How do I handle frequent requests from my staff about pay raises?
Answered by Debra Thompson, President, TG & Associates

It seems that my employees are always coming to me and asking about pay raises. Do you have any suggestions on how I can handle these requests and get my situation under control?

What you describe is a common problem for many businesses. When setting up the business and bringing on the first employees, there are rarely processes in place that spell out the way compensation is handled. In the absence of procedures, employees can invent their own timetables for getting pay increases, as well as their own rationale for a particular increase. The solution for the business is to define a policy that is clear and then stick to it.

Before I get too far in setting a policy, I would like to suggest some forms of compensation and ground rules to consider when creating the policy. Clearly, the area of compensation can go to great depths as it comprises benefits, personal/vacation pay, 401(K), travel reimbursement and so on. In this response, I want to focus on just three areas of compensation where issues seem to occur most frequently in businesses:

So how do you make it all come together? First, your policy must address clearly whatever compensation methods you intend to use. Specifically define bonuses and results sharing in terms of the performance period and the results required to trigger those rewards. They must be spelled out in advance and should reflect a challenge clearly so that employees understand that effort is involved in receiving them. Be careful that you do not set the goals so low that bonuses and results sharing are rewarded habitually and therefore become an expectation. Once workers anticipate regular rewards, any period that results in a no-bonus situation will create some hard feelings.

I would encourage setting a specific time frame for merit increase awards. By scheduling them to follow shortly after the annual performance reviews, each and every employee will know how they did against their job description and their individual performance goals. After all reviews are completed, meet with key managers to rank the order of employees in an objective manner that truly reflects their relative performance. Then allocate your merit budget with the highest performers getting more. For example, if you budgeted a 4% increase in your total salary base for merit, then high performers should receive 6% or 7% and lower performers get 2% or even 0%. This is a tough process that requires you to stick to your guns.

The bottom line is that compensation is a performance-based reward. No matter how tough life is for the employee, do not base bonuses and merit on a hard-luck story. If an individual’s performance does not warrant an increase or reward, then don't give it. As I stated at the beginning, the key to compensation is defining a policy that is clear, then sticking to it.

Good luck,

Debra Thompson is President of TG & Associates, specializing in Human Resources for the graphics industries. Debra is the winner of the 2003 PrintImage Industry Award of Distinction. She can be reached at 877-842-7762 (toll free) or Visit for more information on hiring and developing top performers.
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