One of your most important responsibilities as a leader is to make sure your team members are compensated fairly. That can be especially challenging when job responsibilities and market conditions change.
On this episode of The Clarity Advisors Show, host Ken Trupke shares the story of “Jacob,” a leader who has been approached by his teammate, “Riley,” who is asking for a 25% pay increase.
Ken helps Jacob determine whether the pay hike is warranted by considering Riley’s job performance along with factors such as the cost to replace her and how she fits with the company culture.
Episode Quotes
[You don’t have to] deal with the situation on the spot. You can always say, ‘Let’s schedule a meeting to talk about that,’ and buy yourself some time to get prepared.”
“When you’re thinking about the marketplace and that trade of value, think in terms of replacement costs, not that people are interchangeable. (They’re not.)”
“What you’ll see in cultures that aren’t healthy and where communication isn’t solid [is] the person will just quit.”
“[Don’t] make compensation adjustments based on need. The equilibrium is based on value for value. What [they’re] going to do with the money doesn’t really [matter].”
“It rarely works out well when somebody’s only staying for the money, or if you keep people by offering them more money. Ultimately, they’re going to leave for the same reasons they were looking to leave in the first place, or they’re going to stay and be unhappy because they’ve got these golden handcuffs.”
“There’s more to compensation than the base salary, and there’s more to work than just compensation.”
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