How should I determine when it’s time to give one of my startup employees a raise?
The following answers are provided by the Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
1. When It’s More Than Work
The world is full of employees who don’t think of work outside of work, which can be difficult for early stage startups. I’ve always felt that new employees take a major step to proving themselves when they take their work home. No, I don’t mean sitting at a computer all night. I mean that it’s on their mind. When they come in with new ideas to contribute, it might be time for a raise.
– Adam Callinan, Beachwood Ventures
2. When an Employee Gives Feedback
When a startup employee does what the company asks of him, it is merely doing what he gets paid for. But when a startup employee gives feedback on things the company should do and demonstrates a strategy to get there, it might be a marker for a raise.
– Phil Chen, Givit
3. When They Go Beyond the Call of Duty
When I see a person regularly produce results beyond my expectations, and their work is clearly vital to the future of the company’s growth, I recognize it and pay them for it. This works well as the team member appreciates you recognizing their work, with an unexpected raise being a bonus. When an employee contributes to decisions that affect the company’s future, it shows long-term commitment.
– Kenny Nguyen, Big Fish Presentations
4. When the Business Can Afford It
As long as the business can afford it, it is time to give one of your employees a raise when she is adding additional value to the position she’s being paid for. Compensation should reflect the company’s value of the position.
– Sarah Schupp, UniversityParent
5. When the Business Has Considered Financial Factors
There are several factors that need to be considered when it comes to giving an employee a raise at any sized company. Startups pose even more considerations. Most early stage startup employees have given up some percentage of cash compensation in exchange for equity. This makes fundraising and cash position a unique factor that large non-startups probably don’t have to deal with.
– Danny Boice, Speek
6. When You Have Room for Growth
If you have a sizable team, then it’s important to get on a consistent performance review schedule. Early on as a startup, it feels as if there is no time or budget for allocating annual raises. As you grow, though, you need to be mindful of giving performance feedback and adjusting for the growth your team members have made over the past year.
– Jordan Fliegel, CoachUp
7. When It Is Annual Raise Time
We give an annual raise plan to our employees every year. In the plan, we offer a raise (no matter how small) after six months and another one at the end of the year if they achieve their goals along with the company goals. This keeps them motivated continuously rather than trying to determine a good time to give them a raise.
– Evrim Oralkan, Travertine Mart
8. When They Prove to Be Indispensable
I always tell my staff: Make yourself indispensable, and then come to me for a raise any time you want. We all know the difference between good, great and employees who are absolutely indispensable! Do your best to become that type of team member, and then come to me (in a positive way) to ask for a raise. If the company can afford it, I’ll say yes.
– Mitch Gordon, Go Overseas
9. When the Company Is Growing
As soon as your company is growing, all of your employees should grow with you. By seeing the results of their hard work in their paycheck, they’re immediately more dedicated to the company’s success.
– Rohit Singal, Sourcebits