Small business owners: Is it possible to turn down a request for a raise from employees, yet maintain workplace morale? On the flip side, have you been turned down for a raise, but stayed in your position?
posted by anonymous to work & money (42 answers total) 15 users marked this as a favorite
I run a small business (5 full-time employees) in a niche media/arts industry, and in the past two weeks, two separate employees have come to me (one on the verge of tears) requesting a raise that I simply can't afford, and I'm at a loss on how to properly respond and proceed.
I understand that salaries are a very difficult subject to discuss and are dependent on a myriad of factors including geographic location, job description, relative value to the business, etc, however I was wondering if anyone else has been in a similar position (on either side of the fence) and was able to handle it gracefully.
Both employees are in their mid to late 20's, and have been with the business for over a year and are absolutely great at what they do. They are definitely hard workers, and have brought a lot value to the business through their own networks and relationships. I have provided them both with detailed job descriptions that give objective criteria on what defines the standard of their work, and have conducted reviews at set 4-6 month intervals and adjusted salaries upwards on those occasions, in some cases over 10%. I have put a great amount of time and effort into training them, and into giving them their independence to have ownership over their areas of the company, and very much want to hold onto them and make them feel valued.
That said, we are a very small business, and pretty transparent. Everyone knows how much the business is billing and spending for the most part, and while we are definitely growing and profiting, I have been putting that money back into the business to grow it.
I drew on my own experience of being an employee and set up what I feel to be a very positive office environment. I'm often the first to arrive and the last to leave. I'm not strict with hours, and very respectful of personal time requests. I offer time in lieu, ample vacation and sick days. I try to offer generous perks and take my staff out for lunch or other activities as much as possible. The training they receive will enable them to move onto much higher positions as they continue their career, and I am under no illusions that they will eventually move on. The worst thing that I probably have done as an owner is try *too* hard to be a nice boss. I also know from my experience as an employee that it can be very easy to think that your boss is just being greedy and how that can turn you really sour, when the reality is that I don't take home a great deal much more than them, and that with taxes and our other expenses, I am honestly paying them as much as I can without stressing our cash-flow to ensure they have steady income. At the same time, I am older than them, have owned the business for much longer than they have been working in it, and am therefore able live a different lifestyle which is by no means extravagant, but definitely bears some signs of financial success, which I am already pretty self-conscious about.
I told both individuals that I would be taking time to figure out how to best respond to this, as we're a small team, and emotions can run very high and affect us as a group.
I've been considering things like cutting my own pay and giving it to them, or offering other incentives such as bonuses or commissions, but I'm wary of being on a slippery slope. Futhermore, I've looked at job ads for similar positions in similar areas of the industry, as well as talked to close friends, and feel that I can objectively state that the salaries are fair and in some cases higher than the market value.
If I had the money, I would give them a raise, but it's simply not there. For some reason I think they just wouldn't believe me if I said that. I tried looking at the root of the issue and seeing if there could be anything else that is really bothering them, and I'm honestly am not sure. Some part of me feels that there is a level of naivety in them in terms of the reality of what wages are like in a niche industry, or that they might be trying to live lifestyles that they simply cannot afford, but bringing things like that up will definitely not be constructive in terms of trying to resolve this conflict, and it might also not be true. At the end of the day, each approach that I have come up with comes off as being too defensive.
There is obviously a lot more nuance and detail that is in this situation, but for the sake of the question, I just wanted to throw open the question broadly and hear about other's experience being on the other side of this type negotiation. Even if you are not an employer, but an employee who has have a raise request turned down, has this ever been turned around into an amicable solution? Help!