Team Member Unhappy With Salary

TL;DR - I have been in that employee's shoes... I walked

The likelihood of you succeeding is very small.

However, the best chance you have to succeed is how you frame the problem:

"Person wants a raise of $10K PA"

To Management this is an additional cost of $10K PA - which is really easy to say "We don't have the budget"

Wheras consider this:

"This person wants a $10K PA raise. To replace them would cost us at least $10-20K in recruiters fees, they would ask for the current market rate for Salary - which is $20K PA above what we are currently paying, and there would be 6 months of lost productivity whilst we train them up"

Now - a $10K PA rise is significantly less than a $20K PA rise with a $15K Recruiters fee on-top.

Knowing the full cost of hiring a new employee:

• Recruiter fees
• Lost productivity from interviews
• Lost productivity from a vacant position
• Lost productivity from someone getting-up-to-speed in your organization
• The cost of Salary negotiation at the hiring process

and being able to articulate that to upper management can help.

In addition - if you can tell Management a story about the employee where they did something like:

• Decreased Costs
• Increased profitability
• Decreased mistakes
• Decreased Re-work

And articulate it as a Dollar value to the company: "They helped get rid of this legacy piece of software that was costing us $10K PA" or similar.

But yeah - if Upper Management are holding fast - then you'd better spend your time organizing the leaving party.

Frame challenge: You are trying to fix the wrong problem

Your business has problems and instead of fixing them they are restricting salary raises and reducing overall salaries to bandaid the problem. This in turn is leading to the situation you find yourself in. If the root cause or causes are not addressed then even if you say the magic words that fix this immediate situation in the long term things will only get worse.

Financial Compensation

Pay raises are not guaranteed (not even inflation) and are given based on performance.

There is something known as cost of living adjustments. These are intended to account for inflation and are applied before any kind of performance related pay raises or bonuses. When these are not done, then it is like performing a pay cut to all employees. This hurts retention of the best employees who help make the business successful and thus reduces the profitability of the company, which can lead to tighter budgets.

Budget Reasons

Denying a raise because of budget reasons indicates poor planning, greed, or that the company is bleeding money somewhere and not addressing it. Whomever is in charge of the finances for the company needs to sit down and look through what money is being spent on what, while someone else needs to sit down and review this person's work to make sure they are competent. There was a famous example in 2003 where Lego found itself in $800 million of debt. They were losing money on various projects and had also lost track of how much it cost to manufacture certain Lego sets. Fortunately for Lego they identified the problems and fixed them. If your company does not then they will find themselves with progressively worse budgets which can result in a death spiral for the company.

what are other arguments the manager could have used to persuade leadership?

Leadership cares about money, so framing arguments about losing money tends to be effective. Right now leadership needs to be persuaded to take a serious look at their finances, because the decisions being made by finance if they are not already will have a dire long term effect on the future profitability of the company. Once those problems are addressed then it becomes easier to convince leadership give competitive salaries to employees when profits are higher. You will likely still lose this employee in the meantime, but it is still possible to prevent future employees from ending up in the same situation.

If the budgets and schedules for raises are that fixed in stone - and they tend to be so at larger orgs - the manager doesn't have a lot of wriggle room. Basically it comes down to presenting a comparison of costs - what's the cost of keeping this employee happy (and he may leave anyway, or flaunt his raise and get others asking for one), versus the likelihood of them leaving for higher pay with the costs of being short-staffed for a while, potentially missing deadlines, recruiting, and possibly getting a lower performer to fill the gap.

the burnout was from them not enjoying line-management responsibilities

Not surprised, and the newly promoted manager needs to take a good look at themselves and whether they want to be in this position. Were they promoted based on managerial skills, or simply on seniority? The latter is a poor way to end up in the role. Handling disgruntled employees when your hands are tied from above is one of the most sucky parts of the job, and pay is the biggest flashpoint. It's the reason I quit a good role with a significant proportion of line-management and resolved to be an IC for the rest of my career. It can work out, but proceed with caution and be prepared to change course before burnout hits.

If your region allows, your boss should explain you will fire and replace them if they don't change their attitude.

So many of the responses here are talking about how difficult it is for engineers to find a good job. This clearly means there must be a lot of better engineers who are in the same situation who would be happy to take the job for the lower salary.

The next opportunity is in a year but the person can easily find a higher paying job in our area, doing potentially more interesting work.

This is clearly not true. They would have done this already. They may have applied for these positions, but other people have been hired over them due to the amount of competition.

This is supply and demand. One of the most basic economic principles in business. Why pay a high salary when you can pay a smaller one?

I realize a lot of people in the industry don't like this, but that doesn't change the reality of the situation. Most businesses need to find ways to cut costs, especially based on the expectations of improvements to AI leading to reduced headcounts in all departments over the next few years.

The next opportunity is in a year, but the person can easily find a higher-paying job in our area, doing potentially more interesting work. The manager doesn't want to see a team member quit, but doesn't have leverage to change the system.

The manager does not want to lose him/her, but at the same time, the manager does not want to pay him the money he thinks he is worth either. This company appreciates the work being done. They enjoy the money it produces, but they are not willing to pay the minions that does the work that pays for everything the money they want. So clearly, the management does not actually value the employees. If they did, they would pay them what they want.

Question: besides salary ranges (internal, external) and performance, What are other arguments the manager could have used to persuade leadership?

The main argument would be. These are the peons who do the work that the company relies on for profit. They will find a replacement for their employment much easier than their old employer would find somebody to replace them.

Their value is critical and hard to replace. If there is cost-cutting to be done in this company, then non-critical expenditures should be cut long before the goose that lays the golden eggs should be forced to take a pay cut.

The CEO does not need to be given enough money to buy a third or fourth yacht, but the company does need to keep its programmers happy to continue functioning. If programmers quit en masse that that would be way more of a disaster than paying a couple of key employees a bit more money.