Employee Pay Raises

April 19, 2016

I recently had an opportunity to grow when a team member informed me they were leaving the agency as they were offered a job that included a 50 percent pay increase. One of the biggest opportunities of a start-up agency is being able to transfer your dreams of making it big to your employees, and allowing them to put their stamp on starting something from nothing. With that, however, they also sometimes have to reap the initial sacrifices required in being an entrepreneur. It’s no secret that people need to make a living; and in my company, my partner and I are completely transparent in letting our employees know that we are not taking home any more than they are.

When the team member came in to deliver the bad news, I quickly responded with what reasons beyond the money were there for their decision to leave. With money noted as the sole reason for their departure, I asked what specific amount it would take for them to stay. At this point, the bar had been set and I had to find a way to ensure they would stay and turn the situation into a win for everyone.

In light of that personal situation which, thankfully, did turn out to be a win-win, I have found myself researching how to best handle a situation similar to the one I found myself in recently. Here are a few tips to help budding entrepreneurs in situations where their employees aren’t feeling satisfied with their pay. 


Don’t Take It Personally

Be considerate of your employee’s request. Do not be too quick to respond, consider the request seriously and set a deadline that is fair for both parties. Schedule a meeting to give your employee a chance to plead their case for a legitimate raise in pay. Communicate a plan to return to meet with a response within a reasonable time to think over your options and strategy.

Be Realistic About the Job Market

It’s imperative to know where you stand in compensation packages in your local market. If you fall on the low-end, it’s highly plausible for your superstar talent to consider more appealing packages, no matter how much they love their work environment.

Consistency Is Integral

Your strategy for response to one employee pay raise request should obey the same practice for another. Many large corporations have specific raise procedures in place for annual increases; however, most small businesses are lacking a plan. Consequently, many small business owners are forced to handle these requests formally. A suitable review process becomes relatively substantial to show your employee whether or not they are performing at or above your expectations.

Consider Non-Monetary Perks

Whether you are a start-up, or a more established company, the financial condition of your company may not allow you to handle an employee’s raise request. This is where you need to get a little creative (with consideration) by offering non-monetary solutions. You want to recognize your employee’s sacrifices and worth. Consider flextime, trades with clients (if applicable), increased vacation time or a promotion within the company.

Deferred Gratification” Approach

If you are comfortable with this promise, agree for a pay raise in the future, but be sure to specify all the details, especially tangible timing. This will not only motivate the employee to exceed expectations, but will create loyalty as well.

Bite the Bullet

Figure out how to make a pay increase happen if the employee is deserving. Nothing accelerates the success of your business more than a skilled and loyal workforce. If your employee shows commitment to the cause and is willing to do whatever it takes, give them what they asked for. As an entrepreneur, get comfortable with the discomfort of sacrifice and “figuring it out as needed”.

Keep the Process Confidential

Your employees should be encouraged to keep their pay raise confidential. Ensure all documents are as well.

These types of raise request situations are expected as a business owner and it’s important to be prepared to handle these types of situations. Most importantly, keep the objective in mind. A happy employee is a valuable asset.