I give my employees pay raises using a little different method than may be common for many businesses. I have noticed that it is fairly typical for employers to give raises based on the amount of time an employee has been with the company. In other words, there is a set schedule for pay increases such as a set per hour increase of $0.50 every six months. I do not structure my pay grade in this way because I believe it does not motivate my employees in a significant way. Raises should not just be expected. Rather, than giving time-based raises, I give performance-based raises.
Every 3-6 months I do, what I call, an employee review with each of my staff members. This meeting is an opportunity for them to voice any concerns they may be having. I also use this time as an opportunity to evaluate their performance. If I am impressed with their performance, especially compared with the last time I met with them, then I may give them a raise. I believe this method is more rewarding for them and fair for me because it is based on their achievement rather than them working for the company for a certain amount of time (which may or may not indicate improved performance).
I want my employees to feel valued and appreciated. I want them to feel that they are being paid what they are worth, plus a little more. Performance-based raises shows that I care about them and am paying attention to the work they do. As a result, my staff tends to work harder as they strive to do excellent work. Ultimately, this method seems to be more beneficial for both me and my employees.
For more information on this subject, please listen to The Appraiser Coach Podcast Episode:
Giving Your Employees Raises Based On Actual Performance
