How do you guys handle it when a relatively good employee asks for an outrageous raise? I just had a guy who is being paid $18/hour ask me to be paid $28/hour. He’s a decent worker, but really not particularly skilled at anything. I have much more skilled employees that make less than what he’s asking for. This person does mostly odd jobs throughout the business. He said he came up with that number because represents a 10% raise for each year he has been here, though the math clearly doesn’t work on that; he would be at less than $24/hour even if I had given him a 10% raise each year.
I agree he deserves a raise, but that amount is crazy. I can hire much more skilled and competent people at that rate. I’m somewhat indifferent to whether he stays or goes, but I don’t see him really quitting as he and my office manager are a couple, and they like to commute to work together. I can handle things if both of them quit. Life would be less fun for a bit, it’s not the end of the world. I don’t see any real scenario where they will be otherwise able to work together like they do now.
Is getting a raise of 10% a year standard? I worked in finance for 12 years before owning a business and never saw a raise larger than 5% unless it was with a promotion that included more responsibility.
Living wage in Chicago is 68k a year so guy is at poverty wages.
Depends on the profit margin he has. If you go into the negative $28 is a no go. If he breaks you even and adds no value to your business in intangible ways…no go as well. If he breaks you even or close to and adds value to other employees - keep him for now.
If I got a bonus like that once a year I’d probably accept minimum wage
Determine what you think is fair for what he does and what he brings to the table. (ie. $21-23/hr maybe)
Tell him you’ve reviewed his request and based on the current output as well as how the business is doing in general this is the best you could reasonably offer. But give him feedback on what he might be able to improve on, or skills he might try to gain if he would like to work up to the requested amount.
Precipitate his resignation
I had the same situation recently. The requested jump was even greater than $10.00 per hour. I had to make sure some of my team leads were part of the decision making process, and ultimately I decided to increase that employee’s pay by a number I thought was in line with the value they brought to the overall team they were on (it was less than 50% of the ask).
The result was that the employee stayed and is much more positive now, even though there was a solid chance the offer could have been rejected. I think you are in a position to do the same thing since the resignation of that employee would not be fatal to operations. Coming from the recent job market dominated by employee demands, I think many employees are starting salary negotiations high with their actual target significantly below that mark.
Make sure to account for the cost of training someone to replace him which is often overlooked. How much is that worth? Even if you find a more skilled employee you still have to train him on your systems which is expensive.
I don’t know enough to judge you on what your actually paying. Location matters a lot and no one seems to be talking about that. 18 and hour in NYC and 18 an hour in rural Montana is not the same thing.
Does your Office Manager make more than him? Maybe this stems from a position of not pulling his financial weight in their relationship? Are they teenagers? Early 20s? Early 30s? Is he at a stage in his career where he should have developed more skills but hasn’t? You shouldn’t pry into these things, but know there may be more motive here beyond just the money itself.
Good employees are worth investing in. It’s easy to replace people, it’s hard to replace really good people that are willing to do more than the minimum, even if their current role isn’t highly skilled. Be straight with the guy. Tell him you really like his work ethic, and you value his reliability. People value leadership that feels genuine and honest. If you are transparent about what is and isn’t reasonable for you to do and give him some criteria for future advancement. You may feel indifferent, but you have to show him that you’re not indifferent, and your take his ask seriously. Your excited for his potential, but you need to work with him on his development.
How do you do that.
- Give him a raise and talk through it. $28 is too much. But talk through why it’s too much, and also talk though how things are typically done, and show that you’re doing more than what is typical.
No one is getting assumed 10% raises in this economy. Most large companies are doing between 0 and 5% with and overall pool of 2 or 3%. Meaning in order to give one person 5% you have to give someone else 0% instead of 2% to offset. Here are example scenarios. 10% yoy raises would be $24.96 (not 28) ,5% yoy raises would be $20.84 an hour, 2% yoy would be $19.10 an hour. In a normal company a 5% raise every single year for 3 years would be extraordinary. I’d suggest doing something between 3% and 5%.
- Invest in him. You mentioned other employees having skills he does not. Talk to him about developing those skills in him. I assume these skills are important to your business. Talk to him about pairing him up with a team member who has those skills and letting him take some of his time to act as that person’s assistant or something like that. Tell him you’ll have him a one-off raise when he gets to a certain level of competence in that skill. You’ll have to figure out how to measure his growth.
You do these things; he’ll see you as a mentor and coach. At some point in the future, he will see his own success and partially attribute that success to you. Of course, he was willing to do the work, but he needed someone to believe in him and that he was worth developing. You will be developing a loyal employee, and who knows maybe he eventually get to a point where he can take a leadership role or even operate the whole company in your place, and you can be more absentee and do whatever you want, including may focus on another business.
Bottom line. If you treat the right people well, they will be loyal which is difficult to put a price on. Having a company full of people that take pride in their work and will run the business with integrity when the boss is gone vs you having to fix all sorts of random problems and customer complaints because they do the minimum. You can’t put a price on that benefit.
Another thing you might consider. And this is just in general. Instead of giving out bonus. Consider sending the employees on some kind of memorable vacation. All the bonuses I’ve ever gotten I completely forget when and where I got them and for what reason and where the money went, who knows. But give them something that imprints memories on them, and they will forever associate those positive memories with you.
He can ask for anything and you can counter with nothing and somewhere in-between you land in reality.
You miss 100% of the shots you dont take. Dont begrudge him for asking. Tell him what you are willing to give and then you both decide how much you want the relationshiptocontinue
Up his salary and reduce bonuses by the same amount.