MBA1154 How to Handle a Request for a Raise

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Hey O welcome to the $100 NBA show where you come to learn how to win a business every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online. And in today's lesson you will learn how to handle a Request for a Raise in any business, at some point one of your employees or one of your team members is going to ask for a raise, especially if you don't have built in raises or increments within your organizational structure. And requests for raises happen all the time, regardless if they're consultants, freelancers, full time employees or contractors. You need a game plan to how to handle that request. You need to understand why it's happening, how to evaluate what you can and cannot do, and how to deliver your response to your employee. Hey, nobody wants turnover and hiring new people to replace positions is a big pain in the butt. But at the same time you got to do the best thing for your business. So we're going to strike that balance in today's episode. So let's get into it. Let's get down to business. So one of your employees writes to you, approaches you and says hey, I'd love a raise. The first thing I want to mention is that asking for a raise is not easy for most people. It's going to take a bunch of courage and thought and they're going to plan it out and it's really a bit nerve wracking on their end. It's important for you to understand their perspective, your employee's perspective. Why? Because you can capitalize on that Opportunity. And they're coming to you a bit of a nervous wreck asking for this raise. Your response is going to really, really matter. Now, when I say response, I'm not saying the yes or no, like, yes, you get the raise, or no, you're not getting the raise. But your general response to that request, that initial response really sends a message to your employee. So take note of that. And I believe that your response, no matter what you decide, needs to be supportive. Something as simple as, hey, thanks for writing in and bringing this up. You are totally valued in our team and I would love meet and discuss this matter. Does next Wednesday work for you? That's a good way to do it. Why? Because you're gonna one, acknowledge the fact that, hey, thanks for bringing this up. It's not a burden. You did the right thing by voicing your opinion. Number two, you're letting them know that regardless of what the raise is or what's going on, we value you. Thanks. Number three, you're setting out an appointment where you can discuss this in detail because, hey, a raise is not a yes or no type of thing. You want to have a bit of a discussion to find out how much the raise they're looking for when this kicks in, can we formalize this and have some sort of, you know, reoccurring raise? Or maybe we can break it down, maybe an incremental raise. And by setting a suggested time to me later in the future, it allows time for you to plan your response. Okay, so now that we have that initial response, they got the reply on email or even just if this was in person or in a call. Now, your job is to make sure you know what you can do. Now, for some people, they actually just tell you straight up in that first interaction, that first email, hey, I'd love a raise of X amount of dollars. And that's great because you could take that information and you can find out what's doable if that's in your budget. If it's not doable, maybe you can negotiate a way to make it doable. Meaning, let's say, for example, they're asking for an additional $5,000 a year. Well, maybe we can take that in steps. How about a raise now and then another one in six months after a performance review? So now we'll increase the 2500, and then it'll be another 2500 in six months. Now, it's important for you to sit down and look at the numbers and see what you can do. What surplus of cash, what profitability can you put back into making sure this employee gets what they are looking for or gets what they deserve. Now, obviously, this is all with the pretext that, hey, this person's doing a good job, you value them and they deserve the raise. That's usually the case. And if not, you can make them earn it by having what I just said before an evaluation period say, hey, love the idea of a raise, but let's see how we can make sure you work towards it whether it's within the next three months or six months. And that way it's not a no. That way you can actually qualify the raise. But if it's a straight up yes, take a look at your budget. If you have an account, find out you have the cash to do this at the end of every month and ask yourself, what's the return on investment when you make this raise? Well, number one, you have a happy employee and they continue to work hard for you. Well, number two, if you don't do it, they may want to look for another job and they'll leave your company. And finding a new employee can cost you just as much as the raise. I'm talking about just finding them, you know, spending the time to recruit and to interview and find the right candidate. So there is plenty of motivation for you to make this happen. So once you have your numbers in order and you have your plan in terms of is it raised now or in increments, you're going to sit down and you're going to meet with your teammate, with your employee. And when you give them your response, you always want to sandwich things. And we say, sandwich. The bread of the sandwich is recognition and showing them that you value their work and their contributions to the company. And this is a genuine thing. You want to make sure you start out with this and you end with this highlight why they're valuable, what are some of the contributions they've made and why you enjoy having them on the team. Now, in the middle of the meat of the sandwich, you're going to be giving your delivery of, hey, this is what I can offer you for a raise. This is when I can do it, this is how I can do it. This is in the case that you have the number that they've requested, they haven't given you a number. You can ask, hey, what kind of raise are you looking for, how much? And if that number is the same or lower than what you can do, then go ahead and continue as we discuss. But if it's higher, it's totally okay for you to say hey, thanks for giving me that number. I'm gonna go back, I'm gonna speak to whether it's my accountant, my co founder. I'm gonna see what we can do to make this happen or at least get close. And that way you leave a window of saying, hey, you may not reach that number, but you're gonna try your best and it sets up expectations. And then again you're gonna close with showing them how much you value them. Again, this is gonna be nerve wracking for your employee. So by sandwiching things and just being direct and straightforward and positive, you put them at ease.

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Requesting a raise can be very intimidating for your employees. It's sensitive, so you got to be quite careful with the way you deliver your response. This is not always easy because they might catch you at a bad time, at a busy time, or a stressful time. So be careful about your response. It could really affect the way they feel about you and your company. Remember, they're asking for a raise because at some level they're not totally satisfied with their experience at the company, even if it's just at the financial level. They're looking to grow and maybe get a little bit more cash in their pocket, but at the same time feel like they're growing in their field. They're growing professionally. So follow the steps that I outlined today and you should be good to go. Thanks so much for joining me. In today's lesson, if you love what you hear, drop us an iTunes rating and review. It's the best way to show that you love the show. Before I go, I want to leave you with this. As much as business is a mental game, it's also an emotional game. Not being only the master of your own emotions and how you react to things, but also the emotions of the people that you work with. I'm constantly trying to remind myself and I'm lucky enough to have a co founder like Nicole who reminds me as well that hey, sometimes people think differently, feel differently and you got to react in different ways. You can't expect everybody to respond to things the same way you do. So remember, it's not only IQ that matters. EQ matters just as much. Thanks so much for joining me. I'll check you in tomorrow's episode. I'll see you then. Take care.

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