As a business owner, you likely always want to save as much money as possible. When you don’t spend it, it goes into your profits, right? However, there is a problem with this way of thinking. When you don’t manage to reward your employees for their hard work, you often lose them – along with their talent, skills, and training – to rival companies. Here are seven signs it’s time to consider a raise.
- They have asked for it
A big sign that someone needs a raise to stay with the company is that they have come to you and asked for it. This doesn’t mean you should pay every single person who asks you-you still need to consider the request carefully. Has it been at least a year since they joined the company, or their last raise? Have they been working hard? Do they deserve more money? If yes, then you should accept the request.
- They remain loyal
Most employees probably expect a raise after working with a company for a year. After that, though, you might forget about how long they’ve been around – and that can be disheartening for them. If they have remained loyal to the company for years, it’s time to reward them with an overdue raise.
- They meet high standards
If you set high standards for your employees and they still manage to reach them, it’s a sign that you have someone exceptional on your hands. Reward their hard work with a raise. If you are raising several salaries at once, be careful to offer a few percentage points more to the hardest workers of the bunch. When you reward hard work, you get more hard work in return.
- They go beyond sales targets
Employees who bring more money into a company are always hugely valuable. If you have a salesperson who has gone through all of their sales targets and beyond, and particularly if they have the highest figures in the team, it’s time to give them a raise. Why would you want them to think about going to make money for someone else?
- They have gained skills or qualifications
If your employee has taken the time to put themselves through extra training, or if they have taken on extra duties because of a specific skill they have, then it’s definitely time to give them a raise. Think of it as paying for the value of their resume: now that they have more expertise, they are worth more. It’s as simple as that.
- You can handle the cost
It’s important to think with good business sense as well as in terms of rewarding your employees. Can your balance handle the cost of a bonus to wages? You can always think about taking out a loan, in the expectation that paying your employees more will make them want to work harder and produce better results. This certainly also applies for newer businesses who want to pay employees what they are worth, but aren’t at the right profit points yet.
- They want to leave
As a last-ditch attempt, you might try offering an employee money when they give you notice that they plan to leave your company. Consider carefully whether they are worth it: it may set a dangerous precedent for other employees expecting the same, but it is valuable to save your top talent.
Giving a raise is a business decision, and will be unique to each manager and each employee. However, these guidelines should give you an idea of when it is appropriate to give a raise.
Alex Lawson is a Financial Team Leader and a blogger, working together with other experts at Brighter Finance. Whenever not working on another project or helping customers with their financial issues, Alex may usually be found online, reading money-related blogs and sharing his tips with other experts.