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Lately, I encountered an interesting, yet complicated situation.

At the meeting, which - lets say - had some of the characteristic of employee evaluation and budget planning meeting, management met with an employee who hasn't been given a raise for a long time.

She felt that she was not appreciated and her value wasn't recognized.

Management shared the view and agreed to be partially accounted for omissions or failures. As I am aware, the emotions were properly addressed and apologies stated.

But, the problem is, in order to fit in a budget and have a salary plan that is fair and square management can not give her a raise...

It looks like a lose-lose situation. Of course, I have a bunch of ideas inspired by it, but I would like to hear your suggestions.

What's your suggested approach? Can it be turned into a win-win situation?


Edit:

Is looks like the subject needs some clarifications in order to improve helpfulness of the answers:

  • As I am concerned, a salary level related to a position we are talking about, is externally just and attractive.
  • A gender of a person is out of equation because of two reasons. First, both genders are paid equally. Second, I choose to refer to such person as "she" because an impersonal construction is (in English) rather uncommon and I don't feel convenient using it.
  • As I am concerned, this person is not paid unfairly nor the entire group is. We can probably argue how much of a salary should be related to skills and responsibilities and how much to years of work. Nevertheless, there is no significant change in her responsibilities or skills that would justify a rise. She was paid more than others for a time being and it's a sum of many events that led to a current situation. Events that both management and employee partaken and agreed to.

Commenters seem to focus on a presumed management-employee conflict while it's not the main part of the question. Both parties understand the situation and understand importance of the conditions which are in place. I believe both will appreciate any solution which could make employee feel more appreciated and her value more recognized without making whole salary plan unfair.

I look at it as an opportunity to learn and introduce any valuable insights to both parties involved.

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In a successful organization, there is almost always room (read - profit) that could be re-allocated to the employees. The management simply does not want to feel cornered and responsible for past errors. –  Deer Hunter Dec 15 '12 at 9:45
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If she has asked for an increase, and they said "Sorry, can't", then they are sending her a strong message: "please go away, you aren't really wanted here." She will probably be much happier if she does. –  kevin cline Dec 16 '12 at 19:11
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You and this coworker need to learn about pay leveling. Generally speaking, at bigger companies, each position has a pay range with an assigned average. This range/average may change depending on market conditions. Anyways, the idea is that if you are making less than average for the salary (say 90% of average) then in addition to your earned raise, you will get an extra 10%. ie. instead of 3% you get 3.3%) since you are 10% under the average. Anyways, problems occur when you get well above this average. Then you either get no raise or very little because they deduct the percent above the... –  Dunk Dec 17 '12 at 20:48
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average from your earned raise. The idea is to eventually get everyone with the same title to be getting about the same pay. Anyways, in many cases, this means that unless a person is promoted to a new position they could essentially no longer receive any raises once they begin to top out. Generally, management has little leeway in this manner. The only way around it is a promotion or the average salary goes up. Which certainly isn't going to happen in this day and age. Anyways, if your coworker hasn't gotten a raise, most likely it's because they are already well paid for the position. –  Dunk Dec 17 '12 at 20:51

5 Answers 5

up vote 9 down vote accepted

The statement of 'to fit in the budget' is critical here. The organization is making a decision that this particular individual is not important enough to find the money in the budget. A budget is a plan and plan's have variances. Already, there is likely some favorable variance that can be taken advantage of to "find" the money to support her salary. Or, you simply exceed your budget a bit in order to maintain a desired resource at the appropriate cost for her.

The only time you really can't afford that is when you are having difficulty making your payroll. If this is not the case, then the organization is providing a clear message.

On the other side of the coin, she is making choices, too. If she is choosing to stay at that salary level, and no raise is forthcoming, then she needs to stop complaining and do her job. Else, she can hit the streets and look for a better price for her services...unless this organization is the military or in the confines of a penitentiary, which I don't think is the case.

So the company has to really think about this. If she leaves, they'll really blow their budget to replace her, both with acquisition costs and likely a higher salary.

Edit based on the additional information provided: So she and her colleagues are getting paid a competitive salary as compared to the market place such that neither she nor her colleagues would be able to get a material increase if they moved to another organization. So it sounds like there is some degree of morale issue that is manifesting itself through a wage discussion. If that is true, that would not be uncommon manifestation. Since money is not really the issue, take it off the table and look for other drivers of discontent that is plaguing the organization.

Once money is satisfied, and it sounds like it is, focus on the three leading drivers of motivation: mastery, autonomy, and purpose.

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I don't know how it works in Poland, but in US there is variability in pay in any given job family. Your original note suggested this one person was paid unfairly, not the entire group. If the entire group is paid unfairly, you still have an issue. Either go at risk and hope people don't jump ship or adjust and take a hit to your budget...which is called a variance, I guess a big one in this case. –  David Espina Dec 15 '12 at 14:36
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@BartoszRakowski - If she's more valuable (does more work, does more difficult work, has skills that are harder to replace) than others in related positions then how is it unfair that she is paid proportionally to that value? –  Telastyn Dec 16 '12 at 17:31

Whenever I discuss my feelings about my current position with my peers, I base my explanation in three main pillars:

  • Project
  • Company
  • Finance

When at least one of these pillars isn't going well (OR the person is frustrated with the current project OR isn't happy with the current salary OR hates the company organizational structure, for instance), it's ok (actually, having something to complain about tends to be the rule, IMO). However, when the person believes that two of these aspects aren't ok, then a red flag is raised and actions needs to be taken by the person or by the company.

Having said that, the situation you presented clearly shows that the monetary situation of this specific member is not ok. How about the other two aspects?

If the other two aspects are fine and there's a mutual confidence between parts, it's a matter of being candid, explaining that the company is aware of the situation (already done) and planning for the future. Notice, it's a PLAN, not a PROMISE. There's a huge difference between these two words.

This plan may include the opportunities that MAY appear in the future and the POSSIBLE adjustments done to her payments.

Once this planning is presented to her, is her turn. Now, she'll be able to assess if the company's plannings matches her expectations. Then, it's up to her to take it or chase something else.

Seeing the problem from other perspective, maybe there are things that aren't directly budget directly impacting that could be considered as motivators to keep the relationship between parties. Maybe offer some trainings, some days-off, some spare time for study... it really depends on each person's expectations and behavior.

Searching for non-financial alternatives to keep everyone happy (at least in the short term), may be a good proposal. The company benefits by having a more skilled professional and at the same time, the person gets motivated for having time to dedicate to some training, certification, studies or anything else that's good for both sides.

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Consider moving her into a different position with more responsibilities and a better salary. This looks like a win-win to me. I can't imagine a situation where there is no room for such things.

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Hi Steve, I agree this is a good approach, but I edited your post so it reads more like a statement than a question for the asker. I also added the information from the comments. Hope this helps. –  jmort253 Dec 15 '12 at 2:19
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It is also a face-saver for the management... Her example should also serve as a wake-up call to re-examine your standing salary policies and procedures. How come did she manage to slip between the raises? Are there any covert conflicts/cliques within the organization? Are there any other grudges that the managers have not yet detected? –  Deer Hunter Dec 15 '12 at 15:48
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Perhaps you could expand this on this answer more. Maybe share how this has helped in a situation you have had experience with. Or explain why you expect there is always room for someone to be moved into a different position with more responsibilities. –  ReallyTiredOfThisGame Dec 16 '12 at 2:30

If I'm interpreting this correctly, there's a variety of factors associated with changing money part of the equation here, so I'm going to assume that both salary and annual incentives are off the table. I'd bet that you may work in a big company where if you don't use a very regimented promotion, raise and incentive structure, you are in big trouble, and you MUST keep things very equal, so if you gave this person a raise, the need to treat others in the group/company fairly would actually case a cascade so big that your budget can't handle it.

For my work, I've found that there's a bunch of non-monetary rewards that I can adjust without causing too much of a corporate ruckus. Usability of any of these depends on both the employee and the company.

Title

In a promotion-tied-to-salary company, you probably have a set of very finite roles that you can't change. But often there are unofficial roles that you can give that have titles. Making the person an acknowledged "Subject Matter Expert" can be a way to go - if it's deserved, it helps the team by pointing out a resource, and it shows you appreciate her.

Similarly, you could make her a mentor or a "lead" (often used to connote leadership without management responsibility) for some area of the project. By taking on some more responsibility, you also position her well for a future promotion. The only trick is that for any title, the work and the title have to go hand in hand or it's valueless.

Status Symbols

Offices are usually the big ones - having a bigger space, or a closed door are often big marks of success in many environments.

But that's not the only one - being the first to get a new computer or any sort of awesome add-on equipment. Having the sought after schedule that only comes with seniority (more common with shift-work). Having other privileges of a "top performer" are ways to give your key people a bonus without taxing your budget.

Training and Acheivement Programs

Everyone should get a share of the training pool, but if this person has been underrewarded, you may want to look into training that will groom her for future success. Also, in big corporate environments there are often top acheiver programs that allow the company to highlight key employees and give them extra exposure, networking and information that highlights their capabilities and makes more opportunities available over time.

Management Contact

The more capable the employee, the more the typical manager/employee relationship changes from manager-directs, employee-follows, to a shared discussion of what the initiatives should be and how they are completed. It's usually a natural transition that can't be forced - if the manager doesn't trust the employee, there's no real way to move to a style of communication that requires high-trust. But sometimes realizing you haven't been valuing someone enough will show you that the communication paths can change. This one's tricky, though, as some managers will be very authoritative no matter who they are working with, and some employees will not respond well to a too-touchy-feely manager.

For me, a way to reward my really high-performing employees has been to extend this model to making sure I know what they are really excited about working on, and (where possible) doing a good job of giving them something really exciting and challenging.

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Have you considered instituting some kind of awards program with significant monetary benefits? If she does outstanding work she could get a one-time bonus for it and so could her colleagues, so that is fair to everyone, you only give the rewards for actual accomplishments that merit them. Give out the awards publicly and that is validation of the employee's value.

Another way to show that you value someone is to give her some interesting and challenging tasks, the kind you don't assign to just anyone.

If this person is a better performer than the rest of the group, you could consider adding Senior to her title and giving her a raise as she is in a new job description. With the Senior designationwould come the new responsibility to mentor the others and probaly new responsibilities in terms of handling more customer interactions or design responsibilities (depending on what kind of job she has).

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