My staff wants a raise. Help! What should I do?

As the holidays approach, now is the time many of my clients start asking about raises and holiday bonuses for their team.  For the purpose of this month’s Tip, we’ll look exclusively at raises, and cover the equally-thorny topic of bonuses in November.

Is this how your employees feel when it's time to talk about raises?Q: My employees haven’t had a raise in over a year. Should I just go ahead and give them one?

A: Maybe. But before you do, ask for yourself this – are you making the decision to give them a raise because 1) they’ve earned it and your business can afford it, or 2) you’re emotionally conflicted and are just trying to keep everyone happy?

In my experience, 2 is much more common than 1. Many practice owners I work with tend to deal with financial issues like raises based on emotion rather than good business sense.  

If that’s what you are doing, make the conscious decision to shift your mindset from emotion-based to business-based decision making and ask yourself:  

  • Have I put the money into the budget to plan and pay for the raises?
  • Have I shared with my team, through an evaluation or team meeting, what their responsibility is to ensure the profit that will pay for the raise?
  • Do my employees have job descriptions so they know what is expected of them, and so that I can hold them accountable for fulfilling these duties?
  • Do they know what they can do above and beyond their job description to earn their raise?  CE, for instance? Have you investigated and taken responsibility as the employee for CE on your own? Are you actively working to improve your skill set, and therefore increase your value to the practice? Are you willing to assume additional responsibilities in the practice?
  • Have I discussed their CE goals with them and put a plan in place to help them achieve these goals, and help me monitor their progress?

Your team must understand: their productivity is directly responsible for ‘more’: more money, more benefits, more equipment, etc.

You must understand: throwing money at people is not the way to keep them motivated or happy, just the opposite in fact. The more you throw undeserved money or benefits their way, the more they will expect. Even worse, those who can, do, and those who don’t, won’t, leading to demotivation in the ranks because not everyone is pulling their weight but are still reaping the same rewards.

A simple way to level the playing field

Based on your budget and how much your practice can afford, take your raise and divide it into four parts, with each part being worth up to 25% of the total.  How well a team member does in each category determines how much they get. The dollars are earned and understood instead of expected. More importantly, the motivated and engaged team member is fairly rewarded for growth while those who don’t participate and excel have only themselves to blame. Now conversations are based on how they need to improve, instead of, “Where’s my raise?”

Keep in mind, these are not absolutes. Someone may only get 5%, or 18% or 20%. Use this as a guideline only.

0-25%: How well they perform their duties as outlined in their job description.

0-25%: How well they contribute to the team (without being asked)!

0-25%: How much they seek to learn new skills, both in the office (new equipment, procedures, for instance), and CE focused on what they do, or want to learn.

0-25%: State of the business.

The first three are totally in the team member’s control, provided you have shared with them the goals of the practice. The last is totally dependent on how well the business performs. Using these guidelines, you now have a fair and balanced formula for giving raises that both you and the team member understand and can agree on.  

Examples:

Employee #1 is a star. He is hard-working, motivated, eager to learn, understands his job and performs it well. Your practice, however, has not had a great year, so money for raises is limited. Under your guidelines, he qualifies for 75% of the 100% available to him, which is far better than nothing! More importantly, he understands why.

Employee #2 does her job as outlined in her job description, no more, no less.  She is pleasant to patients, but uninterested in CE, or taking on additional duties in the office. She is competent but complacent. Under your guidelines, she qualifies for 25% of the 100% available to her. If she wants more, she will have to earn it by contributing more to the team and actively seeking to learn new skills.  While she will undoubtedly be disappointed, you can explain to her with confidence why she is not getting more.  

Now that you never have to worry about how to handle raises for your team again, remember to watch for next month’s Tip on another ‘hot’ topic - bonuses.