Whether the answer is yes or no, the conversation fails for the same reason: not being ready with a real number and a real explanation. A vague "great year, and there's good news" or a hollow "it's just not in the budget" both come from the same problem, walking in without the specifics prepared.
Use this as a starting point, not something to read verbatim. Say it in your own words, but keep the order and the directness.
"I wanted to tell you directly: your base is increasing to [$X], effective [date]."
Say the number early. A long windup before the news makes people brace for something worse than what's coming.
"Here's what drove this: [performance, scope, or market reason, specific to them]."
"You had a great year" could describe anyone. Naming the actual driver, closing a specific gap, taking on a specific piece of scope, moving up in the market band, is what makes the number feel earned instead of arbitrary.
Say the number and the reason, then stop talking.
"It's not huge, but..." or "I wish it could be more" turns a genuine win into an apology. If the number is smaller than they hoped, that's a separate, honest conversation, don't pre-apologize for good news before they've even reacted to it.
"Here's what continuing to grow this looks like: [next milestone or scope]."
A raise with no forward line reads as a ceiling. Naming what comes after keeps it feeling like progress, not a one-time reward for services already rendered.
"I want to be straight with you: I can't get you an increase this cycle."
Don't bury it in a preamble about budgets and headcount before they know what you're actually telling them. Say the answer first, then explain it.
"Here's specifically why: [budget cycle, band position, rating, market data, whatever actually drove it]."
"It's just not in the budget" as the entire explanation reads as a dodge, even when budget really is the constraint. Say what specifically about their situation, band, timing, rating, made this cycle a no, not a generic line that would apply to anyone.
"I know that's not what you wanted to hear, and I'm not going to pretend it doesn't matter."
One honest acknowledgment. Repeated apologizing shifts the conversation toward managing your discomfort instead of theirs.
"Here's specifically what would change this, and roughly when: [concrete target, next budget cycle, or next review date]."
"Let's revisit it" with nothing attached to it is not a plan, it's a way to end the meeting. A real target and a real date is what makes a no survivable instead of just deflating.
Current comp: ___
Decision (increase amount, or no increase): ___
The real, specific reason (rating, band position, market data, budget timing): ___
What's next (milestone for a yes, concrete target and date for a no): ___
One question to have an answer ready for (e.g. "why did a coworker get more"): ___
If any of these are still blank, the conversation isn't ready yet either, for a yes or a no.