MBA1390 Q&A Wednesday: My employee is asking for a HUGE raise. What do I do?

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Hey O. Welcome to the $100 MBA show, the podcast that keeps on giving every 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 $100 MBA, a complete business training and community online. And today's episode is a Q and A Wednesday episode on our Q and A Wednesday episodes. I answer a question from one of you, one of our listeners. If you have a question you want to ask, just email me over at omar@100mba.net Today's question is from Lee. And Lee says, my employee is asking for a huge raise. 40% actually. She's a huge asset to our company and I don't want to see this person go, but 40% is really above our budget. I even offered 30% and the person said no. What should I do? Great question, Lee, and I'm happy to help you and answer it right here on the show so others can benefit as well. This is a tough one. Of course we value our employees. Somebody who's a key player is, is somebody we want to keep. But when you're faced with this situation where somebody is asking for a huge raise and 40% is huge and it's outside your budget, what do you do? Are you forced to let them go? What are your options? That's what we get into in today's episode. We're only as strong as our team. How do we make sure we keep them if we can? Let's get into it. Let's get down to business. So Lee's employees asking for a 40% raise outside the budget. Lee even offered 30%. The employee said no. What should she do? First of all, I want to start by saying that at the end of the day, your job as the leader of the business is to make the right decisions for the business, not Only for yourself, but for everybody else who's involved now and in the future, you are no good. The business is no good to anybody if it's not around. You got to be sustainable. You got to make sure that you're making a profit and you're making sound financial decisions. So if it puts you in a spot that's uncomfortable that you can't afford that 40% raise, then unfortunately you're gonna have to say no, and you're gonna have to let go of this person. It's one of those tough decisions as a leader of your business that you're gonna have to do. These are the ones that we really don't look forward to making, right, these decisions. But of course, I wanna give you some options because you value this employee and you see them as a very important role, a very important person in making this business work. You've offered them 30% and they said no. So you can give them a counter offer, say, hey, I can do 30% now. How about we discuss the rest of the 10% a year from now? A year from now you can grow and maybe afford it, and you can put them on a contract and you can just write it up. A simple contract. Hey, this is your new salary and this is what your, you know, bonus would be. It could be based on performance. It could be based on just hanging around and doing a good job and passing evaluations for a year. That is an option. If you don't want to do that because even that is going to be too expensive, then don't. Just for reference, you know, if you Google this, typically professional careers that are in demand, they a race could be asked between 5 to 7%. 10% is even on the high end. 15 is like, this person is a superstar, irreplaceable. So 40% is a hefty number. And it makes me question it. It makes me say, hey, maybe you need to have a different chat with this person. Ask them, hey, is there something about this job that could be more enjoyable, more enriching? Maybe they want a different position, a different title. Sometimes people just say, hey, I'm going to ask for a humongous raise. If they say, no, I'll leave, it'll be a reason to leave. I'm actually just looking for a different job, a different opportunity. Sometimes you need to scratch below the surface and see what's going on here. Maybe this is not about money. Maybe this is about a significance. Maybe it's about recognition. Maybe it's feeling valued for what they do and what they Contribute. If you can give them those things without that humongous raise. With a raise, but without that humongous raise, then you should explore that. You should explore, hey, if you value this person, tell them that. Say, hey, we really value here, this company. You add X, Y and Z. It'd be difficult to replace you. In fact, I think that you could do more. We can expand your role. I'm thinking about making a new title. And you can ask them, what are your ambitions? What do you look to achieve the next five years? Let's map it out. Let's see how you can grow with the company. Dig a little deeper to find out why they asked for that raise. Most professionals are not asking for raises because they need to pay an extra bill or two. They're asking it because they feel like they deserve that recognition, that they've earned it. Now, another thing that could be happening is they have another offer on the table somewhere else and they just gave you this 40% raise because that's how much the other place pays. Or it's slightly more. If you can have an honest conversation and find out if this is true, that's okay. If this is going to happen. If you have to, let them go because, hey, you just can't give them what they need or what they want, that's okay. I know that sometimes it's hard to let go. Rock stars on our teams, trust me, I would not want to do that. And I have done it in the past. But sometimes it's just for the best. It's for the best for your company. And you can cultivate and you can hire new ones in the process. Now, I know you're thinking, hey, this transition is not going to be fun. If they leave, I need this person. They're going to be a big hole. This is where you have to have a conversation with this employee and say, hey, listen, even though, you know I might not be able to help you out, how about I give you an increase for a temporary amount of time, let's say for a month so that you can hand over to a new hire. I have to find somebody who's going to replace you, be trained, all that kind of stuff. That's a very reasonable ask for somebody. You know, two weeks is the standard for some places, but a month is not asking too much more. And it allows you to feel a little bit more comfortable about finding somebody in a few weeks and getting them hired and trained up. And before you know it, this new person will be ready to take on the role and will Be within your budget and then they can grow with you. Everything is a discussion, everything is negotiable, everything can be worked out, but you have to have dialogue, you have to have conversation. If this person is in a physical location with you, have a cup of coffee with them, take them out, have a chance outside the office to just get to know each other a little bit more and have honest conversations about how you can do what's best not only for them, but for you and the company. Remind them, hey, the team needs you to help us a little bit with this month for that transition. The team will appreciate it. People work somewhere, you know they have an affinity to a team. Remind them of that. If this plays remote, if you have a remote player on your team, get on a video call, do it face to face, talk about it, get to know what's going on. It's going to help kind of ease the conversation. When you're face to face, you're going to be able to read body language and understand what's really happening here. And one of the things I like to do is just preface the conversation, say, hey, you're not going to hurt my feelings. The best way for us to achieve the best result is if we're both transparent and honest about where we're at and what we want so we can both kind of meet each other's needs. That's how we get things resolved, even if that means, hey, we got to part ways. Let's think of a good way to transition. So it's good for the team and good for you and good for us.

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Edu to wrap up today's Q and A Wednesday's question from Lee. An honest conversation is going to allow you to evaluate the situation. Can you hang on to them? Maybe they're looking for recognition, a title, something more than just a job and a payroll. Find out if there may be another job on the table. Maybe you just can't hang onto them because they got that offer and they're just trying to find a way to easily say goodbye. If that's the case, let's work on a good transition plan for your company. Ask them to hang on so you can transition for a month or so so you can train up your new hiree and make that new person your new rock star. I hope that helps Leah. Hope it helps other people that are listening that have the same question in their head raises hiring, firing. This is difficult stuff as a leader of your company, but it's essential to having a great team. Thank you so much for listening. If you love it here, hit subscribe right now so you don't miss a beat. As soon as a new episode is available, it'll get downloaded straight to your device. And we're available on all those podcast apps, Spotify, Stitcher, Apple Podcasts, Himalaya, Overcast. We're on them all. Just search the $100 NBA show. Hit that subscribe button. Before I go, I want to leave you with this. One of the things that we've implemented in our business is regular evaluations and a chance for an increment in your pay. It's very transparent at the start of their contract or their employment with us so they understand, hey, this is my upward mobility. This is how I can earn more money. This is how I can get better. This is how I can get a raise in my company. And it gives them this idea that, hey, this company cares and this company has a plan for me rather than just working, working, working and hoping for the best. Maybe one day I don't have to ask for a raise to just give it to me. No, it's all laid out. They know when it's going to happen. They know when their opportunities are going to be there. They know what they're being evaluated on. They have a game plan. And this is the best way to kind of frame that discussion at the start when they get hired. Thank you so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care.

At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.