Doling out Raises

Once you're in management, one of the trickier assignments you'll have is determining raises for your direct reports.  It's an easy job to flub, which might either cause problems with an important subordinate or even get you in hot water with your boss.

Here are a few rules of thumb for putting together increases.

1.  The total of all direct report increases should be in the same range imposed on your business as a whole.  In other words, if the budget is a 3% increase, those under your direct control should also be subject to the same limitation.

2.  The raises should make sense relative to one another -- your best performer should get the lion's share of the increase, and your worst performer, the smallest.  This should, however, be tempered by the position of each subordinate within their pay range, and the real risks you have of losing someone critical to your success due to non-competitive compensation.

3.  Don't wimp out and fail to confront your weaker performers.  You'll regret it later, particularly if you decide you need to make a change.

4.  Get your boss's approval of all raises before talking to anyone about what you are planning.  Many bosses have a big need to fiddle with amounts, or want to argue specific points with you.  If you say anything ahead of time, you're putting yourself and your credibility at great risk.

5.  Don't ever make any concession to an employee that could be seen as a form of compensation without discussing it with your boss ahead of time and getting his/her approval.  This means any arrangement which involves travel, reduced or modified hours, incentive pay, or any other change that could remotely be seen as impacting pay.

Just like any other political hotspot where you can singe your fingers, I've learned a few of these rules by making mistakes.  And if you've followed this series of posts, you can probably already guess which ones -- yep, those that involve getting approvals ahead of time.  I freely admit I've always hated asking for permission to do what I've already decided is right.

In one of my jobs, I went through the entire performance appraisal process and raise cycle without once saying a single thing to my supervisor.  In that job, I was responsible for a stand-alone profit and loss business, and I did have an approved and budgeted overall increase for all employees.  And while I was able to keep the salary changes for my direct reports in line with the budget, my boss clearly wanted to debate each increase in great detail.  I later learned that the boss had his own favorites from among my staff, and he wanted to make sure those he perceived as "high performing" were rewarded with the top increases.  He also wanted to see that those who were at the bottom (in his estimation) received the message that they should begin looking for employment elsewhere.

The problem was, his opinions were developed based on little direct observation of their work (other than the occassional presentation), and reflected his belief that he was an oracle when it came to picking "A" players.  I can tell you from personal experience that he vastly over-estimated his abilities, much to my later woe.

Fortunately, I broke no rules by leaving him out of the loop, so other than a general question about my own perceptiveness and intelligence at not seeking his counsel, there were no major repercussions.  At least none at that juncture.  Soon afterward, it was codefied in HR's policies that all raises required a supervisor's sign-off.  No exceptions.

I also violated the last rule once, by allowing one of my direct reports to office out of a remote facility part of the time.  While I did get the agreement of the top HR manager in the company, my boss had other ideas about whether permitting this was wise or appropriate.  One of the dimensions I was attacked along as a result was the concept that allowing the employee to fly to the remote location during working hours was, in effect, a pay increase -- the "logic" being that those would have normally been hours when the employee was working.

The result of this fiasco was a two year campaign by my boss to oust the employee.  The entire episode wasted a lot of my time, and put me in a perpetually stressful situation.  While I was completely happy with the subordinate's performance, I found myself continually fending off attacks over trivial matters, and defending the arrangement I'd made.  In the end, I decided it would have been a lot easier dealing with the situation up front by discussing it with my superior.

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If you enjoy the ideas presented in my blog posts, then check out my other writing.


Corporate Thriller novels: LEVERAGEINCENTIVIZE, and DELIVERABLES.  These are all based on extensions of my basic experiences in the world of corporate management.