the envisioned turnaround, the timeline for it, the costs you are currently incurring, and promise to compensate the employee as soon as the climate permits, you still have not guaranteed that this employee will not seek work elsewhere. But, having an employer who is open and honest should give the employee some pause to consider delaying re-entry into the job market. A reasonable response from you would be to say: "We will check back with you in say X weeks or months and update you on how the company is progressing, if it's improving, we can reopen this discussion about your additional responsibilities and what the right salary is for it. How's that sound?"

Remember, your employees are performing a service that requires reasonable compensation. Determine what you believe is fair given their performance, responsibilities and corresponding market. That process will create an environment where employees will be happy to go to a workplace that they see as fair, one that provides open and honest communication, and where they want to remain even through tough times. e

We spend most of our waking hours at work. What do you need or want to know to make it a better place? If you have any questions or concerns about working, your workplace, co-workers, or career, drop me a line at DeSantisCP@aol.com and I'll give you my two cents as to what I think should be done. I look forward to hearing from you.

Chris De Santis' uses his 20 years experience in training and development as an independent consultant. He specializes in the design and delivery of management and organization development interventions. A presenter at Leading Edge Alliance seminars, De Santis focuses his work on assisting individuals or groups in identifying obstacles to effectiveness and subsequently works with them to create user friendly solutions aligned with the company's strategic initiatives. He earned his undergraduate degree from the University of Notre Dame, an MBA from the University of Denver and an MA in organization development from Loyola University.