Human Resources
How to Determine When an Employee Deserves a Raise
Written by Anna Lempereur for Gaebler Ventures
When should you think about giving your employee a raise? What makes an employee eligible for a raise? Find out how to give your employee the raise they deserve.
Giving an employee a raise is an important part of owning a business.
Giving raises to employees will show that you have been recognizing their hard work, and remind them their job performance is being rewarded.
Why Should You Give Your Employee a Raise?
Many employees expect raises after at least one year, and some tend to leave companies if they feel as if they are not being paid enough.
If your employee personally asks you for a raise, definitely take that into consideration. They are most likely asking for a raise because they feel like they have done something to deserve one.
Remember that gratified employees will have the incentive to perform better, which will help improve your company and keep everybody satisfied.
What Makes an Employee Deserve a Raise?
You should only give an employee a raise when they clearly qualify for one. Here are some tips for when you should consider a pay increase:
- Employee has Been Working for a Long Period of Time. If your employee has been working for a significant amount of time, it is definitely time to consider giving them a raise. Loyalty is something that makes an employee eligible for a raise. After one year, you should give your employee a three to five percent raise.
- Good Job Performance. Your employee must perform tasks well in order to qualify for a raise. Always set high standards, and when those standards are met, that is where a raise comes in. Employees doing a great job should get close to a three percent raise; employees who are doing an exceptional job should get a raise near five percent.
- Good Sales Performance. Like job performance, an employee who can bring in a significant amount of sales into your company, deserves a raise. Employees who bring in many sales should get a raise around three percent, while employees who bring in the most sales should get a raise close to five percent. Make sure your employees are rewarded appropriately.
- Employee Contributes a Unique Talent or Ability. Does your employee have any unique talents or special qualities they bring to your company? If you recognize something in your employee that makes them stand apart, you should show your appreciation with a pay increase. Not only will the raise indicate their hard work has been paying off, but it will give them an incentive to keep it up.
Be Sure Your Company Can Financially Handle Raises
It is essential to thoroughly determine if your company is financially capable of giving raises.
You do not want to lose a significant amount of profits from giving raises to employees.
To prevent this, begin with small wage increases until your company can handle something larger. Make sure to take care of your strongest employees first, and then worry about the rest.
Anna Lempereur is a freelance writer interested in writing about small business. She is currently a Journalism major at the University of Albany in New York.
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