Many managers cringe when their employees ask for a raise, and others struggle with how best to approach the subject appropriately and professionally. There are various compensation models and issues to consider. If we move past the mechanics and the details of compensation administration, the focus can switch to the concept of “value”.
Consider this as an employee...
Instead of: “I want a raise.”
Better: “How can I increase my value?”
Consider this as a manager...
Instead of: You will get a raise when you are here a year, or when you have completed X.
Better: We are a company that helps and supports you in increasing your value and contribution. As you increase your value, you will be able to increase your earnings.
There are complexities involved in compensation administration. Business economics, revenues and expenses, and concepts like market value come in to play. But when we have a culture that supports and believes in the concept of increasing one’s value versus raises, both the individual and the organization can benefit.
When a company culture operates like this, a manager who seeks an increase for a direct report says, “I would like approval to give Joe an increase; he has increased his value, he can run a crew, and he has overcome his reliability issue that I discussed with him 6 months ago.”
This approval can be given with enthusiasm. Joe is happy and the leadership is as well. There is joy in being part of an individual’s growth and success and the company is stronger and has gained value from Joe’s development.
Incorporating the theme of increasing value as the link to compensation sends a powerful message. The manager knows they want a raise. But he/she must be able to give the guidance and support to the individual so they may increase their value and subsequently get a raise. The company and manager now have a captive audience in guiding the individual’s development and the individual understands what they must do.
The following is a short list of tips to incorporate the concept of increasing value to your compensation program:
- It is a matter of culture that starts with the leadership and should be applied consistently.
- It starts when somebody is hired and on-boarded. Be completely transparent with expectations and how the company manages the increasing of value. For example, “Welcome to our wonderful company. We provide resources and opportunities for you to develop to your full potential. We acknowledge your development as you increase your value to the company.”
- The company and leadership must fully commit to the concept and be prepared to honor these commitments:
- Recognize the people appropriately when they do actually increase their value.
- Give the support, direction, resources, training, feedback and required tools for someone to increase their value.
- Be prepared to articulate what an increase in value specifically means. There could be a broad range of things that include, but are not limited to:
- Improve proficiency or productivity
- Develop technical skills
- Job management skills
- Leadership or other soft skills/communication
- Diversification of skills
- Individuals must take responsibility for outcomes by using the opportunities and support given by the company.
This approach to compensation has numerous benefits and can minimize the uncomfortable conversations and anxiety anyone may experience when matters of compensation are discussed. Everything is upfront and transparent.
If an individual is not entitled to a raise, an inquiry can be handled appropriately with a response, “I cannot increase your compensation at this time. I would like to help you increase your value to the company; let us schedule a time to talk.”
Most importantly, there is a positive foundation for everyone to win: individuals grow and develop, leadership has the tools and foundation to cultivate the team, and the company has a team who is motivated to continuously increase their value to the organization through professional development. Increasing value may bring everyone more Restoring Success.