EE Request $8,000 Raise
jimlegal
218 Posts
Help! What should I do? I have never faced this type situation before.
An employee seeking an $8,000 annual raise to be effective by February 15th, 2004 has approached me. This employee at all times was courteous and polite during our discussion. This employee did advise that if we could not provide the increase, that this employee would seek other employment.
This employee has been with the company for a little over 14 months, is a great asset and has an outstanding performance evaluation. In the past 14 months we have given this employee a $2,000 annual raise after completion of the probationary period. This employee’s annual salary is now $40,000, which maybe low for the market in Dallas, Texas.
In support of the employee’s position the employee gave me several advertisements from last Sunday’s paper, most of which have an average starting salary for this employees’ position of $47,000. We would not like to loose this employee, however we do not want to put ourselves in the position were other employees wanting annual raises as well, make run on HR.
Notably, we had to lay off twelve employees last summer and have not given anyone any raises or bonuses. Like everyone we are in a tight budget situation and have had to make cutbacks.
Any comments, suggestions, opinions, personal experiences you wish to share would be greatly appreciated. Thanks...
An employee seeking an $8,000 annual raise to be effective by February 15th, 2004 has approached me. This employee at all times was courteous and polite during our discussion. This employee did advise that if we could not provide the increase, that this employee would seek other employment.
This employee has been with the company for a little over 14 months, is a great asset and has an outstanding performance evaluation. In the past 14 months we have given this employee a $2,000 annual raise after completion of the probationary period. This employee’s annual salary is now $40,000, which maybe low for the market in Dallas, Texas.
In support of the employee’s position the employee gave me several advertisements from last Sunday’s paper, most of which have an average starting salary for this employees’ position of $47,000. We would not like to loose this employee, however we do not want to put ourselves in the position were other employees wanting annual raises as well, make run on HR.
Notably, we had to lay off twelve employees last summer and have not given anyone any raises or bonuses. Like everyone we are in a tight budget situation and have had to make cutbacks.
Any comments, suggestions, opinions, personal experiences you wish to share would be greatly appreciated. Thanks...
Comments
If the EE is this valuable AND is expressing an interest in staying with your company, I'm sure he realizes the financial position that your company is in. Could you offer other things to sweeten his deal with you until the company has rebounded a bit and you can increase salaries?
Depending on his situation, he may welcome vacation time, additional stock options, whatever you have to offer that may make it worthwhile for him to stay with you.
Do you offer tuition reimbursement? He may have a spouse or child that could use it, even if he can't/doesn't need to.
Good luck.
another thought: You say that you don't want to grant his request because you're afraid that all EE's will want this treatment. EE's pay should be confidential...and that should be the response if anyone asks. Additionally, the EE has demonstrated that your salary scale is significantly below that of the industry...which goes back to my earlier response, what can you/are you doing to make it worthwhile for ee's to work for you and earn less than their counterparts?
The additional vacation, stock options, and/or anything else you are able to offer would show this ee that you really would like him to stay at your company even though the company is not in a favorable financial position.
Good luck.
I've been in this situation & this is what I did -I checked our salary ranges with surveys & revised them to fit the market. When I did that, we couldn't fix everything at once, but we had a few key positions that we wanted to be competitive with the market. I compromised with some of these managers by giving them a step-up "market adjustment" - not a raise based on performance. The adjustment occured over several years, with raises every 6 months. I also took a portion of the raise they wanted & put it into performance incentive, which kept the base salary from adjusting too high.
I don't think you should worry about the "rush" to HR of everyone asking for huge raises. Instead, focus on your compensation structure & develop one that's defensible & equitable. Then your pay ranges are an open book & everyone can know why they're where they are. If you're paying $40,000 for what others are paying $47,000, then you're about 85% below market. This will result in lower direct payroll costs, but higher turnover. You'll have to strategically decide where your company wants to place itself in terms of market - you may be right where you need to be. SHRM puts out a great booklet on developing a compensation plan & pay ranges. (I'm not presuming that you don't already have a good plan - just passing on a tip about a great little booklet.)
Kathi
On the ee's side, his approach may have been mis-guided but to him/her it is real and the ee is ready to move on, regardless of the companies' response. The ee does not have a long-term relationship built on loyality and dedication to his opportunity and should go ahead and jump on the advertised positions and the company should support the ee's decision. Maybe in a couple of years your company might choose to recruit the ee at a higher range because he now has additional experiences and value. Don't allow the bridge to the ee to be burned, make it a clean seperation and a WIN WIN for all.
PORK
I would start with the question, as suggested by others, that addresses why your salary range looks so low. There can be many factors, such as the jobs descriptions are significantly different than first appearances suggest; your company is out of line by accident, or your company is out of line on purpose.
You mentioned a RIF and low or no raises for several months. When you are struggling, you may have to lose a few people who are not invested in the struggle; at the same time, it takes a good, dedicated and loyal work force to pull out of the doldrums and perhaps your company is poised to recover.
Look at your facts objectively and decide whether or not you want to compete for this EE. Do not worry about the others flooding your office with the requests for raises, but if the EE is able to secure the same job for significantly more money, you are still in the place you were worried about, because the other EEs will soon know and present you with the same problem/opportunity.
In either case, you must analyze your company's position in the competitive marketplace to recruit and retain good EEs. If you are in the lower part of the range, you will generally get a below average EE, that is just the way it works.
I say do not bow to the demand, but you must do your homework to prepare your company to live in a competitive environment.
Good luck.
As others have stated, the amount of recruitment, downtime and possibly going through a batch of "losers" before you find another good employee may be more counterproductive and expensive than the $8,000 raise (if justified).
I did ask the ee why this position was accepted at the initial salary. The ee advised it was because the ee really wanted to be a part of our company for the long term. Since the ee’s was initially employed, our company has cut back days off, cold drinks, ½ day free time, Fun Fridays, Annual Company Picnic, Christmas Party and much more. However the ee advised that he had given our company a year to correct the financial situation without success. The ee has made comments throughout the year to his immediate supervisor about his struggles. The ee also stated he felt it would be irresponsible as a husband and father to stay at the current financial levels, which would wreck his family.
As suggested by Pork, I met with the ee’s supervisor this morning that clearly stated that he would like to keep this ee and I need to work with the executives to fix the problem. Then he stated isn’t that the HR persons job? This particular supervisor isn't one that asks the executives for much, is always low key. The problem here for me is that our executives will spend money on anything, but employee salaries. Apparently it’s been that way for years around here.
I feel like I’m in a no win situation. X:-(
It is HR's job to determine where you are with respect to the labor market, it is the leadership's job to determine where they want to be. It is only your call to get them the information and make suggestions or recommendations, it is their job to act. If the supervisor does not want to fight for his staff, he will get to train new ones and probably continue to lose the experienced staff to higher paying companies. His actions also have consequences.
As to ee's coming in & looking/demanding more money. I always listen & if they present reasonable information, I consider their request - if they don't then I diplomatically point out the error of their logic, state company position & encourage them to seek other employment if they feel that strongly. The information this person has supplied to you - would have gotten the latter approach I mentioned. To state, here's what it says in this Sunday's ads - is bogus. I can go onto Salary.com & they tell me that I should be earning $90,000 per year & about $110,000 with bonuses and benefits - great, but I work for a company that takes in only 8 million a year - that wage is completely unrealistic. I would point out to this employee that fact & I would also let them know that a good wage survey is generally made of of several factors, company financial position, company philosophy on wages, a minimum of three independent sources for wage information - as industry specific as possible & local conditions - ads in the Sunday paper don't cut it. Next, I don't care if the guy doesn't have a credit card - his expenses are his expenses - not the company's - give me a break. Did you pull out the company financials & show him how much the company spends monthly on benefits, taxes, payroll, rent/lease, electric, etc? Again, this logic would have been quickly dealt with. I'm not really a fan of this expression, but for me it seems appropriate to this post, "It's not personal, it's just business." If you can't afford to pay him more, then encourage him to seek the American Dream - more money at a different company. Just my thoughts.
I, too, wish I made the salary that is quoted for my years of experience.
Your companies' personal and loyality relationship is questionable and is now built on a $ollar foundation and that surface can be like quick sand and consum the value of the relationship. Love is strongest when it flows both to and fro with ease and pure understanding. It is usually best to let the recruited go and then maintain a relationship that brings the ee back when he/she has more expertise and experience paid by the othercompany (lover).
PORK
Now the Hockey arena is a self gratification activity of the executive group and will not really solidify the love and belonging required for a solid team relationship. It is a perk and unless paid for by the executive group out of their own pockets, it has or will have little benefit in building a team relationship.
PORK