When to Give an Employee a Raise
When to Give an Employee a Raise
The human mind is a fascinating thing, doing more work than we can possibly imagine and much more than we ever think about. The conscious part of the mind that controls our decision making abilities is itself controlled by many forms of biases operating both in the conscious and unconscious parts of the mind , many of which we never realize are even there. These decision affecting biases can be the difference between making a wise decision and a bad one. One such instance this holds true for is when deciding rather it’s time to give an employee a raise or not.
We like to reward an employee when they stand out for their extra effort in the workplace, but a raise is not always the best idea. Payroll is a vital part of a company that has to be maintained There are several things that must be considered, and some of those mental biases we mentioned that we have to look over. So when is it practical to consider a raise for an employee? Well first let’s look at why they would deserve one first.
They have been Employed for a considerable amount of Time: Some employees believe that a company is obligated to give them a raise after one year of employment. While some companies do follow this idea, it is not a requirement. When an employee has been with a company for a considering amount of time however, chances are they are being productive for a company otherwise they would have been let go by now, so a raise may be in order.
They out-perform in either work or sales: Some people just have natural talents when it comes to a job. They may have a charming and welcoming personality that makes selling products simple for them. Maybe they have an acute eye for detail that benefits them on a factory floor, making their work top quality. They may not have any natural talent, but be determined or dependable, always willing to work overtime or come in on a day off.
They Have a Special Skill or Knowledge: Unlike our previous entry about natural talents, here we are talking about a skill or ability that can be gained from previous work experience or special learning. These are skills learned that will benefit the company directly, and can be learned while currently employed. Many employees seek to further their education so they can earn more in their job, or seek a promotion. This skill may not be commonly found in employees, and a raise can help ensure they stay with your company.
Now that we know three of the most common reasons to give an employee a raise, we can look at if you should give them a raise. A key thing to remember is that giving one employee a raise may affect other employees as well, along with your overall finances and payroll. To better explain these points, let’s envision a business in Melbourne, Fl that has five employees, plus the owner and sells a certain type of product.
How will it affect other employees?
While all of the employees work hard at their job, one of them stands out from the others, tending to sell the most products each week. After a couple of months of this, the owner decides to give the one selling the most a raise. Another employee finds out and tells the others. Two of the employees in question feel it is unfair that the one employee got a raise and not anyone else, so feeling underappreciated, their productivity slows down. Now you have rewarded one employee and possibility motivated them to work harder, but two other employees feel underappreciated and are now selling less products, which could end up lowering the stores overall productivity.
Can your payroll afford It?
You have to set so much aside from your revenue to cover your payroll, and giving someone a raise will require more to be set aside. If the owner decided to give each of the five employees a small five cent raise, it may not seem like much at first, but if they each work 40 hours a week, that five cent raise will turn into an extra 480 dollars spent on payroll each year. That is just for one year, what if they got another raise the following year? Payroll could increase even more than it did the previous year.
Is the employee consistent?
One of the five employees has been putting extra effort into their work lately, and over the last couple of weeks have sold more products than usual. This is a topic where one of the mental biases we spoke of earlier comes into play. The human mind recalls recent events in a sequence most clearly, followed by events that occurred at the beginning of a sequence. Finally, events in the middle are commonly the most difficult to remember. Instead of judging an employee on recent work, look at their work history. Do they tend to go up and down in their performance? Are you about to give them a raise for working harder just to have them slow down again?
Do you want to Reward, or Motivate?
A couple of these points have included rewarding an employee, but what about motivating an employee? While a reward can definitely motivate an employee, a raise can also be used solely for motivation. The promise of a raise can cause an employee to steadily work harder and be more productive, especially if the promise of more raises down the line exists, whereas a reward may only motivate them for a small amount of time. Of course, this idea also falls beneath the question “can you afford it?”. You don’t want to make a work based promise without certainty that you can keep it. You could end up losing an employee.
These are the basic questions that will form a good foundation for deciding rather or not you should give an employee a raise. Using this as a guide, our little Palm Coast business can continue to prosper while rewarding it’s employees accordingly. Your company can follow this example and prosper as well. Giving a reward to an employee such as a raise is more than just a matter of payroll, it also falls under the scope of employee management and human resource management. When it comes to matters such as this, you can place them in the hands of an experience team such as the one at Vision H.R., who have a highly trained staff that can handle any Melbourne Fl payroll services you may need and make your decision making simpler and stress free.
