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Raises: When you want to - but can’t

It doesn’t matter if you’re trying to survive a tough economy or a challenging business period, when cash flow is painfully tight, payroll is one of the first expense line items that leaders red flag. And in tough times, leadership’s focus and sense of urgency must shift to driving revenues and finding ways to contain and cut costs. It’s the leader’s responsibility to lead the company safely through to better times. To do so, leaders need every employee to bring their best game to work every day. Because the first thing on the leader’s mind is survival, the last thing is issuing pay raises.

It takes time to survive tough periods. Most often, it takes more time than anyone ever expects to reach daylight. The reality is that it can take years to get a company out of the red and into the black. And a return to profitability doesn’t mean the crisis is over, because profits are now being used to pay down the debt incurred while in survival mode.

But then the aching in the leader’s heart begins to grow. He or she knows that many team members rose to the challenge and went above and beyond. As requested, they brought their best game every day. But there is no money for raises - very much earned pay raises. Any leader with an ounce of compassion and appreciation for the contributions made by their team members feels that aching.

Unfortunately, that pain is something too many owners try to ignore rather than address head on. As a result, frustration can begin to surface among employees who wonder just how long this battle will rage on without some sign of reward and appreciation. When this occurs, the battle-weary can lose faith and disconnect from the cause they’ve been fighting so long for.

Here are some no-compromise strategies to address raises when raises are not possible:


  • Put it out there: Stand before your team and tell them where the company is. Just like the president delivers the State of the Union address every January, I call this process a “state of the company” address. Tell your team where the company is in the battle. Reconnect them with the vision and mission they’ve been fighting so long and hard for. Express your appreciation. And tell them where you’re at on the sensitive subject of raises. It is always the best strategy to get everyone’s feelings on the table for discussion, because when you don’t, speculation, rumors and bad assumptions will infect your culture.

  • Other ways to reward: When raises are out of the question, there are always other rewards you can offer. Just like soldiers are given time away from the front lines to recuperate, give some comp time to those employees who have earned it. A day off, an extra-long weekend or a chance to leave early is a sign of appreciation that won’t break the bank. Sending one or more employees for some much-needed training is a valued break from the routine of work. Just giving out some gift cards for dinner, movies or special services is a sign of appreciation and a reward. A company picnic or barbecue brings staff together. True, these are not raises, but they are rewards that can fill a void and soothe the aching.

  • A little goes a long way: There is always a way to find a little in the budget for those tried and true employees who consistently go above and beyond. A minor “I-wish-I-could-give-you-more” raise is better than nothing. FYI: Take a hard look at some of the stuff you’re still spending money on. I’m sure you’ll have enough “nice-to-haves” to cut that will allow well-deserving employees to get some sort of a raise.

  • If you feel it, they feel it: Ignoring or avoiding pay raise conversations is the worst strategy. Doing so is a compromise to the individuals who work to make your company a success. Employees feel the stress and strain of getting a company back on track too. Just have the conversations.

  • Define the target: It is critical to define where the company’s critical numbers need to be in order to trigger raise opportunities. This places the focus and energy on achieving goals and having wins and away from the, “They won’t give me a raise,” drama that grinds down progress.


One last thing: I am well aware of what it feels like to sacrifice my paycheck so employees can receive theirs. Although I am willing to do this when situations dictate, I view it as my opportunity as a leader and owner to implement what is clearly much-needed change. And for the record, I also view it as the price I need to pay for my bad decisions or compromises.

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Please share your thoughts with me about today’s Monday Morning Wake-Up. Click below to comment.

Neil Ducoff, Founder & CEO of Strategies and author of No-Compromise Leadership

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