Why Not Giving Employees a Raise Can Cost You a Fortune
I receive tons of email (email@example.com) from people asking how to manage workplace situations. While bad employees are just as prevalent as bad bosses, these people are asking about their bosses. If you see your own actions reflected in these emails, stop it!
This employer doesn't respect talent:
I have a puzzling situation at my job that I don't know how to approach. Recently, I was in a role where my job was re-evaluated and it was decided that my function and job level should be higher, based on my work. With that being said, I was re-leveled to a role one position higher. If I had applied for that position, I would have received a 10 percent raise. But I was told that since I was already in the role, I didn't qualify for the raise. To me this doesn't make sense. Even though my salary range increased, I was shafted from missing an important raise while moving up the stagnant corporate ladder. Do I have anything I can do?
This doesn't make sense, but it's pretty common. Oh, look! You're doing a ton more work, and if we had to replace you, we would have to do it at a higher salary, but we know that finding a new job is a pain in the patootie and so we won't give you a raise. Seriously, this is the message these bosses are sending.
Now, I understand the business reasons--it's not like you're made of money. Plus, many companies have salary-increase cycles, and if this re-leveling took place outside of that, there isn't a pot of money set aside for raises. Give one anyway. If not, you'll lose the respect of this employee. Sure, she may stay longer, but she'll resent the heck out of you, and that's not what you want. In fact, if you follow that course, I'd encourage her to start looking for a job that will respect her skills and work ethic.
This employer discourages open communication:
Our company does raises in February. While speaking with my supervisor over the last couple months, I mentioned a potential of relocating due to personal reasons within the next year, but never confirmed it would be a definite. As a result, I was not given my pay bump in February because of the POSSIBILITY of me leaving. I can understand where they're coming from, BUT what if I don't leave the company and they are withholding this from me? Are they required to make up what has been withheld from me? Everyone else received their annual increase, but I didn't because of the above. I understand this is a lesson learned the hard way, but since there's no proof I will actually be leaving can they do this?
On the one hand, why would you want to give more money to someone who has already expressed interest in leaving? On the other hand, wouldn't it be totally awesome if you knew your employee's career plans so that you could plan ahead? Look, people will leave you. Traditionally (and ethically, absent extenuating circumstances), all you get is two week's notice. Is there any professional job where you would be able to source, interview, select, conduct a background check, negotiate and offer, and have that replacement trained and ready to go by the time the two week's notice period is up? No! So it's to your serious advantage to be supportive of your employees who give you this type of heads up.
In fact, you want to make it clear that you encourage your employees to speak up and that you won't punish them by withholding raises or firing them if they tell you they're thinking about leaving. Guaranteed, this employee will mention to her co-workers what happened, so they'll all think twice before giving their managers a heads up.
(And just to answer the original question, the company isn't required to make it up. Raises are optional.)
It's not just about saving a few dollars.
The employers in both these situations thought they were being so smart in saving a few dollars. By denying raises to two employees, they can pat themselves on the back. Smart moves! Except that they've set up a situation where employees know they aren't valued. And not just for these two employees--all the employees will feel that way.
Remember, turnover is very costly--you can spend 150 percent of the salary just the replace the person--and, you'll have to replace the person at the higher salary that you're withholding from your current employee. And it's not just these two employees that will have negative feelings towards you after the raises are denied. Their co-workers will hear about it and not be happy either.
So, over all, these attempts to save a few bucks may backfire in a big, expensive way.
Have a workplace dilemma? Send your questions to EvilHRLady@gmail.com.
SUZANNE LUCAS | Columnist
Suzanne Lucas spent 10 years in corporate human resources, where she hired, fired, managed the numbers, and double-checked with the lawyers.