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Handling Tough Money Talks With Your Staff

The end of the year is a good time to start planning for the all important performance (and salary) reviews of your staff for the coming year.

Planning your annual budget means looking at possibly rewarding performance from outstanding employees.

And explaining to the not so outstanding people where they need to improve in order to receive a salary increase next year.

When you’re having the “money talks” with your staff, some uncomfortable conversations are bound to occur.  Here are some tips on how to handle the most common compensation complaints from your staff.

“There’s No Way I Can Make Ends Meet On What You Pay Me”

First, don’t become responsible for your employee’s personal financial issues.  You can’t help someone learn to manage their money. That’s not your role.  You can be sympathetic, but you can only pay what you can afford to pay. 

If you want to keep this employee but your budget simply won’t allow you to give them a whopping raise, think of other ways to reward great performance.  Think about benefits that won’t cost you more than you can afford to pay.  Some suggestions are flexible working schedules, paid gym memberships (some will work with you on group rates and that will cost a lot less than giving a substantial salary increase), or even work share programs. Be creative to find ways to reward great employees without overextending yourself.

“I Make Less Than The People I Supervise!”

Before your head starts spinning with ways to handle this problem, make sure it’s a real problem.  Confirm that this supervisor is truly making less than the people who report to him.  If it’s a real problem and you can’t find a legitimate (business) reason for it, you need to remedy the situation and fix the problem as soon as possible. 

Now, having said that, if the supervisor’s reports work on commission and they’ve legitimately earned commission payments that increased their salary, make sure the supervisor understands that.  That’s a legitimate reason for the inequity in pay.

“If I Don’t Get A Raise, I May Have To Find Another Job”

Is this an employee that you would really like to keep?  If so, ask specifically what it will take to keep them on your payroll.  It may not be something totally out of the question.  If it is, try to work out a compromise that keeps the employee happy and doesn’t blow your payroll budget.  A combination of a pay increase with some non-monetary improvements like flex time or work share may be a good solution.

Above All, Don’t Panic

If you find yourself facing some of these conversations, recognize that it’s an uncomfortable place to be but you don’t have to fix the problem immediately.  Let the employee know that you understand their situation but you need to check a few things out and you’ll get back to them.  Set a specific time frame for your response and stick with it. 

And, if it comes down to dismissing the employee, talk to your legal advisor to make sure you’ve dotted all your “I’s” and crossed all your “T’s” and you’ve done what you need to do to stay out of court with a disgruntled employee.

Human resources issues are some of the trickiest problems you face as a small business owner.  Especially when they involve proper compensation for your employees.  Call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.  As your personal legal advisors we can help you avoid employment issues before they happen. Normally, this session is $1250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.