Responding to salary demand

Sooner or later, every manager or business owner will encounter an employee who makes a salary demand and will be tempted to give in. The employer fears losing a valued employee who has special knowledge or skills.

But, this practice can set a dangerous precedent which is referred to as "salary blackmail." The question is, as with all blackmail, when does it stop. The employee may demand more money next year. Also, other employees may demand a pay increase as well when they find out about someone being successful with this ploy.

Before allowing such a plan to succeed, make sure it's in the best long-term benefit for the company.