Apr 13 2014, 3:33pm CDT | by Forbes
Cash is king, there’s no doubt about it. But not every business is in a position to grant the six- and eight-percent salary increases many of remember from not so long ago. Turnover is an issue again, and pay is always somewhere in the vicinity of any conversation about turnover. We hear about it from our CEO clients.
LIZ: Liz Ryan!
ARNIE: It’s me, Arnie. How are you, Liz?
LIZ: Fantastic. What’s new, Arnie?
ARNIE: I’m out of sorts today, I guess. I just got back from the manager’s meeting, and it was tense.
LIZ: The new fiscal year plan?
ARNIE: Exactly. The sales comp plan pushback I expected, but that was actually the easy part. The way is clear for the top fifty percent of our sales team to make fifteen or twenty percent more than they did last year.
LIZ: What about the rest of them?
ARNIE: I mean, anyone can do it. I’m just making a prediction. If we hit our targets they’ll all be ecstatic, and me most of all.
LIZ: On to the non-salespeople…
ARNIE: I have tried to explain this a hundred times. I guess I need a different vehicle or maybe I’m just too close to it. We just came through two of the hardest years we’ve had in our business. Sales were flat and profits were down because of the flood and other issues, but we kept everyone employed.
LIZ: How did you do it?
ARNIE: We cut expenses and told our consultants we were taking a one-to-two-year hiatus with them. That was hard on us and them but they’ve stayed very close to us and ready to jump back in. We’re just about to get a couple of them involved again, but we’re not going to give out salary increases this year. Not to me, not to the VPs, not to anyone.
LIZ: And that went over…
ARNIE: Like a lead balloon, as they say. You wonder, should I have laid off some people to give the rest of the team a salary increase? It’s not the kind of question I want to put in an employee survey.
LIZ: How would you characterize the mood overall?/>/>
ARNIE: The mood here is fine! It’s when managers start sitting down with employees one on one and telling them that they’re not getting a salary increase — that’s what the managers are afraid of.
LIZ: If no one’s getting a raise, why wait for on-one-one meetings? Why not announce the plan loudly, at an all-hands meeting?
ARNIE: That’s a good idea. Why let the first managers with employee reviews ahead of them bear the brunt?
LIZ: I’m glad you called me about this. You don’t have to make the message “Sorry, no raises.” And as you already know, at this moment no one is thinking about buying you roses because you kept all of their co-workers employed during the down period.
ARNIE: That’s how they’ll think about it, too — “You kept my co-workers employed” versus “You kept me employed.”
LIZ: Arnie, the last thing you want to do is start feeling hostile toward your team. You kept them on because you need them.
ARNIE: That’s true. But I want to head this no-raise-disgruntlement off at the pass.
LIZ: You won’t head it off at the pass. You’re not happy about it yourself. You can soften the message, though. You can get very creative with it and learn a lot about yourself and your teammates.
ARNIE: As in how exactly?
LIZ: You can offer alternatives to a pay raise. You can give people extra flexibility in their hours, or let them work from home part of the time. You can give them flexibility in the dress code or some other policy that bugs people. You can give them plum assignments if they want that, or executive visibility.
LIZ: Why not set up a quarterly dinner with the employees who most value time with you? You and the team of VPs can meet with twenty or thirty people each quarter. We did that at U.S. Robotics, and it was fantastic. People loved it.
ARNIE: What do they do, sit with one executive for the length of the dinner?
LIZ: We had four tables of eight people each, one executive and seven employees, and the executives changed tables for every course. Lots of fun. Great conversations! I learned what the Heisenberg Uncertainty Principle was at one of those dinners.
ARNIE: What else?
LIZ: You can create a simple mentoring program and give people access to that if they want it. You can offer some of them training dollars instead of salary dollars. You can pay their dues for professional associations. If they travel a lot, you can buy them airline club memberships. You can ask them what would be valuable to them. Who knows what other ideas you’ll hear!/>/>
ARNIE: That sounds like a lot of work.
LIZ: You’re just exhausted. On Monday you’ll talk to Marcia and your HR person, Adrian, and the three of you will have fun with it.
ARNIE: I like the idea.
LIZ: The most important thing, beyond anything we’ve talk about so far, is visibility. Your team wants to know when things will change and there’ll be money for salary increases again. Tell them what’s happening with sales. Tell them about the new channel you’re opening up. Be honest with them. Open the vault. That’s what they need most of all.
ARNIE: Are you coming to this meeting?
LIZ: For sure! You and me can sing a country duet.
ARNIE: You know any of those?
LIZ: No, but I can learn one. I figured you don’t know any operatic duets.
ARNIE: Not any that I could pull together quickly.
LIZ: HA! Arnie, the big thing is to come around the table to see your employees’ point of view as reasonable. It is reasonable, obviously. You work hard all year, you expect a salary increase. You’re showing them a side of the business they haven’t seen before. You have to give them time to integrate it.
ARNIE: I do see it. We can have fun with this.
TEN SALARY-INCREASE SUBSTITUTES (here’s the script for suggesting these ideas to your boss):
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