John Jonas explains how to give sustainable raises to part-time Filipino assistants. He recommends discussing budget with the employee and offering choices between direct raises or employer-paid benefits. His company typically gives annual raises of $25-$50 a month, with occasional larger bumps of $100-$300+ for strong performers.
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Welcome to the Secret Sauce of Outsourcing podcast that's dedicated to making you better at working with OFS online Filipino specialists. This is episode 214, how to calculate Reasonable Pay Raises. So I got this email after one of my podcasts recently from Debbie who has a this is really interesting about pay raises. So she says, hi John, I'm about to do a review with my assistant who has been working for me for four months and would like to reward her with a pay raise. She still has quite a bit to learn in her role, so I want to do it in a way that's sustainable, which I'm going to add to that. Yep, I get it. She continues, I don't want to create unrealistic pay levels that my business may not be able to sustain going forward as her knowledge and pay levels increase. As I'd like to keep her as a long term team member, she's part term, 20 hours a week by her choice, which suits me perfectly at the moment. Is it more beneficial to her to offer to pay her SSS or PhilHealth instead of a weekly pay increase, then do a pay increase at a later review point or some other combination? So to answer Debbie's question, there is no answer. There is no better or worse or correct thing in this situation. What I would suggest you do is you talk to her and ask you set a budget amount that you want to give this and you say, would you like me to pay your SSS? Would you like me to pay PhilHealth and Pocky Big? Would you like me to pay health insurance for you? Would you like a weekly pay raise? And you can kind of set what you want and in the end, all those things are kind of the same thing. You're gonna give her, you know, $50 a week in more money or whatever that amount is. So we don't really tell our people what raises are coming. We don't tell them how much the raise is or when they're gonna get it. So we do give a yearly raise and that amount depends on their performance and we also want that raise to be sustainable. So my team just knows they're probably going to get a raise at the end of the year. It will depend on their performance as business owners. We want to maintain that raise so that we can continue to raise it every year and it's sustainable for the business. So here are my general thoughts on giving pay raises. Number one, annually we give A$25 to $50 per month pay raise that is general across our team. However, sometimes we'll do a bigger pay, like 100 to 200 to $300 pay raise per month for people if they're really, really great. So if you're really amazing and you were making $600 a month, well, now maybe you're making eight or nine hundred dollars a month. And then as Debbie is suggesting, sometimes we'll start someone at slightly lower than what they want, what they're asking for. And then after three or four months, we evaluate how it's going. It's going well. Then we're going to raise them up to really close. To what? Close to or above or slightly below what they actually wanted to make when we were hiring them. And then there's the occasional, like one time I doubled someone's salary because they were so amazing and putting in so much effort. And I could see it. And so I doubled their salary. And that's actually happened a couple times. Once was in the very, very beginning. I don't really count that. When another time was later on, someone was so dang good. Yeah. And that's super rare. This year, 2022, we will consider a couple things. Number one, we'll consider inflation. In of terms, inflation has been rampant in 2022, including in the Philippines. And so their general salaries probably need a bigger raise in 2023. We will also consider that the US dollar is really, really strong. And throughout 2022, they've already gotten a really big pay raise, like a 15% pay raise. Historically, the US dollar is at 50 to 1, 50 pesos to $1. Right now it's at 58 to 1. So when we pay them in US dollars, they now they're getting 58 pesos for every dollar we send them instead of 50. That's a really big raise. However, I will also consider, I will not count that as a raise because at some point the dollar is going to weaken. It's going to go back down to 50 to 1 or below that. It's stuck at 46 to 1 for a really long time and that's a pay decrease. And so that's something to consider as you're moving forward with this. If you're considering that, oh, they already got a raise this year, well, at some point it's going to go down. So then are you going to raise them commensurate with what it with what the dollar, how the dollar fluctuates with regard to benefits for Debbie? So you asked should I maybe get pay them sss instead? So it took us a long time at onlinejobs Ph it took us a long time before we started paying benefits. There was nobody to tell me anything about it. I mean, I didn't. I didn't really know that it even existed. Obviously I knew it existed, but I didn't know what I could do. And so I talk about it and so you know about it. It took us a lot of years before we started doing that, and we just gave pay raises instead. We. Which is kind of what I'd suggest in the beginning. Until you're ready to commit to, like, paying benefits to people, I would just give a raise. Because in reality you're just giving a raise in the end anyway. When you pay a benefit, you're giving a raise, although you're not tying it to that thing. Also, benefits are just an optional thing, whereas, like, paying a salary is not really optional. Giving pay raises is optional. But it. It's kind of not. It should be done. Obviously. We're actually working on a complete guide to benefits, including, like every potential you could do and how it's done. That's not done yet, but we're working on it. It's going to come out. I do talk about a lot more cultural things that you can or should do or how I work through different processes. In my book, the Outsourcing Lever, which is available at outsourcinglever. Com.
