Time to give out a raise! Yes, a RAISE! Hiring and keeping your superstar staff is crucial, especially in today’s hiring market. Today we are going over how and when to give your employees a raise.
I don’t randomly give raises. There’s a method to my madness on how I do this. If you wait for people to ask you for a raise, you’ve made a mistake. It’s a very difficult hiring market right now.
Let me give you a few of these tricks to knowing when you might want to give a raise. I’ll also tell you how I would get a raise. If you walked into my office tomorrow and you could do this, I’d hire you.
When to Give a Raise?
You give a raise when they have a skill that you can monetize.
If you were a plumbing company and you could hire a plumber and you could build them out at $150 an hour and you could pay him $35 then you have a four-to-one ratio.
You can monetize them.
It’s just a very simple math problem.
So if you can monetize talent that you have, you can make money with the margin. There’s a spread there and everybody knows what spread they need. Every business is different. I’ve done businesses where the spread wasn’t very good and I got out of those because I could pay somebody $20 an hour and I can maybe get $45. Then I realized I could pay people $35 an hour and bill $120 if the skill was more difficult. I wanted to get to really the very difficult people, and then I could build out a massive margin. I’d rather make $90 an hour profit, as opposed to $20 with the same amount of oversight.
Do they have a skill that’s hard to replace?
I use the phrase: It’s like trying to find a one-eyed leprechaun. I brought on a new staff member last week from North Carolina. I put him up in a high-level suite for the week. They have a fire pit and wine and all the rest and he was like, “Wow, you went above and beyond!”. And I shared with him, If you’re talented as I hope you are, this is going to be the easiest investment I ever make. We give them a seven-day trial, then we give a 30-day trial, and if we get close to 30, we relocate them. I’ve actually purchased two houses this year to create staff housing!
So as you can tell, I’m taking staffing very, very serious, and I’m looking at every option out there. Do they have a skill that’s hard to replace? In my business there are a few that are extraordinarily difficult to replace.
If you have that, I’ll give you a raise in that I’m going to pay you highest market value. In reverse, can you develop a skill that’s hard to replace? Now you’ve made yourself very valuable.
They solve problems for you.
Who solves problems for you?
I have a few people on my team that I can put a problem square in their lap and they can put it to bed. I have some that can get it 90% and I got some that can get it 80%. In my business there are some problems that don’t need the owner until the very end.
There’s a difference between managers and leaders. I need leaders. I expect my staff to be able to manage themselves and manage one other person that’s who we hire. Leadership is huge for me.