Being asked for a raise is not about the money
It’s great when your startup starts to do so well that one of your team members thinks it’s time to ask for a raise.
It might not feel great for the founder picking up the request, but it indicates a lot of positives- the whole team is feeling the growth and success, the team is big enough that someone feels the need for some additional recognition for the role they play, people have put in enough time they feel they have reached another level- it can be a bit of a milestone for a startup.
It’s important not be caught on the back foot when your first raise request comes through. You need to be prepared and know exactly how you will respond.
It’s important for a lot of reasons:
- as the founder, you don’t want to come across as unprepared or unprofessional, no matter how tight-knit and “pal-sy” you are with your team;
- you don’t want to have to respond on the fly, either over-promising to the undeserving or underdelivering to your best worker;
- you need to have a prepared response so that you are still in control of your startup- its HR, its budget, its culture;
- and you want to maintain the relationships and rapport with your team members that an improvised response could easily wreck.
If you are following a few basic ground rules from the outset, the preparation for this request will come easily and naturally.
If not, no worries, they are easily implemented.
Here is a case in point:
A startup founder attending a session I was delivering last week came up to me after and asked for some advice. He showed me a text message from one of his engineers asking for a promotion and a raise.
He could tell me that this guy valued status, and being recognised for the job he did. He could tell me that there were some areas of weakness he had been working on with him that had not yet been improved.
He knew what motivated this guy in his work, and knew that the things he was good at were very valuable to the company.
It was great that this founder knew so much about this team member.
It wasn’t great that the guy was asking for a raise via text.
It wasn’t great that the founder didn’t have a ready response, nor any idea of whether or how to give the guy a raise.
A few key things jumped out at me:
- Did this guy know what the founder thought of his work- both the good and the bad? Had this founder been clear and upfront about this?
- This guy was an engineer, and the startup had a few others. Did they all make the same money? Did they have equal status? Perhaps most importantly, did they know on what basis they made the money they did, and did they each know what the other was paid?
These are just a few of the complicating factors that sprang to mind.
These things can be sorted, so that the founder can give a good response.
But it would have been much better for everyone and certainly for the founder if there was clear and understood system already in place.
Here is what the founder needed to do to get a grip and regain control of this situation, and in effect, his startup:
- If he didn’t already, he needed regular sit-downs with each of his team members to talk about what was going well and what wasn’t. Any important points needed to be written down and shared- “you need to work on this, you’re doing great with that”.
- There needed to be a system to manage expectation of rewards, like pay raises. Anything that is consistent and transparent would do- a positive annual review on hire date anniversary means a raise of X%, or company grows by X% all staff get a raise. Anything, as long as it makes sense for the company and everyone can know it.
- There needed to be transparency and fairness of compensation, for a whole lot of reasons. People talk. People compare. People complain. Avoid becoming the employer talked about as being discriminatory, or unfair.
In my community there are tech roles that are in high demand and short supply. This transparency and fairness, even if you aren’t the highest wage payer, can get you great people who might choose you over another company.
It impacts your ability to secure clients and to recruit and retain later.
This transparency may even save you a legal challenge.
So if this founder had had regular meetings with this engineer, told him where he was doing well and recording those things he needed to improve, when the request for a promotion and raise came up he would have solid shared evidence as a basis for his response of either yes or no.
Not to mention that the raise request could have come through in a face to face planned meeting, and not over text.
Both people would have been in a position to feel more comfortable, confident, and in a much better position to negotiate one way or another if they were operating within a ‘known system’.
This request for a raise was not about the money. It was about seeking recognition and acknowledgement for a job done and skills applied.
It was about challenging the founder to exercise his responsibility for a company which the employee felt he was contributing significantly to its success.
To step up to the challenge, the founder needed to have a clear and fair response, based on evidence shared between the two people. Mutual respect ensues. Happy team member remains a productive and valued team member.
And this is whether or not the raise is given. If a refusal is put into context, there can still be a constructive outcome.
For instance, if the founder sets a goal for improvement in a certain skill by a certain time, they agree to review it in three months in order for the raise to be awarded, both sides have a clear context in which they are operating.
Loyal employee feels heard; founder can maintain a measured control of HR, budget planning, staffing.
So, get yourself a consistent system. Write it down. Make it available to everyone. Manage expectations. Make it clear to people how to get ahead. Make it fair. Save yourself heaps of time and trouble later.
People hate not knowing. And when people don’t know, they make stuff up. Or they try their best to operate in an unknown system.
This can build resentment and wreck your attempts to lead.
Step up and be the leader to your team. Set the culture in transparency and fairness, and consistency.
Everyone wins, especially your startup!
This is a story about culture and leadership, and is not meant to provide any employment or legal advice.
My first book, Becoming a Fearless Leader: A simple guide to taking control and building happy, productive, highly-performing teams is out now. You can find access to a free pdf workbook that accompanies it on my website. If you do read my book, I would love to hear your comments.
I write about my leadership and management experience of 20+ years, and all I have learned as a founder of a tech startup as a non-techie, over-40 female with no entrepreneurial experience. You can see more here. If you think this might be helpful for others on their leadership or entrepreneurial journey, please recommend and share.