Agency Owners: How to Talk to Employees About Money
If you have employees, you have to talk to them about money at least a few times—once when you hire them, and then at review time.
Many people, in fact, most people, feel awkward talking about money. That goes for employers too.
But if you avoid money talks, you’ll run into problems and misunderstandings.
Employers Should Be in Control of the Money Talk
Let’s start the money talk before you even hire someone. You should have a definition of who you’re looking for, what the job entails, and what compensation you’re offering.
Do everyone a huge favor—when you advertise for a position, tell the world what you’re offering to pay. Give a range.
For position X, the salary is between $85,000 and $110,000, and benefits include A, B, and C. We’re looking for qualifications X, Y, and Z.
This accomplishes three things:
You’ll get more qualified applicants who understand the pay range before they apply
During the interview, you’ve already broken the awkwardness barrier. The candidate doesn’t have to ask for a salary with no reference points
You can also talk more about the value of the benefits as part of the compensation package
Share Your Employee Handbook During a Second Interview
Assuming that after a first interview, you’re interested in hiring a person and you call them for a second meeting.
During this interview, you’ll share your employee handbook. (Do you have one? You should.)
In your handbook, you’ll want a section on performance and salary reviews. Here is what worked for us.
When we hired someone, we reviewed the handbook and gave them a hiring letter that both parties signed. The letter included a clause stating the first three months of employment were a review period.
At the three-month point, we met with the employee to assess whether expectations were being met and whether employment would continue. This was not a salary review, only a check-in on performance.
Don’t Make Employees Ask for a Raise
As an employee, asking for a raise is uncomfortable, nerve-wracking, and potentially embarrassing. So, don’t make them do it.
As the employer, you should be in control of what you’re paying employees, when their pay is adjusted, and by how much.
Review Salaries Annually
When you first hire someone, let them know that you will review their salary annually. Make sure that you or the office manager marks the date in a calendar. You can be sure that the employee will be very aware of the date and expect a meeting to discuss their performance and salary.
Also, by letting them know that it’s an annual review, they won’t come to you before then to discuss their salary.
Don’t mention or indicate the amount of a typical raise, especially during the hiring meeting. This should be entirely up to you, based on the employee’s performance and their value to the company.
How to Provide Performance Feedback
Provide performance feedback as you work together. If you’re happy with something they’re doing, let them know, right then and there. If they’re exceeding your expectations, tell them. Everyone could use some praise.
On the other hand, if you’re unhappy and want to see changes in how they work, tell them that too. Do it quietly, personally, without drama.
Whatever you do, don’t hold it back for the annual review.
Imagine you’re the employee for a moment. You don’t want to find out after a year that your boss is dissatisfied with your work.
Most employees want to work in a way that makes you happy. They want to know they’re living up to expectations. Many of them crave feedback. Give it to them.
Keep Your Promise. Call the Annual Salary Meeting
Before the anniversary, set up a date and time to meet.
Prepare for the meeting with your notes in writing outlining what you want to say about their performance and what you’re offering for a raise.
You will get one of three reactions to your comments and your offer:
They may be delighted, and thank you
They may not say much and be accepting of it
Or they may let you know they expected more. In advance, you’ll need to think about how you want to handle any potential disappointment
A Salary Review Meeting is Not the Time to Negotiate
If your employee is disappointed and is asking for substantially more than you’re offering, you’ll have to think about how you want to handle this. The important thing is that you give yourself some time to think about it.
Don’t make any promises or deliver any ultimatums in the meeting. Assuming you’re both reasonable people (you’ve been working together for a year, so you’ll know each other a bit), there should be a way to work this out.
If you have a partner in your agency, you can always say you have to discuss it with your partner. But one way or another, resolve this quickly, within a day. Don’t leave it hanging. Make your decision and move on.
Sometimes Employees Leave After a Salary Review
You should not be surprised if an employee decides to leave your company after a salary review. Perhaps they’ve been thinking of moving on but waited until they learned of the amount of the raise being offered.
This is predictable, especially if they’ve been with you for a few years.
Employees sometimes use these meetings to evaluate their worth in the market. If they’ve been making $75,000 and you offer them a raise to $82,000, they’ll go out on interviews asking for $90,000 or more. And really, you can’t blame them. You may have done the same in the past.
A Salary Increase and a Promotion?
In some cases, you may want to tie a salary review to a promotion. For example, that might be from copywriter to Associate Creative Director (ACD).
You may be offering a substantial raise in pay, but for that, you’re also increasing expectations of their work. You could give an ACD added responsibilities to supervise a more junior team. To a degree, their job now involves some management.
Think carefully about this in terms of expectations and career path for the employee. Be sure it’s a good fit.
You may think a promotion to ACD will be welcomed, only to find out the person isn’t interested in that. They just want to be a well-paid senior copywriter.
Start having these discussions before you get into the money talk.
Talking Money from an Employee’s Perspective
Let’s say you’re going to an interview where they haven’t posted the salary range.
Once you decide that the job sounds interesting, ask them what they’re offering rather than telling them what you want. Put the onus on them to tell you what the job pays.
That gives you a moment to think about how you want to react.
No matter how the meeting goes, you don’t have to accept anything right there. They may not be offering you the position right then anyway.
The easiest answer for both you and the employer is that you’ve got more appointments to consider. Before you leave, get an idea of their timeline. When do they want to make their decision for hiring?
If you’re interested in the job and you’re happy with their starting salary, a “thank you for the meeting” follow-up email is a great way to let them know. Add some further thoughts you’ve had since the meeting and let them know you’re interested.
A Salary Review with No Raise?
If you have a salary review and your employer isn’t offering a raise, it’s a signal.
No matter how they frame it, it’s not good news. It may even be a nudge to encourage you to leave.
Assuming you’ve been there for a year or two, you should expect an increase at review time.
If you don’t get it, start looking. From a performance perspective, you should have known about any issues before this meeting. So, assuming your performance has been up to expectations, why aren’t you getting a raise?
They may say they don’t have the budget. In other words, they can’t (or don’t want to) afford you at a higher salary.
Find an agency that will. If you don’t get an increase this time, what are the odds for next time?
Don’t Stay in the Same Job Too Long
Communications and advertising are not “gold watch after 25 years in the same job” kind of business.
If you’ve been working for the same company for years, you should have been given added responsibilities if you expect significant pay increases.
But at a certain point, the company can’t pay you any more than you’re making. Why not?
Well, simply because you’re not worth it. You’ve maxed out your salary for that position at that company.
You’ve got to move on. Read this about the dangers of staying an employee forever.
With senior-level experience, you have a few choices:
Find an agency with bigger clients and bigger budgets, who will pay bigger salaries
Go freelance if you think you can make more
Start your own agency
Learn more about money talks with employees and clients in my book, How to Start a Successful Creative Agency. It’s the essential business guide for graphic designers, copywriters, filmmakers, photographers, and programmers.
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