I operate a small business and there is no money in the budget for raises for the rest of the year. My best employee just told me that she has been recruited by another company, but does not want to quit. She said she feels compelled to take the other job because of the salary increase, but would turn down the other job if I can give her a raise. (Her last raise was 18 months ago). It feels a little like extortion. I don’t want to lose her and I also do not want to be manipulated into giving a raise. Should I give her the raise under these circumstances rather than lose a valued worker?
I think what you should do is to stop telling fibs. First you say you have no money for raises and then you say you can pay but don’t want to be manipulated. No wonder your star employee wants to quit. You are a liar and you are cheap.
What you meant to say is you don’t want to give raises. Fine. That’s your choice. However, if you run a business where you just give raises when someone threatens to quit – you are going to win a record for highest turnover.
— Evil Skippy
I do not know your employee, her performance record or anything about your business. What I do know is that it is not uncommon for some businesses to offer special incentives to retain employees who are being recruited by other employers. Try not to think of this as an extortion attempt. Instead, view it as your employee being open with you so you can make a thoughtful choice.
Before you make a decision about your star, reflect on the following:
- Are you being fair overall to your employees when it comes to wages and wage increases? (If not, you have a bigger problem than I can address here – but it would also mean a raise for your star right now could cause a ripple effect of trouble if you do not evaluate everyone else’s situations)
- Do you have a system in place for determining how and when wages will be reviewed (as opposed to simply reacting to conditions as they develop)?
- Have you analyzed the benefits you offer to your employees (not just wage levels) to make sure you are in line with similar businesses in your locale?
The bottom line is that you own the business so you can do whatever you want as long as you don’t break any employment laws. It might be a good idea to increase your star employee’s salary; it might not. You are the only person in a position to make that call.
Readers – when (if ever) would you give an employee a raise to keep her or him from quitting?
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