Think Twice Before Giving Managers a Pay Raise

Think Twice Before Giving Managers a Pay Raise

Employee morale can sometimes be directly related to how much an employee is paid in comparison to someone else.

And while most employees will understand the pay hierarchy in a company or business, it places a burden on a manager when he or she decides to take a raise.

How should a manager of a company tackle this so it doesn’t harbor ill feelings among employees? Here a few tips to consider before making the decision. (Trust us, you’ll be glad you did.)

Think About How Employees Would React

Entrepreneur.com recently gave out warnings to managers on how they should tackle giving themselves a raise. The most basic of those warnings was in gauging exactly how the employees would react to a managerial raise. It ultimately depends on what type of company it is. In a startup, a manager taking a raise above his employees could potentially cause a revolt.

For larger companies, it’s best to include founders or investors in the company when the thought of a raise comes up.

How Much Work Does the Manager Do?

If the old adage of being paid what you’re worth means anything, then a manager who takes on multiple responsibilities has a right to a raise. In those scenarios where the leader takes on more than he or she can sometimes handle, there shouldn’t be any arguments about who gets a salary spike. However, this should be proven in meetings with fellow employees so there isn’t any skepticism.

Base Raises on What Others Are Getting Paid

If other managers are in the company, basing a personal raise based on what the others are getting paid can help considerably in making it fair. This can also be applied when a manager gives raises to employees. Someone who’s been rewarded in the company with a raise for outstanding work can set a high bar for other raises at every company level.

Base the Raises on the Company’s Profits

A manager who takes a raise when profits aren’t up can send employees into a panic about the future of the company. That can destroy employee morale more than anything and unravel the business with employees fleeing to other jobs. For startups, it’s best if managers live on as small a paycheck as possible so the business can stay in the black until becoming more successful.

Obviously, any increase in pay for any employee should command thoughtful consideration. However, when it comes to management, the decision becomes that much more vital to your success.