I talked with one of my team members about another guy who is quitting. During the talk, he mentioned that it might be because there was no pay raise for the past 2 years. These guys (one who I was talking to and another guy who is quitting) are very good at their job, work hard, and love the company and I think it's unfair not to give them any pay raise. I also think that this can actually be the reason why people are quitting.

I want to give background of the company. The company is a startup and there is no procedure about pay raise. As a startup, we need to save money wherever we can but this really affects the company because we actually end up spending more money recruiting people and time to train them.

I plan to talk to the owner (I report to him) about pay raise for everyone in my team but not sure if that is a good idea.

I am their manager and I got a good raise every year. I did not know that they never got a raise until yesterday. The owner takes care of pay raises. Since I have gotten good raises, I assumed everyone else did.

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    Has the employee who is quitting ever brought the lack of pay to conversation? This would change your approach for how you go about asking your manager. It's one thing for people to work and wait to be acknowledged, but it's another to actually ask your manager for a pay bump (within reason of course). One of the best things I've experienced at a company was having an open communication culture, that made me feel like my manager was actually in my corner when it came to wage conversations. – knocked loose Nov 8 at 19:50
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    Why do you get a raise (good one), and they don't? – BЈовић Nov 9 at 8:20
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    @AaronF how should he have known that they didn't get raises? (he didn't, as he said in one of the comments) – Ivo Beckers Nov 9 at 11:09
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    Because he is their manager :) – Martijn Nov 9 at 11:17
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    the term manager is very broad. at least where i'm from. But in most cases it just means (to me) that your manager is someone you report to and someone who makes the decisions about what you work on. And not really about the salary of the people under him. – Ivo Beckers Nov 9 at 12:02

Yes. As as manager, part of your job is going to bat for the people who work for you, and part of that is asking for pay raises. Especially if you are getting a good raise, you should be asking (and should have been asking) for a decent raise for your good workers.

If no-one was getting raises, that would be different, but as long as there is money for raises for managers, the manager has an obligation to take care of their workers, and pay raises are a very clear sign on whether an employee is valued or not.

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    @bharal fyi the phrase is per se, I believe – Sharlike Nov 8 at 18:18
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    @bharal You're very right that could be an issue; however, when you add up the cost to train a new employee to be as effective as the one which left, giving a pay raise can actually reduce the cash burn rate. It depends on how valuable that person's position and experience are to the company as a whole. – employee-X Nov 8 at 22:10
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    This is right, I'm actually wondering why the OP waited 2 years before thinking of it As a manager I'd be wanting the possibility/probablity of regular raises from the start, it gives me an extra tool to work with and benefits morale all around.. – Kilisi Nov 9 at 2:08
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    @Kilisi: I did not know that they never get a raise until yesterday. The owner takes care of pay raise and stuff. Since I have gotten good raises, I assume everyone else does – Code Project Nov 9 at 2:40
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    @CodeProject maybe you should talk about lack of such knowledge too. You should be aware how your team's salaries compare to the market and you can't do without such knowledge. Also keep in mind that replacing a (good) employee usually costs more than offering a raise to the existing one. Only if the employee is seriously overpaid this isn't true. – Ister Nov 9 at 9:09

Don't talk to the manager about "a" (singular) pay raise for your staff. Talk to him about what the policy will be for implementing raises - typically, organizations pay out a cost of living increase on a known, regular schedule (ie annually) plus merit increases for strong employees, plus promotion increases when a title changes due to someone taking on more responsibility. It sounds like your organization doesn't have any of these standards in place.

It's fair to represent to the owner that you know of frustrations among the team due to lack of raises recently, but you want to solve the problem for good - not just for now. Getting everyone a raise right now doesn't really do anything except postpone the conversation about raise policy until the next time people get upset.

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    This... particularly cost of living increments. 2 years without a pay rise pretty much means your effective income has dropped 4-5% over that time. And you have developers that have gained 2 years experience, and could probably get a 10% hike if they moved. – HorusKol Nov 8 at 21:00
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    Having been in this position (minimal to no pay rise for four years!) the jump when I got a new job out of frustration was pretty impressive. I went from 24k to 28k by moving to a job that was less demanding. Never let an accountant run a company. – Ruadhan2300 Nov 9 at 9:12
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    No raise = under-performance. If you get a D- on a test and nobody tells you why, it tends to piss people off. – Nelson Nov 9 at 11:14
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    @Ruadhan2300 I did the same as well (37 to 53). If your employees recognize that you're going to bat for them as well, you're more likely to have good productivity from them. It's much easier to work knowing your manager has your back in all aspects than to be worried your manager is just out to collect a paycheck. – Anoplexian Nov 9 at 18:51

Yes.

  • Pay rises will probably be good for your team's morale, which may mean they work more efficiently.
  • Pay rises may keep employees in the team, avoiding time and money spent on recruitment to replace those who leave.
  • If your team work out that you're standing up for them, they may be more loyal to you, which benefits you personally (now and perhaps in the future) and the company too (if their loyalty to you inspires them to work harder for the company).
  • If people are already leaving over pay, your boss needs to know that there is a problem, and what he might need to do about it. In a small company, key people leaving could be an existential threat.
  • It would benefit your own career enormously to understand the budget available, perhaps with a view to taking responsibility for it later.

But...

  • Budget constraints may make it not possible. Replacing staff is more expensive in the long run, but the long run comes later. There might not be enough in the bank to offer rises right now.
  • If asking for a rise gets nowhere, or doesn't get enough for your team, you will need to act as the face of the company when your team ask about a rise. You can't say "it's not my fault, it's the owner's fault!" You represent the company and may have to deliver - and justify - bad news... even if you don't agree with the decision... even if you fought against it.

And...

  • Might you be able to propose other benefits that might be almost as valuable to your employees as a rise, but which are more palatable to the owner? Schemes like Perkbox (I have no affiliation with them, other similar schemes are available) can save your employees money, which isn't as good as giving them more money, but costs your company less. Or perhaps arrange partnerships and discount agreements with other local businesses, or get money from the budget for regular social events for your team... that kind of thing. Some of your team might really appreciate the company treating the team to a social trip out once a month... others might say they can't pay rent with 2-4-1 cinema tickets and insist on the pay rise. But it's worth a try.
  • As suggested in a comment, if the startup shows promise, some employees may accept stock instead of money. Not all will - it's a gamble - if the company succeeds, the stock may be worth a lot of money later. But if it fails, the stock might be worth zero. Some employees might take the gamble. Others might not.
  • Good point that manager will be the face of a company if things will go wrong and will take responsibility. However, discount cards or cinema tickets don't give solid company impression if it can't give decent salary. – Justas Nov 8 at 23:11
  • A decent salary is the better option, yes. Lacking that - or in addition to that, why not! - other benefits can feel valuable to employees. Google offer a great many company benefits, for example, and most of them cost the company very little: uk.businessinsider.com/cost-benefit-of-google-perks-2015-4 – BittermanAndy Nov 8 at 23:33
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    It's been a while since I saw a manager defend an apparently bad decision made up higher. The manager has to deliver the bad news, but not necessarily justify it. Also, if the startup is promising, handing out stock options might be an incentive. It's cheap now for the company, if it's temporarily short on funds. – David Thornley Nov 8 at 23:42
  • Good point about stock, I'll edit that in. I think sometimes a manager has to be "the bad guy" and justify company decisions he doesn't agree with, but that's a whole other conversation. – BittermanAndy Nov 8 at 23:51
  • @BittermanAndy A manager has to hand down company decisions and enforce them, and that can amount to being the bad guy. Usually, no justification is necessary. – David Thornley Nov 12 at 22:16

Yes, you should. Ideally, a person should know company politics before joining - what results are expected and what can be achieved. Especially, if you want to work with top performers and people who care about company - if they won't get reward, you'll be left with mediocre who can't find job in other place - and it may cost more.

It is also a question why you're getting a raise and others not. Maybe you are managing team in such way that it is cheap and stable?

There are other things to consider: If employee will continue to work, is there any room to grow for him in the company? Can company easily replace an employee? Will extra cost give extra value? Can old/new employee bring new energy or ideas?

It sounds like what you really need to do is not so much negotiate a pay rise on behalf of your subordinates as to lobby for a system of pay review to be put in place.

The conversation may go along these lines :

  • We have a problem in that our pay structure puts us at risk of losing employees to our competitors and may be affecting staff moral.
  • I think this is the case because several of my team have raised it as an issue and A and B have left recently citing this as a particular issue.
  • This is costing us money in terms of recruitment costs and lost productivity (give quantitative evidence) .
  • Every time a staff member quite it costs us X dollars in recruitment costs and lost productivity whcih is equivalent to a Y% pay rise for all staff.
  • Costs in staff productivity are harder to calculate but in may opinion may be even higher.
  • Therefore I propose the following...

Ultimately, an employee's salary should be a reflection of the value that they bring to the company, which should be defined by their skills. As a manager, if you make a consistent effort to increase the relevant skills that each employee has, then it becomes a very justifiable ask for your management. In two years time, for example, an employee can be far more skilled than when they started and have the capacity to bring much more value to an organization, thus they should be getting paid more. Transparency in this will actually motivate your employees to learn more.

For your specific situation, I would absolutely ask for cost of living raises at a minimum. I'd probably ask for a base line raise of some percentage. Then, I would implement a skill development program to your leadership and tie that to compensation increases.

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You should not. You must consider that the reason you got a good raise is because your team did a good job without the owner having to give a raise to everyone. The reason companies gives huge money for board of directors is because it is much cheaper than paying a good salary to everyone as long as they make the employees give more for the same money (or less money or less employees...).

A manage must only take care of their own interests and those of company. You are not a union representative you are a company manager. Good managers suggest downsizing, cutting costs not asking for raises for everyone.

I know this sounds very cynical, but you don't want to be fired do you? And yes, I don't want to have a manager like this, but that is also why employees don't choose their manager.

It also don't mean you need to be a monster to be a good manager. You can and should ask for investment in things that makes employess more productive. It is much cheaper and more effective than giving a raise (whose effect is very short, since people get used to the new level quite fast and start to think they should receive a better income and so on). Most of the times employees leaves they jobs because of bad working conditions, unless your company is paying well bellow the market average.

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    A manager who looks out only for themselves and the company will become less effective. It's usually better to motivate people by getting themselves to align with the company goals than to make demands on them - particularly when the situation is causing expensive turnover. In this case, the low pay is hurting the team. – David Thornley Nov 9 at 23:53
  • what a terrible answer: dont give them raises, just be selfish – Pixelomo Nov 12 at 2:29
  • "employees don't choose their manager" - yes, they do, and the way they do this is by quitting if you don't treat them well. Treat them badly and you end up managing either no-one at all, or only those incapable of getting a job elsewhere. – BittermanAndy Nov 14 at 10:42

It really depends on you relationship with the owner and how you go about doing it.

Personally, I would not go ask the owner to give raises to everyone on my team. This is essentially asking the owner to take money out of their own pocket. Remember, this is a start up. There is a very good chance the owner can't afford raises for everyone. I would not do this unless you were willing to take a pay cut in order for them to get the raise.

What I would do is talk to the owner about the fact that you have heard someone is leaving because they have not received a raise. Even go as far as to highlight the loss the company will incur if this person leaves. Then, let the owner decide what the next course of action is.

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    maybe my answer isn't clear enough: don't go asking for raises if you don't have a way to recoup the cost. The company is start up and more than likely, can't afford to give everyone yearly raises. Its pretty easy to go in there and ask the owner to take money directly out of their pocket to give to someone else. I wouldn't do that unless I was willing to do the same. Instead, present the issue and let the owner make that decision. – SaggingRufus Nov 8 at 17:31
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    @Bilkokuya ill try to see if I can edit it. I understand where you were coming from. – SaggingRufus Nov 8 at 17:38
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    i think its fine for a manager of a team to argue for raises for people on the team, regardless of the company's position. the manager is, effectively, the ceo of that team, and has to push to get the best results possible. if that means ensuring a higher salary to maintain quality, then so be it. the owner/snr manager can push back, of course, based on the needs of the company vs the needs of the company from that team. – bharal Nov 8 at 18:12
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    @SaggingRufus I don't follow. If the manager won't stay when given a pay cut or not given a raise, that's just what the managees are doing. The manager isn't trying to talk people out of quitting for better pay while getting a raise, and so is doing what he or she is expecting employees to do. If you're talking about a pay cut for the owner, that's ridiculous. The owner(s) get paid out of revenue minus expenses, and if people contributing to the company leave because of low pay, then revenue is going to go down if they were worth hiring in the first place. – David Thornley Nov 8 at 19:21
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    @SaggingRufus That makes no sense. It's not this manager's job to manage the corporate finances. There is no reason why costs need to be held at some arbitrary level. They need to be justified, but OP has a good justification. This is not asking the owner(s) to take a pay cut - and, even if it was, the owner(s) take the risks involved in business, and the employees should not be expected to take the risks without having the same rewards. – David Thornley Nov 8 at 21:14

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