82. Responding to Unreasonable Employee Demands
How to balance fairness with business sustainability.
Imagine this - An employee demands an immediate pay raise despite no change in responsibilities. Another insists on excessive workplace perks far beyond industry standards. Over time, you notice -
Increased workplace tension, as other employees feel entitled to similar requests.
Strain on business finances, with unreasonable requests threatening sustainability.
Declining leadership credibility, if demands are met inconsistently.
Disruptions in workflow, as negotiations take time away from essential operations.
While it’s important to acknowledge and support employees’ needs, unrealistic demands can create imbalances and set unsustainable precedents. If not managed properly, they can lead to dissatisfaction, resentment, or financial instability for the business.
HR psychology tells us that unreasonable demands often stem from misalignment of expectations, lack of transparency, or workplace comparisons. Employees may also push limits when they perceive flexibility in leadership decisions.
The challenge? How do you maintain fairness while ensuring business viability?
The Solution – A Three-Part Approach - Assess, Address, and Reinforce
Handling unreasonable employee demands requires assessing the validity of requests, addressing them professionally, and reinforcing fair, transparent policies.
1. Assess the Validity of Employee Requests
Before responding, it’s crucial to evaluate whether a request is truly unreasonable or if it holds merit.
A. Identify the Nature of the Request
Reasonable - Requests for fair wages, flexibility, or career growth.
Unreasonable - Demands that exceed industry norms, personal convenience-driven perks, or unrealistic salary expectations.
Grey Areas - Situations where fairness must be weighed against business capability.
Red Flag - If an employee consistently makes excessive demands beyond business capacity, a pattern may be forming.
B. Consider the Business & Team Impact
Does meeting the demand align with company policies and values?
How would granting the request affect other employees?
Would the business remain financially stable if similar requests followed?
HR Psychology Insight - Employees may make unreasonable demands when they feel undervalued or compare their situation to others.
C. Evaluate Industry & Market Standards
Compare requests against benchmark salaries, benefits, and norms.
Assess whether competitors offer similar accommodations.
Ensure decisions align with best practices for sustainable business growth.
HR Best Practice - Decisions should be data-driven, not emotionally reactive, to maintain credibility and consistency.
2. Address Unreasonable Requests with Professionalism
Once a request is assessed, leadership must respond in a way that is fair yet firm.
A. Communicate Decisions Clearly & Transparently
Explain why the request is not feasible without dismissing the employee’s concerns.
Offer alternative solutions where possible (e.g., structured pay raises, additional benefits that align with business capacity).
Reinforce that business sustainability must be maintained for long-term success.
Red Flag - If employees feel ignored or dismissed, dissatisfaction may increase.
B. Use Fair & Consistent Decision-Making
Ensure equal treatment across employees to avoid favouritism claims.
Base decisions on clear policies and documented precedents.
Align responses with business priorities and long-term strategy.
HR Psychology Insight - Employees respect leaders who provide logical, fact-based responses, even when requests are declined.
C. Encourage Constructive Dialogue
Ask employees about the motivations behind their request.
Offer opportunities for collaborative problem-solving.
Suggest career growth pathways or structured incentives that align with business needs.
HR Best Practice - Employees who feel heard and valued are more likely to accept decisions without resentment.
3. Reinforce Fair & Sustainable Workplace Policies
To prevent future unreasonable demands, organisations must cultivate a balanced workplace culture.
A. Set Clear Expectations from the Start
Outline compensation structures, benefits, and growth opportunities clearly.
Provide transparent pay scales and progression frameworks.
Reinforce what is negotiable and what is non-negotiable in company policies.
Red Flag - If employees feel uncertain about workplace policies, they may push boundaries to test leadership responses.
B. Foster a Culture of Fairness & Business Awareness
Educate employees on business finances and sustainability constraints.
Promote fairness through structured rewards and recognition programs.
Encourage employees to bring ideas that benefit both the individual and the business.
HR Psychology Insight - When employees understand how their requests impact the organisation, they are less likely to make unreasonable demands.
C. Train Managers to Handle Requests Effectively
Provide leaders with negotiation and conflict resolution training.
Encourage open, yet structured, conversations on compensation and benefits.
Equip managers to reinforce company policies professionally while maintaining positive employee relationships.
HR Best Practice - Leaders who approach requests with empathy but firm business reasoning gain employee respect and trust.
Reflective Scenario – What Would You Do?
An employee insists on receiving a pay raise that far exceeds market rates, citing their loyalty to the company. Other employees begin to express similar expectations, putting pressure on leadership.
Using the strategies above, you might -
Assess the request against industry benchmarks and business sustainability.
Communicate transparently about why the raise is not feasible while offering structured progression options.
Reinforce fair policies to prevent expectations from escalating across the team.
Encourage the employee to contribute to company success in a way that justifies future rewards.
By handling the situation with clarity, fairness, and professionalism, SME leaders can maintain a healthy balance between employee satisfaction and business viability.
Golden Nugget - "Great leadership balances employee satisfaction with business sustainability. Transparent communication and structured policies create a workplace where both can thrive."
By applying assessment, structured response, and reinforcement strategies, SME owners can ensure that employee requests are managed fairly while maintaining the long-term success of the business.