Updated: Nov 28, 2019
Let’s walk through a scenario that every employer will experience. Short-timer Tim barges into your office and asks for a raise, “Boss! I’ve worked here for three months and I need a raise. Joey, one of the founding employees makes $10,000 more than me per year and I run circles around him.” Before you reach for something to throw at short-timer Tim, consider this as an opportunity to learn and improve.
First, do you have a quarterly employee review cycle with annual raises? If not, you just received a homework assignment. It’s important for employees to know if they’re succeeding and if that success is going to be rewarded by a promotion, one-time bonus, or pay adjustment. Make sure new and long-term employees are familiar with the process. Prior to offering a potential candidate a job, ensure he/she knows when they can expect a raise and that raises are based on performance.
It’s also important for employees to have a promotional path. In other words, if short-timer Tim starts his career at your company as an architect and 10 years later ends his career as an architect, you have a problem. Your job as an employer should be to grow your team. Consider creating position levels: architect I, architect II, architect III, lead architect, supervisor, manager, etc. Each position should have a minimum, mid-point, and maximum salary range. Do your best to hire people in between the minimum and mid-point salary ranges. This allows the employee to increase their salary within their current position.
Finally, I would always recommend taking the time to listen to your employees. If the employee can’t bring anything new to the business that justifies a raise, then reiterate the raise policy. Work with your employees to create performance plans so it’s crystal clear on what it takes to be successful. If you need help or have questions, consider your friends at Great Family Management Consulting. Let’s take off together!