PRO-vocative IDEAS from PRO
President's Resource Organization
 
Here is your new edition of the PRO-vocative IDEAS e-letter. Each issue will bring you a Thought PRO-voking Idea designed to help you run your business better. If you don’t want to receive these monthly emails, just click the Remove button below.

These ideas don’t come out of an Ivory Tower, but from the real-life experience of entrepreneurs like you. At PRO, Presidents’ Resource Organization, the owners of small businesses gather monthly to share problems, and work towards solutions, based on their own lessons learned. PRO members move their companies to the next level, through this peer group interfacing.

Here’s an example of a PRO-vocative idea and the discussion leading to it: 

What Should You Do 
When An Employee Unexpectedly
 Asked for a Salary Increase

Member Problem: 

An employee unexpectedly asked for a salary increase.  How should I respond and handle this discussion?

PRO Advisory Board Recommendations:

Joe:    When an employee asks for an increase when it isn't time for their review I generally get a little agitated, but I realize it is important to "keep my cool."  I specifically tell the employee I understand they are asking for an
increase and that I will review their situation.  I repeat to them "I understand you are asking for an increase" so they recognize I have heard them and I am paying attention to their request.
 
Sally:  I always try to get as much information as I can about why they are asking for the increase.  Is it another offer, dissatisfaction, outside pressure (such as their spouse), or financial difficulties?
 
Harry:  Mt response is to get time to think about the situation and do research.  I tell the employee we will meet next week on a specified day at a specified time to discuss their request.  I always make the time very
specific, because I want the employee to feel I recognize this is a serious request and I am not just putting him off.

Glenn:  All of these points are important...finding the reason, and getting time to do research.  What is the competitive wage environment?  What is their productivity?  How critical is the employee to our organization?  I try to get information on comparative standards for the job and the responsibility.  The standards give me an objective way to view the request and to measure the contribution and importance of this position and this employee.

Molly:  You also have to ask what they think is fair, so you can measure the request against the standards Glenn mentioned.  And the time factor is important not just to gather the information, but also to think about the request so I don't just make a "knee jerk" reaction.

Ralph:  When I have the discussion with the employee, I may have to say No to the increase.  In that case, I discuss their performance and make suggestions for how they can achieve what they are asking for.  This may require additional training, education or taking on more responsibility.  In essence, I am saying  we value your performance and our company rewards performance.  I may also
define objectives that have to be met to achieve the increase.

Susan:  I have had the experience of giving a larger increase than the employee requested when I have investigated and found their performance was far better than we thought.  I wanted to make the increase a WOW.  I wanted to show we do appreciate their performance and recognize their contribution and dedication.

Scott:  We make it a point to let our employees know we will not be held hostage to competitive offers and unrealistic demands.  However, if after we explore the situation and determine that the request is warranted,  we will give the increase.  As Ralph said, if we determine we can't make an adjustment at this time, we state what they have to do to obtain the increase.

Facilitator's Comment:

When an employee requests a compensation adjustment, this is a negotiation.  You, as the boss, want to be fair to both the employee and the company.  First, as stated in the discussion, don't get agitated with the employee.  Keep your composure.  Make sure the employee knows that you are listening and you have heard their request.  The suggestion of meeting at a specified time and date enhances the credibility of the forthcoming discussion.

Prior to your meeting with the employee, investigate their performance and the comparative wages for the position and responsibility.  Think about the interests of the employee and also the interests of the company.  If the answer is going to be No, think about an alternative that you can offer.  The alternative may be a lesser increase, education, incentives, and so forth.  Your goal is to move the discussion from being a compensation issue to being a performance issue, and to clarify what they will do to earn the increase.

A high performer is always worth more than the prevailing comparative wages.  If the employee is a high performer, reward them.  If they are average or below average,  don't be afraid to lose the employee.  It is management's job to work only with high performers, and doing so makes your job easier.  One PRO member often quotes the 20% rule:  You don't have to worry about the top 20% of your employees who are high performers.  The 60% of employees in the middle will perform according to the way they see you treat, manage and reward the bottom 20%.

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