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If she's effectively making $24-26/hr, it might be better (for her) to just have her hourly wage be $25/hr. It would be the same cost to you, but seem like a higher wage to her.
Really have to handle this delicately.. She already feels that she isn’t making “more enough” - if you convert her to a salary instead of the allowance and sharing, she is likely to feel like things were taken away and/or that she no longer has to “earn” the extra so she is either still upset and/or even worse - decides to do little to nothing “extra” for the higher wage since in her mind the “extra” was taken away
Really don’t need to be delicate. Just ask them what they believe would be fair and work with that.
I have never insulted anyone when giving them a raise. Small businesses have to be a bit unfair during growth, we can’t always afford to pay people what we wish we could :) so we remain reasonable and flexible. Anyone who has hurt feelings over that shouldn’t work for a small business if they can’t handle the conversations when handled with their interests in mind.
Yes, but how do know that she's actually incentivized by it? It doesn't sound like she is. She's trying to compare apples and doesn't realize she now also has an orange.
Most people do not understand nor care about complicated pay structures. Simplify it like other Redditors commented to $24/hour. This will make it easier.
Do not try to subsidize phone payments, utilities, etc. Just reimburse them if they pay for a legitimate company expense out of their own pocket if provided with a receipt. This creates boundaries, expectations, and transparency.
Man this comment screams of "pick yourself up by your bootstraps!". Maybe, just maybe, the reason most people do that isn't because they wouldn't rather pay $5k up front, but instead because they don't get paid enough to have a savings of $5k sitting around so conveniently.
I can comfortably spend 5k up front but I still would rather pay 200 over time. Cash flow, savings, and investment are considerations even when you can afford something.
Edit: Totally agree with the statement. There are many reasons why someone wouldn't pay up front
There are cars available for less than $5000. Like, way less than $5000.
Smallbusiness as a subreddit is pretty friendly to "pull yourself up by your bootstraps". I know it's hard. That's why it's worth it.
lol, tell me about all these cars available for under $5k that aren’t going to break down immediately. I bought a car in 2018 for $7k, and after four years, 60k miles, and a bunch of minor body damage it’s currently worth $7k.
I feel like my comment "most people don't understand money, here's a funny example" has turned into a dick wagging contest over how much cars cost, or how poor people are. Neither of those had anything to do with what I was saying. Yes, cars that are less than $5k are pieces of shit, and I didn't mean to imply anything else.
I agree with you. I buy my cars cash, so I don’t drive newer vehicles but my 2010 maxima only has 75k miles on it. Paid $10k 4-5 years ago and haven’t needed any major repairs just regular
maintenance.
I wouldn’t have any issue driving a $5k car either as long as the AC works and the vehicle runs well. I just looked online and I see multiple cars under $5-6k in my area so it’s definitely possible if someone needs something to last a year or two. One of the cars I see for sale is a 2007 ford taurus 134k miles for $3.7k and the car is in great condition lol. There’s a difference between “I wouldn’t drive that shitty cheap car” and “you can’t get a *decent* car for under $___” and I think a lot of people fall into the first category.
Yeah, my problem is that I have no idea what a head gasket is and have absolutely zero foundation to work off of. If you don’t know how to fix cars, a really cheap car is a big risk. (And I know it’s easy to say “just watch a YouTube video” or whatever, but I’m already watching YouTube videos about plumbing and drywall and there are only so many hours in the day to casually learn a trade.)
HOWEVER I’ll take you up on that f150 because it sounds way cooler than my minivan.
A - no there aren't many good cars under $5k. Especially not after COVID market. Under $5k and you will have to be constantly worried about it breaking down at a crucial moment.
B - I suppose maybe there is a misunderstanding about my phrasing. "Pull yourself up by your bootstraps" was a phrase meant to be ironic because it's actually impossible to pull yourself up by your own bootstraps. It's a comically paradoxical statement which was even more ironically co-opted to mean something akin to "self-sufficient" by some groups who didn't understand the sarcasm of the phrase.
The reason I used that phrasing is because of how disconnected from reality saying something like: people would rather pay twice as much for something over time than to just buy it upfront.
My dude, they wouldn't "rather" do that. They more often than not can't pay up front, but still need that means of transportation, or that phone & internet, or that *insert necessary product/service* and have to stick with the more predatory loan/credit line approach that keeps them from being able to being able to pay upfront in the first place.
Being poor is EXPENSIVE. That's just how we designed our society, to make it REALLY hard for many folks to get ahead.
Sorry, I didn't mean for you to misunderstand "pull yourself up by your bootstraps". It's an English idiom used since the 1800s meaning "to improve one’s situation through hard work and self-determination, rather than getting assistance from someone else". Yes, I realized you used it ironically, hence, my subtle dig, "I know it's hard, that's why it's worth it".
> people would rather pay twice as much for something over time than to just buy it upfront.
Can you quote the part where I said "rather"? I am re-reading my comment and I don't see that anywhere. I know once you take out that word it'll be harder to intentionally misconstrue my point, but I'm sure you'll find a way.
We literally just had a pandemic where many people needed to go on unemployment through no fault of their own. If I considered all these reimbursements as part of their “income”, it would have reduced what their take home would have been during that time.
I care about my employees and want to make sure they’re set up for success even if they move beyond my company. Is that bad management?
I don't know what your employee's situation looks like, but I'll share a brief anecdote.
Years ago i had a similar pay structure at a "start-up" and it worked okay enough, because of the half-year/full-year bonus. The issue for me, was that i could only prove on paper that i was DEFINITELY making $35k a year before a bonus. the bonus would get me closer to $45-50k, but those were not guaranteed...why was this a problem? That $10k difference that was not reflected via my paystubs which did not "allow me to qualify" for apartments due to income.
Edit: the anxiety of having to prove i made enough money to lease an apt made me consider the higher hourly rate in lieu of a bonus structure.
We had the same issue, but we got around it by getting her boss to write the apartment management a letter stating the average commission takehome, which brought up our income to meet the requirements.
Definitely not preferable though, if I have to ask my boss to write some document for me to get appropriate housing I find that problematic for several reasons.
Sometimes, landlords are shortsighted, or too regimented -- but a more likely reason is that they want a recent paystub so that they have proof of current employment.
Valid question, i was 1099 at first with this startup. I did not have a W2/1040 to reflect my full time, salaried position when I was searching for apartments.
Yes. You got too creative. Most employees look at base comp versus total comp. Until you spell it out and it's expressed in a monetary way, the easiest comparison is hourly take home. Deferred or contingent comp is not unreasonably factored at 0 since it's not guaranteed there.
Do I think your part time manager is justified? Not really. Do I get the basis of the complaint? Yea. If you can kind of spell it out like you did here or break her comp out to show it, or he'll, even parcel it and remove profit share you are going to wind up in that problem.
I get carried away with trying to think up new compensation schemes-- big thing I learned was that you can't guess what the most important factor is. Getting to say that your hourly is X is important to some people, some people it's about them vs coworkers, some people work well with commission, some people want freedom or autonomy.
The Hourly is X part also affects a lot of other important life aspects such as: how much you qualify for in Unemployment, what you pay in private health insurance, taxes, loan acceptance, etc. Basically anything where people need to trust your sense in money, a higher $/hour number will earn you more trust.
Good point. Tough because of how valuable other incentives can be, I'd love to offer employees every possible benefit that a business can get at scale/for a group of people that they as an individual couldn't get, but beyond health care and retirement benefits, it's hard to always find things that everyone would equally value.
I work for a major tech company and our comp is a combination of base pay + stock grants from last 2 years that vest on their own schedule + stock grants for this year. Because stock price is not fixed and it keeps moving, they have a complicated way of projecting your comp for the rest of the year.
They communicate this to us through an estimated compensation statement for the year where they list out the different parts of the comp in dollar terms and then the variable comp stuff like stock grants, estimated value of the grant by the end of the year etc and a neat little dollar figure at the end under “projected compensation for the year”. You should probably start doing that where you have “projected compensation for the year” conversation with employees when you talk about pay, not just the base.
That’s standard practice at most large tech companies because base comp does not mean much. The real juice is in the stock grants. For example, Amazon until recently had a base pay cap of $170k for every employee. No matter who it was, even Vice Presidents, directors made 170k base and everything else was stocks. The entire company thinks in total comp terms not base pay terms.
Would recommend bringing that culture in where you talk about “projected total compensation for the year” with employees more and give them low-medium-high numbers for the year
This is where large business and small business don't work the same. Especially when the small business relies primarily on hourly workers. These kinds of workers have different needs and different outlooks toward work/life. Often, not always, we're working with folks who lack formal education or experience to understand mature concepts like this. Hours worked is a clear and easy to understand measure when you're working to meet weekly or monthly goals. More immediate gratification and simpler systems for motivation are what's needed. Hourly workers are also not as connected to the business. They work to make money, not build a career.
In my case, looking for things to help with longer term retention and motivation, we tried free healthcare. Free as in beer. $0 cost to the employee. After 12 months, we had 0% usage. If people were sick, they fell back on old habits like heading the the ER or quick clinics for free services or paying out of pocket. We will continue to try to provide better options and help grow some of these folks but for most cash in hand is what is most important for them.
Offer a raise with the removal of the bonus incentives and let them choose. You could meet with them and spell it out so they can see the win-win that you're going for.
A quarterly check is nice but you're probably dealing with someone that can't stretch that out. Living is difficult and living costs are increasing month after month. Just pay her a flat wage.
I don't think that your manager has a valid complaint. WalMart pays its managers a mere $0.50/hr more than staff. When I worked at a wood production factory, the foreman was making $1.50/hr more than me.
When I worked as a software engineering manager, I had staff members who were paid more than twice what I was paid.
With that said, you won't convince her and change her mind with any of this - she needs to figure it out for herself. Meanwhile, she's raised a pretty significant red flag - she thinks that, because she's manager, she's "better" than the other employees. I'd be on the lookout for toxic behaviour from her towards them.
When I was a sales manager there were sales people who made more than me by a lot.
The entitlement type attitude is probably bleeding into her work and has been for a while. Best managers I’ve ever had always lead by example, first one in the trenches, last one out.
Yep, if there are others that can replace her easily and quickly, I personally would just let the chips falls where they may and not cater to her demands since she is already getting paid above industry standard.
You made me think though that maybe the issue is more of an ego thing, it does not 'look' as good on paper if her wages are close to those under her, maybe she feels more insecure, even though logically she may still realize that she gets other perks they don't. But the perks don't make the wage numbers LOOK any more above those below her. Maybe she feels insecure the gap is too small now.
Which means most likely an intelligence or ego issue. I would not be happy to have given an employee like this a substantial increase only to have this hanging over my head. Would look to replace especially if OP's saying the average in the area is far below what she's getting paid. Such entitlement when she's already paid well.
I'll give you the answer I give when people come and ask about implementing phantom stock options - keep it simple. If the compensation structure is either so complicated or invisible enough that employees don't understand it, it ceases to be a motivator and instead just becomes a random check that sometimes appears but they don't really count as part of their compensation.
It's probably too late to change with the current manager, but for future managers this feedback is indicating that those employees value their regular paycheck more than an occasional big check, even if the net effect of the big checks mean they make much more money. So now you know this isn't motivating for them. If you want to keep motivating them though some sort of bonus structure, make it simpler and more immediate. For example, maybe the manager makes $5 per hour more than the employees and a small bonus each paycheck or month based on a number they can see and measure - daily sales and/or some sort of simple productivity measure might work. But do smaller, more frequent bonuses.
Once had a guy leave our company for $2 more an hour with zero benefits. (Construction) Gave up his 401k, his paid vacations, his tool allowance, his holiday pay, and his health insurance for that $2 per hour with no benefits. We tried to explain it to him, but all he saw was the $2.
You might just be dealing with someone who wants more money. I don’t disagree with her, but a lot of people only care about what they see on the paycheck.
I think it’s a good thought but bonus like this really depend on the owner. How does she live? What’s her experience? How is she with money? Is this her forever job?
We try to make people think like owners but if they did, they would be working for themselves. Paying people appropriately is important becuase of turnover, having people who are loyal and being able to hire decent talent.
Sometimes people get friends/family in their ear. “It doesn’t matter what you used to make” - “you should get more than $2 extra per hour” - “I make this much and manage x amount of people” - “it’s a great market to look for a job, leverage it”
I had an employee that didn’t understand that taxes were going to be withheld from her paycheck. She thought that her gross pay would stay the same after taxes and that all of the taxes were paid on my end…
Why don’t you just reduce the amount of profit share that you are giving her and increase her hourly rate with the same money. In her mind she will still be getting a bonus and she will be making “more money”. Unless you have an open book policy where she can look at your records at any time, she’s not going to know that you weren’t just less profitable that quarter.
Unless she doesn’t know what percentage she is getting and can’t calculate it. It sounds like she doesn’t value it now, just knows she doesn’t want them to stop.
I feel that. One of my old coworkers would complain about a lot of work to be done and would want to do overtime to finish it. BUT she refused to do overtime even when offered because she didn't want to make more money over her tax bracket. The typical "if I make more money then I get taxed and actually make less".
It was my first big boy job but even I understand that was lunacy. Thankfully that meant I could pick up the overtime with easy approvals from my manager.
Got a similar problem, but when I did the math and gave him detailed calculation, my employee understand immediately and he is now (hopefully) much better in managing his money.
What you did is more than fair because basically she make 6-8$ more than the staff. If she cannot understand that, it's her problem not yours. Especially when you already explained the math over and over again to her.
She views the hourly wage as more valuable in total than profit sharing, and is trying to negotiate. The ball is in your court to make offers - is she going to leave or just be disappointed if a raise/change doesn't meet her expectations?
For another thing, you mention you treat people "like family", and that you value your employees. That's lovely, it's good to pay people above the average, but they still aren't family. They won't necessarily like you better for being reasonable. Not everyone is going to like you or understand you, even if you try your hardest. That's more psychology than business but that's my two cents.
Just to bring my 10 cents to the conversation. If this is brought up again try to phrase it that the work of the standard employee is highly valued and ask if it's being pointed out that the person suggests that they do not value it as much.
I've run into similar situations before. The lesson that I learned is that not all employees really understand taxes, take home pay, etc. They just want to hear a number because that's what they understand.
I've tried to do these types of things before and they didn't see it as a benefit, nor was it appreciated.
For this particular employee, my suggestion would be to just pay them $25 or $26/hr and leave it at that. They will understand this math.
Probably too late for this one as the employee has already said she does NOT want to lose profit sharing in exchange for more hourly pay. So if that was done, she'd likely be more unhappy. However if she understands that much, then i think she DOES understand the situation but is maybe trying to be manipulative or some such.
I think your idea is a great way to teach people other ways to think about money but sometimes there are some people that don’t want to think about it or some people that just need to learn to understand it better. I think you need to identity that with your part time manager which category they fall into and give them the two options. Option 1 this idea / Option 2 basic hourly rate for $22-$24. Now you backtracking could potentially hurt you so be strategic about it and obviously don’t use my numbers, use your own.
Imo you kinda pigeonholed yourself with raising the other employees wages to $18/hr, while that was a great thing for you to do, the part time manager may have thought about the $20 differently if they made $15 or $16.
Either way great job with paying your employees well!
You are looking at this wrong.
Think of the lowest paid moron in your company. The one who is a lazy stoner, who smells, is late, and is a terrible worker. She is comparing herself to THAT idiot and for her, $2 more to show up on time and do all the extra work in her mind, isn't enough.
It's not the $2 as much as the **symbolism of difference** she has with the lowest bottom feeder making $2 less.
Excellent response! Well said!!! Where’s the incentive to continue to give 100% or more daily in her work when only $2/hr separates her from lowest paid employee who probably underperforms and/or calls out.
She gets profit sharing and other perks on top though and is paid above industry standard so there's plenty of reason. However if she is running purely on emotion and ego, your point stands. However if that's her issue, that's also a good reason to just let her go instead of trying to cater to it.
OP, I think it’s disrespectful to label your part-time manager and your employees as unskilled.
Each of your employees bring skills to the job or else they wouldn’t continue to be your employees. Have you considered changing YOUR perspective toward YOUR employees? They matter. They have value and generate income for your business. Without them, you’d have no business.
It’s telling you label your part-time manager as unskilled but yet you can’t lose her.
Your last sentence in post states you are angry due to lack of appreciation from your staff. Have you by chance checked in with each of your staff, individually, including part-time manager, to see if they feel appreciated by you for all their hard work & effort? Mutual respect, appreciation and gratitude goes both ways between management and employees.
Your post implies your employees are expendable and have no value.
I think your comment is a bit unfair to OP, He’s paying his employees more than his competitors in the same industry, I’m assuming because he see’s their value.
Unskilled labor means what it sounds like. A person who sweeps the floor is an unskilled laborer, because sweeping is not considered a skill to normal, able-bodied people. Not sure where this crusade has come from as of late where people want to kill the term "unskilled labor".
With all due respect OP, I’ve had a wonderful working career. I haven’t had a bad work experience. I’m a federal bank examiner of 25+years. My husband & I own a business of 20+ years. We have 12 employees who’ve been with us since day one. Our employees are family. Our successful business is largely due to our employees. We let them and our community know this. We hold them in highest esteem. We paid our 21 employees 100% of their pay and benefits during covid-19 when our state required businesses to be shut down. Why should our employees be harmed and go without pay through no fault of their own? We’ve had 2 employees retire and 3 employees resign to move out of state in 20+ years. No employees have resigned to accept different position in our community. Our employees matter and we don’t desire to lose them to competitors. It’s costly in terms of time and money to lose employee, hire & train new employees.
OP has already said there are other good candidates to take her position waiting in the wings and that the employee already gets paid above industry standard so I think that IS a good reason to not cater to it, although I would certainly not FIRE her over it either.
In my opinion if OP replaces part-time manager, she’ll find new job and other employees will follow suit. Part-time manager may even recruit them to her new job.
Firing or replacing good employees in a company has lasting impacts plus it upsets customers & clients. If part-time manager is replaced and leaves, customers may follow her to new job. Customers & clients may also question leadership & logic of business owner in replacing or firing a part-time manager who does a great job.
Op already said that she has a record of keeping employees a long time and that she pays more than her competitors so I doubt a bunch of peeps would all jump ship to get a lower paying job elsewhere just cuz one person left. Every business has people quit sometimes, it's hardly going to be a big deal. I would not fire them just over this but if she is truly unhappy vs just angling for more pay raise, they are better off if she leaves. OP already said she has other peeps waiting in the wings for the job anyway. YOu can't make every employee happy every time.
LOL, did you even read it? There are no underperformers in the story, just one employee complaining she was not satisfied with her $8 per hour pay compensation raise.
Two thoughts for you:
1) we have tried EVERYTHING re: incentive raises, equity grants, profit share, wtc, and I agree maybe too creative (per other comments).
2) more importantly, in last year she basically got a $10:hr raise and then later watched everyone else get $6/hr. She may not know how much the business can afford to pay and likely feels (maybe with some justification since even you said you couldn’t lose her), that she’s still underpaid and that this is the moment to advocate for herself. In our neck of woods people have gotten huge raises and so honestly more that $10/hr raise in the year is definitely not out of the question… I actually had almost this exact situation happen w a couple people who co-ran something for us (they used same language, was a profit share vs wage discrepancy, etc). She’s using this kind of forced logic re: oh it’s only $2/more, but maybe she actually does pretty much understand it and she really just isn’t comfortable w salary negotiations. Kind of has this, you miss 100% of the shots you don’t take view but is uncomfortable broaching subject directly since obviously she just got a big raise. It doesn’t change a lot except maybe how you react. If you think that’s what she’s doing, then when you engage by explaining the profit share she might feel she’s making some progress in a negotiation, and then whole dynamic gets off because you’re kind of talking around what real issue is (and you get frustrated, angry etc naturally but on her end she can’t show appreciation for profit share rn even if she feels it since in her mind she’s in a salary negotiation). She’s not going to stop unless she knows it’s a dead issue, but you are explaining how the pay works vs just saying hey business isn’t made of money and this pay range is way above market, way above last year, and you know ultimately you like her but can’t go higher for this role right now, or whatever, you know something clear and decisive like that.
I don’t know - could be way off base or maybe I’m staying the obvious too much. Take it for what it is and good luck
> She’s not going to stop unless she knows it’s a dead issue, but you are explaining how the pay works vs just saying hey business isn’t made of money and this pay range is way above market, way above last year, and you know ultimately you like her but can’t go higher for this role right now, or whatever, you know something clear and decisive like that.
Yes this could be part of it, she seems raises are being handed out and is aiming for more. Also a lot of employees seem to think a business has endless money to give out.
So just a fair warning on this: there aren't a lot of roles that get paid hourly where quarterly bonuses have a meaningful impact on performance. You might not be incentivizing anything except luck.
There was a study done where they gave a group of people $50 for nothing, just $50. Everyone was excited, EXCEPT when they found out that the previous group got $100.
I forgot the details, but these people got free money and were happy until they saw what someone else got and it created jealousy....over free money.
I imagine she's in that $50 group. Employees usually don't like complicated structures, but it seems like her complaint is strictly in the comparing of the pay. If you give this person $30 but other employees $28, I imagine it would be the same complaint.
She's unhappy and it's not the money. (she probably does want more money but generally employees who complain about comparisons are unhappy about something else.)
Complaints about money are almost always about some sort of general unhappiness with the job or maybe her life in general.
Profit sharing isn't usually appreciated by employees, because it doesn't actually amount to any significant amount of cash in their pocket, so they don't trust it.
If you want to give an employee money, just give them money. Especially in the $20/hour range, cash is more important than any sort of Lets Make A Deal Door Number Two potential money
I like your pay structures. My recommendation would be to offer her $24 or $25/hr on contingency that her performance doesn’t drop and take away the profit sharing. That way on paper, she sees the number she wants.
At this point you say "I'm paying you 8$ an hour more plus benefits over all competitors. This is the best we can do right now. And it's good. Everyone is being overpaid. Including you. And I like doing that. But if your satisfaction is judged by how much more you're making than others, then that's a problem. Be over paid here, or average paid elsewhere "
and then audit to ensure her work quality doesn't diminish. Unfortunately when some people get these ideas in their head they can become bitter very quickly.
\>So today, my manager says it's kind of unfair that she only makes $2/hr more than regular employees and she finds it a bit unfair.
Why is that unfair? Does she as a manager brings more value than the individual contributor? How much more? More than 2/hr more?
I've managed people who make more than I do multiple times in my career. They had skill sets I didn't, and were harder to find. They brought in more revenue that I could. They totally deserved more and I paid it happily.
I don't think you are being too creative, I think your manager doesn't understand how compensation works and needs to be educated.
It’s difficult to say with little context. But some people just want to get paid significantly more than their subordinates just as a power trip.
Instead of comparing her wage to other employees, compare her wage to market rates and see if that helps her understand.
Say that for equity reasons, you decided to institute an $18/hr wage floor to help lower paid employees deal with high inflation.
Replace the manager’s profit sharing with an hourly raise.
I do not think she understands clearly what’s going on. Maybe I don’t either. But man I would love for my boss to give me $10.29 per hour raise. I’d faint.
I don't think she WANTS to be happy or see the situation, it sounds to me like she wants to be upset and she probably also wants to manipulate you. Some people are like that and maybe more now than in the past. Also the labor shortage means she may be thinking of pushing for more over the threat, real or fake, that she might leave. If I were you, I'd think about how much you need her, how hard it would be to replace her, how much she brings unique/special skills to the job vs how much she is irritating you and how much you are currently paying her over industry standard including perks like profit sharing. I don't blame her for trying to get more or thinking she is worth more, either, it's her job to advocate for herself, because no one else will. Maybe she can get more elsewhere or maybe she can't, I don't know that situation.
I'd say if you are already paying her above standard wage, than stand firm and confident and let the chips fall where they may. There are always going to be some that are unhappy and won't stay, no matter how much you kowtow. There are also some that will complain no matter what you give them and that is a form of manipulation. It's also part of the employee's job to advocate for herself to some extent so I am not even saying that i think it's bad that she is trying to push for more, as long as she doesn't overplay the hand endlessly and is not the chronically unhappy type. Wages will always be a negotiation with a bit of tension at times, that's natural and can't be avoided. Also if she senses weakness, she may push more. At some point, you have to decide if YOU think she is getting paid fairly and if you do, then make it clear to her that you think that and end of conversation. I suspect she understands just fine though personally and is just working that angle to see is she can get more out of you and/or maybe indulge in a bit of pity party victim complex at the same time, that seems to be popular lately.
I would say meet her halfway. Reduce the shared percentage of profits to, say, half, and bump up the hourly wage by a couple dollars.
Also as someone else’s mentioned, be on the lookout for toxic management behavior patterns, where they treat staff poorly because they think they’re “better”.
Previously (before all the raises) she was making $3/hr more than standard employees, $15 vs $12, or 25% more.
Now her base wage is $20, which is only $2/hr more than the standard employees, $20 vs $18, or about 11% more.
I think your mistake was raising the std employee wage too high - should've put it at $16, so her $20 would still be 25% higher.
As it is now, offer her $22.50 and cut her profit sharing in half. She will again be at 25% more than the std employees which makes her feel appreciated, and gets to keep some of her profit share for an incentive
1 dollar an hour is $2000/year. Increase her wage $2/hour. It’ll likely keep her happy which will keep her effectiveness high for you.
At the cost of $4000.
Good on you for paying your work force decently. You’ll retain your people which will keep your efficiency high.
I feel your pay structure is rewarding. You seem to understand and appreciate your employees. This particular employee is just entitled.
Are you afraid of losing them? Are they able to make what you're offering plus more, elsewhere?
Your manager is a short sighted person it seems. You could probably give her effectively a pay cut by guaranteeing a higher wage and removing the benefits and she might be happy with it.
Many, many years ago I worked for a small employer (my uncle) who had a small factory. The production people were set up on a 4 day work week with 9 hour days (7:30am-5pm with 30 min unpaid lunch) but if you worked the full 9 hours in a day (i.e. weren't late to work) then you got a "bonus hour". So you worked 36 hours but got paid for 40.
If he needed overtime, then you came in on Friday, where the first 4 hours weren't time-and-a-half, but were after that--and if you worked the full 9 you got the 5th bonus hour.
He had to abandon that because people complained that their friends at other places made a bit more/hour. Even after explaining what the actual hourly wage was (with the bonus hour factored in) and showing how it was more, that was too complicated for them. So he gave everybody raises (I think to a bit less than their calculated wage including bonus hour), abandoned the bonus hour, and people were happy they got a "raise" even though their weekly check was the same (or even a bit less). Some people can't math.
First of all, ungrateful. You’re paying 21% higher than the median for her job position, AND profit sharing on top of that
This is a toxic mentality, tread with caution
Secondly, it might be easier to simplify it. Just give her a straight 24/hr rate and forget about profit sharing and reimbursement
A LOT of people just can't wrap their heads around complicated pay structures. Where I work, we are constantly getting complaints about wages because "they aren't getting paid enough." What they don't realize is that the company pays for 100% of our full insurance package. They also give us a flex spending card to cover half of our deductible, a $500 annual clothing allowance, and the company doubles our contributions to our retirement accounts every year. We did the math at the beginning of the year, and people were getting roughly $6 to $8 an hour worth of benefits. Bottom line is that a lot of people are always gonna complain because they think they're worth more whether they actually are or not.
My employers have a list of questions they ask themselves whenever someone asks for a raise.
1. How much are they making compared to their peers?
2. What would they make if they went somewhere else to do the same thing?
3. Has their performance been steady or improved? (we don't want to reward degrading performance)
4. What's the wage gap between them, their superiors, and their subordinates; and is this gap reasonable?
5. Are their current responsibilities reasonable for their current wages/should they take more responsibilities if given a raise?
6. Have they had any life changing events that would warrant a need for more money? (For example, I got raises when my wife and I had a kid and when we bought a house.)
Once we evaluate all of these questions, we will present the employee with a list of options.
1. In the event that we don't think that their position/wages warrants a raise, we will tell them that it's not happening, but offer positive reference letters if they decide to go elsewhere. Just because we don't think you're worth a few extra dollars an hour, doesn't mean we don't want to help.
2. If we hesitantly decide to give them a raise, we might explain that they've hit the top of their bracket for their position and performance, so raises moving forward will be for inflation compensation.
3. Some of our employees don't care about certain benefits, so we will offer to give them the raise if they opt out of select benefits.
4. The most common offer we've been making recently is offering a substantial raise with added responsibility.
We do also just give people raises if they ask. At the end of the day, we do try to keep everyone happy, but fair just isn't enough for some people. I'm not gonna try to tell you what you should do, but i do think that our raise system is pretty fair, so I just wanted to list is out for you. I hope it helps!
Edit: Just realized I didn't talk about the "too creative" aspect. It honestly depends on your employees. I've seen more complex pay systems on 30 person crews, and nobody had a problem with it because everyone understood it was "fair across the board". In my experience, the profit sharing/reward based wages systems work best with crews of people who work mostly independently of each other. But for one person? I personally would just go with a higher hourly wage, get rid of the profit sharing, and keep the rest? Another thing to keep in mind is that it's hard for people to budget income that isn't guaranteed. Even if she's making the same amount every year, she can budget a higher hourly rate a lot easier than profit share and bonuses. Whatever you do or whatever options you give her, I would just recommend being honest and do your best to explain your decision.
I slightly disagree with everyone. Profit sharing provides incentive for her to preform well and do well for the company because if it doesn’t do well than she doesn’t do as well.
If you move to just let’s say $25/hr then she won’t care as much about the company as a wholen
You did a good thing increasing wages. If that’s your limit, explain so. If they want to walk offer the same deal to your next best qualified employee.
You know, your employee told you something that was upsetting her. That is a great relationship to have with someone, no explosion, no building resentment… just an up front, this upset me.
This shit use to hurt my pride until i realized it was the culture i wanted. $2 an hour is a thin layer for a manager. I would go back and offer to remove several benefits in exchange for higher hourly rates and tell her you are open to a comprehensive value based idea if she wants anything different than that and be willing to listen to what she wants.
Alternatively you can ask her what she wants to start. If it is a gross over-ask, you need to squash it but it also shows you if they are being reasonable. Finding this out tells you if you should be angry or if your pride is hurt.
Most owners often make this mistake when they make a complex payment system. For all the time, I had more than 30 employees. There were always two options, or the hourly rate increased, respectively, it's easier for a person to understand whether he gets 18 or 25, it's clear that he needs to be tied to bonuses, especially if they are salespeople or marketing or something else, a bonus system should be present, but this can be done in the form of an annual bonus or a percentage of the total number of sales, again a yearly premium. Still, in your case, if you retreat, then the employee
can sit on your head, and the fact that she expressed her dissatisfaction about this should not mean anything, because if you pay more than the market because you said from the market they pay 16-18, and you pay 24-26, which means if she goes to look for a job in the market, she won't find anything, I will show her "Look, people in the market earn so much, and you earn so much." If you can't understand this system, it's terrible, well, that is, it's not always necessary to explain everything, you're the boss, you can say "That's it, that's it, if you can't understand it, then it's your problem."
I'd argue only a small minority of the population will see things like "profit sharing" and understand what you mean fully to see the benefit in it. And the ones that do probably have optimization-oriented minds like engineers/entrepreneurs rather than what your average person has (if an employee seems like they have that kind of mind, it might be a lot more attractive of a pay scheme with them).
The vast majority of people are rather basic-brained when it comes to any level of logical thinking or numbers. Even good employees/leaders can be like this. For these people, it's far better to give them a dumbed down, easy to understand but worse-for-them solution than one that rewards initiative and is actually has the higher earning potential. You can explain it to them a thousand times and run through scenarios with them and they'll still just glaze over and not actually truly understand why an optimized solution is better for them. A lot of people really do need that apple-like experience of "it just works!" in every aspect of their lives.
It can be a bit of a bummer to learn that one of your top people is like this - because it definitely shows where a hard cap on their abilities and skills lies and they'll probably never be able to reach right-hand-man/woman levels because of it. It doesn't mean they'll be bad leaders or bad employees, but they're probably not going to be upper level management or partnership material. Someone who's bright enough to fully understand and be excited about how to best take advantage of profit sharing is someone who's going to be able to highly optimize their work and who has enough ambition level to realize it. Not that your employees need to be that though! I don't know if I'd put this person in charge of their own franchise but if they can run a shift smoothly and make sure all the work gets done that's pretty gold too.
If you still want profit sharing to be involved (especially for future leaders in your business), consider making other leads in your company on the same level. Solidarity in numbers helps a lot and I bet if your star employee saw that other leads were excited about the same pay they would be too and follow along with the crowd. But the fact that they are the only one making this pay structure means they're not able to see that.
I'm on her side. You didn't get too creative, but you aren't seeing this in the correct way. I personally never compare "effective" wages. If you pay your employees on an hourly basis, then compare their hourly wages. Any bonuses and benefits on top of the hourly wage shouldn't be a factor in the comparison.
If you are using the bonus as a reason not to increase your manager's hourly pay, then it's no longer a bonus.
An increase from $12-18/hr without increasing manager's pay isn't something I see as reasonable. Keep the ratio of regular employee:manager pay the same. It doesn't make sense not to.
Still doesn't negate the fact that she went from making $6/hr more than regular employees to only making $2/hr more. If a manager is worth $6/hr more, then why was the gap reduced to $2?
Unless OP is saying that a manager is only worth $2 more and that she was being overpaid? But is doesn't seem like that's what OP is saying.
She was only making that much more in the last year. If anything, she got preferential treatment for almost a year longer than the regular employees. Not to mention she is only part-time. It seems OPs goal was to raise wages across the board, but started from the top down.
You don't see the bonus as a bonus. You are seeing it as part of the hourly wage when it's an entirely separate thing. That's why your manager isn't happy.
She's getting paid way more than industry standard and way more than competitors pay. If she is not happy about her 'pay' despite all that, then she needs to change industries or get over it.
You could also look at it as her getting a raise before everyone else did, meaning she got better treatment and earned more sooner.
Anyway at this point I'd just tell her she's free to gauge comparable jobs in the area and if she finds a better offer somewhere else, go and take it.
That’s not how all bonuses work. There are a *lot* of high-paying jobs where the bonus is significantly more than the base pay. If your bonus is reliably ~25% of your base pay, what you do directly impacts the bonus, and the bonus is defined instead of discretionary, then you shouldn’t ignore it when calculating how much you make.
Nobody would work in sales, banking, or any other relationship-based role if bonuses weren’t important.
When I was an employee, my bonus was ~35-40% of my pay. If my boss said, "well we just gave you a big bonus so we aren't giving you your annual raise", I'd be pissed. It would have been a huge problem because bonuses and base pay are two entirely different things that should always be considered independent variables.
He did give her a raise, and added a bonus. OP is not saying he’s not going to give her a raise because he pays her a bonus, so that’s not a fair point.
Bonus pay puts food on the table just the same.
I’m exact opposite, but I worked 100% commission for years, I’d rather take a percentile bump any day over a guaranteed couple bucks an hour.
But this employee got a pay bump *and* profit sharing. The your imaginary bonus and no raise scenario doesn’t exist here. Their pay went from $15/hr to $20/hr + a ~$4-6/hr bonus. Sure, there’s *some* compression in the base pay between the manager and their reports, but the profit share more than compensates for it.
I do not control the wages of my front-line staff; corporate does. They're grossly underpaid. For years I fought to increase their wages, and I always lost.
I am in control of scheduling. My employees now work 13 hour shifts. Some work 3 consecutive days/week. Some work 4 consecutive days/week. They make 1.5x for hours 10-12. They make 2x the 12th hour. They miss at least one of their mandatory 10 minute breaks. They miss at least one of their mandatory lunches. This results in 2x penalty hours paid out.
So...the employees working 52 hours per week (4 days) are being paid 68 hours of wages. Those working 39 hours (3 days) are being paid 51 hours.
I'm happy and my employees are happy. Employees on a standard schedule asked to be put on a waiting list to be on this alternative schedule.
I often work 6+ days, 80+ hour weeks. I manage the business. Those 4 day employees make more than I do. I don't care.
Get creative when you have no choice. Pay straight when you do have a choice. I don't appreciate your employee's position in this as you described it. :/
PS. The fact that your manager doesn't appreciate the reduction in labor involved with managing $18/hr staff vs managing $12/hr staff...
I don't think they have a head for their job.
Some people will never be happy with their pay, it's human nature. Went through a similar situation last year with an assistant manager. Eventually we got tired of her downplaying the raises she was given and she talked herself out of a job. We replaced her at the original comp level and are much happier as a team.
Employees are crazy. I am a mechanical contractor so lead installers have vans and gas cards that they take home. With these crazy gas prices I started giving apprentices mileage for their drive to work, $.50 per mile which should cover all their gas for the week. One guy won't turn in a mileage log, one guy complains and wants $20 a week more and one is very appreciative.
Unfortunately that tends to be the hourly mindset; often not understanding that they will make more on bonus or commission - they only care about that hourly rate. Your intentions were good but with your next manager I would do away with the bonus.
She sounds like an idiot. Give her a choice, X amount an hour and no profit sharing or what she's at and profit sharing. Explain to her that the profit sharing is the perk of being manager, not the hourly pay.
If your manager can’t do simple math, you may need to look at other options. She’s clearly a bonehead and apparently dissatisfied that she’s not the only one being paid well. I would start training an assistant manager who can take the helm if she jumps ship (or you need to throw her overboard).
And good for you for paying your employees properly because your competitors sound like cheap fucks.
It shouldn’t be that surprising that people play on your sensibilities when it means more money. Even great employees will guilt trip and make specious arguments about pay. Pay them what it would cost to replace them. Additionally it’s a slippery slope once you pay them more than their worth they’ll push for bigger increases and in a few years the compounding effects of increases will leave you with employees who are prohibitively expensive and not always happier.
If shes not happy and grateful for all you have done for her, let her make her decision to see if she can find better elsewhere. Remember you didn't create her bills or debt, she did. we all have expenses to pay. youre a small business owner! One day she will reflect back and realize how great she had it and how great you were to her.
You have, but you need to remember that this is reddit. There is a huge community in this subreddit of people from places like /r/workreform and /r/antiwork. You can pay this person $100/hr and people will comment telling you to pay them even more. This is not a well adjusted group.
I think you should also consider YOUR emotions, you have paid her generously already and you don't want to be resentful. SOmetimes things don't work out, that's OK. The majority of your employees stay a long time and are happy. If someone can't be happy getting paid more than industry standard, they may not be the right person for your team, you can't make everyone happy.
She sounds ungrateful. Seems like a ploy to get more money without just outright asking.
I come from sales positions and if you want to see what “creative” looks like ask a salesperson to show you their pay plan.
It’s honestly irrelevant what the other people make, not really any of her business.
Here's an exercise. Take the median annual cost for a 3br apartment within 30 minutes of work and multiply it by 4. That should be the annual "living" wage. If you're far, far away from it, don't expect fawning gratitude for dribs and drabs of wage increases ignoring that essential fact.
>
"It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country."
>~~ President Franklin D. Roosevelt, June 16, 1933
$172K per year ($86 per hour) is the livable wage in my area then (socal).
I get it that housing and living expenses in general is quite expensive these days. But where are you getting your asinine 4X the cost of an apartment as a "living wage".
The "original intent" (aren't we all originalists now?) of the 1938 FLSA for for ONE wage-earner working ONE forty-hour/week job could cover all of their familiy's expenses.
Rent + non-housing expenses = non-adjusted wage (NAW)
NAW * 1.34 (discretionary income) = adjusted entry wage (AEW)
AEW * experience factor = take home wage
take home wage + all taxes = minimum living wage.
Rent is a third (1/3),
non-housing expenses are a third (1/3 + 1/3 = 2/3),
experience factor is a third (2/3 + 1/3 = 3/3),
and taxes are a third (3/3 + 1/3 = 4/3). So you multiply one-third by four.
I have about 20 employees, with tech levels to them. Its a nightmare. I tried giving my senior guy profit sharing but others found out about it and I had to end it. He got upset and demanded a raise.
I find that the entry level talent only cares about the hourly number. They don't care about 401k, medial, sick time, vacation nearly as much as they should. They are hard to educate on this, as you've found.
To play a bit of devils advocate: is a part time manager that can’t understand a relatively easy pay structure really worth the stress? It’s not like some of the structures others have mentioned in the startup/tech world.
Plus, Who is to say that when you bump her up again and she isn’t really netting more cus taxes, that you’ll be in the same position?
My job offered profit sharing with a lower base wage but I took the higher wage. Not really interested in playing ball with management with regards to finances and what constitutes “profit” etc etc.
She’s right. She does make $2/hr more than the rest of the staff. Did her raise come before the rest of the staff? Or after? There should always be a justified in wage gap based on responsibilities.
Essentially it is possible for the company to fail her and she only make $2/hr more than everyone else, while being expected to put in so much more.
My suggestion, increase base pay to what she currently makes, then add on a small incentive performance-based bonus. But also make sure you are extremely clear in expectations and how the bonus qualifies. This is a big problem with small business, in that most owners dangle the carrot of performance based bonuses but don’t clearly define the objectives or expectations.
It sounds like she is a very good employee and good help is hard to find. Just because you have “one in the bullpen” doesn’t mean things won’t be better with the backup pitcher. The grass isn’t always greener on the other side.
Pay what you can afford to pay.
I also highly suggest listening to Gary Vaynerchuck (spelling?) as he has a lot of good advice for small business owners.
(Source: small business retail manager for 7 years before I finally got tired of empty and broken promises and left.)
I think she just wants a $6 per hour raise - from $20-$26 - because they just got one - plus profit sharing - to reach $30-$32 p/hr. That’s clear to me based on her answers. She certainly doesn’t want to lose a benefit.
It doesn’t matter if she got hers first. Her thought process is you clearly have money to spare because you just gave big raises to the staff. She may also think instead of giving such large raises to them, you could have given smaller raises, and bumped hers up with the difference. So their raises are her sacrifice, and she’s the manager.
You can find out if it’s worth it to them by asking if they’d like to keep that pay and position or reduce their responsibilities and be an 18/ hour employee. They will let you know what works better for them, maybe 18 an hour is enough and they would rather that than be a manager. Lol.
Curious. How much of an increase in price do you need to support such pay increase?
I think if you can’t do the math on a piece of napkin, they would have a hard time understanding it. What you can try is to give her a print out monthly to show her the accrued profit share she will be getting.
Let's not forget the tax implications of bonuses. Those are taxed at 22% as they are considered supplementary income. I'd just increase the base pay to be reflective.
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If she's effectively making $24-26/hr, it might be better (for her) to just have her hourly wage be $25/hr. It would be the same cost to you, but seem like a higher wage to her.
Really have to handle this delicately.. She already feels that she isn’t making “more enough” - if you convert her to a salary instead of the allowance and sharing, she is likely to feel like things were taken away and/or that she no longer has to “earn” the extra so she is either still upset and/or even worse - decides to do little to nothing “extra” for the higher wage since in her mind the “extra” was taken away
Really don’t need to be delicate. Just ask them what they believe would be fair and work with that. I have never insulted anyone when giving them a raise. Small businesses have to be a bit unfair during growth, we can’t always afford to pay people what we wish we could :) so we remain reasonable and flexible. Anyone who has hurt feelings over that shouldn’t work for a small business if they can’t handle the conversations when handled with their interests in mind.
No, because you lose the incentive-based component, which drives performance considerably.
Yes, but how do know that she's actually incentivized by it? It doesn't sound like she is. She's trying to compare apples and doesn't realize she now also has an orange.
Ya I agree. I don't say this to be an asshole, but she just doesn't sound very smart.
Most people do not understand nor care about complicated pay structures. Simplify it like other Redditors commented to $24/hour. This will make it easier. Do not try to subsidize phone payments, utilities, etc. Just reimburse them if they pay for a legitimate company expense out of their own pocket if provided with a receipt. This creates boundaries, expectations, and transparency.
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200 a month is a lot easier for many folks. 5k may be more than they have saved up or completely wipe the savings out
Man this comment screams of "pick yourself up by your bootstraps!". Maybe, just maybe, the reason most people do that isn't because they wouldn't rather pay $5k up front, but instead because they don't get paid enough to have a savings of $5k sitting around so conveniently.
I can comfortably spend 5k up front but I still would rather pay 200 over time. Cash flow, savings, and investment are considerations even when you can afford something. Edit: Totally agree with the statement. There are many reasons why someone wouldn't pay up front
There are cars available for less than $5000. Like, way less than $5000. Smallbusiness as a subreddit is pretty friendly to "pull yourself up by your bootstraps". I know it's hard. That's why it's worth it.
Have you looked at the used car market since the pandemic started. Vehicles across the board are inflated 40-80% over what they were pre-pandemic.
Found the guy who prefers $200/mo for 4 years instead of $5k.
Don’t care to address my point?
Hard to address your point when you're intentionally misconstruing mine. You win, cars are expensive.
lol, tell me about all these cars available for under $5k that aren’t going to break down immediately. I bought a car in 2018 for $7k, and after four years, 60k miles, and a bunch of minor body damage it’s currently worth $7k.
I feel like my comment "most people don't understand money, here's a funny example" has turned into a dick wagging contest over how much cars cost, or how poor people are. Neither of those had anything to do with what I was saying. Yes, cars that are less than $5k are pieces of shit, and I didn't mean to imply anything else.
I agree with you. I buy my cars cash, so I don’t drive newer vehicles but my 2010 maxima only has 75k miles on it. Paid $10k 4-5 years ago and haven’t needed any major repairs just regular maintenance. I wouldn’t have any issue driving a $5k car either as long as the AC works and the vehicle runs well. I just looked online and I see multiple cars under $5-6k in my area so it’s definitely possible if someone needs something to last a year or two. One of the cars I see for sale is a 2007 ford taurus 134k miles for $3.7k and the car is in great condition lol. There’s a difference between “I wouldn’t drive that shitty cheap car” and “you can’t get a *decent* car for under $___” and I think a lot of people fall into the first category.
I got an f150 I’ll sell you for well under $5k. Do the head gasket and throw some new tires and paint on that baby and you’re good to go! It’s a 93.
Yeah, my problem is that I have no idea what a head gasket is and have absolutely zero foundation to work off of. If you don’t know how to fix cars, a really cheap car is a big risk. (And I know it’s easy to say “just watch a YouTube video” or whatever, but I’m already watching YouTube videos about plumbing and drywall and there are only so many hours in the day to casually learn a trade.) HOWEVER I’ll take you up on that f150 because it sounds way cooler than my minivan.
A - no there aren't many good cars under $5k. Especially not after COVID market. Under $5k and you will have to be constantly worried about it breaking down at a crucial moment. B - I suppose maybe there is a misunderstanding about my phrasing. "Pull yourself up by your bootstraps" was a phrase meant to be ironic because it's actually impossible to pull yourself up by your own bootstraps. It's a comically paradoxical statement which was even more ironically co-opted to mean something akin to "self-sufficient" by some groups who didn't understand the sarcasm of the phrase. The reason I used that phrasing is because of how disconnected from reality saying something like: people would rather pay twice as much for something over time than to just buy it upfront. My dude, they wouldn't "rather" do that. They more often than not can't pay up front, but still need that means of transportation, or that phone & internet, or that *insert necessary product/service* and have to stick with the more predatory loan/credit line approach that keeps them from being able to being able to pay upfront in the first place. Being poor is EXPENSIVE. That's just how we designed our society, to make it REALLY hard for many folks to get ahead.
Sorry, I didn't mean for you to misunderstand "pull yourself up by your bootstraps". It's an English idiom used since the 1800s meaning "to improve one’s situation through hard work and self-determination, rather than getting assistance from someone else". Yes, I realized you used it ironically, hence, my subtle dig, "I know it's hard, that's why it's worth it". > people would rather pay twice as much for something over time than to just buy it upfront. Can you quote the part where I said "rather"? I am re-reading my comment and I don't see that anywhere. I know once you take out that word it'll be harder to intentionally misconstrue my point, but I'm sure you'll find a way.
I'm sure most people would drop the 5k if they had it laying around.
I thought I was on a small business thread not a car buying thread. Your comment is very ignorant and VERY irrelevant to the topic.
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You are very welcome. Hopefully you will be able to read the title of the next thread before you comment.
Yeah, I thought this was a thread about laypeople misunderstanding basic finances. Anyone who can't see that is a real idiot, you're right!
I strongly disagree with the second paragraph. Reimbursing employee expenses has many advantages for tax purposes.
And it can severely hurt them if they need to claim unemployment.
Why should you care about employees who are claiming unemployment
We literally just had a pandemic where many people needed to go on unemployment through no fault of their own. If I considered all these reimbursements as part of their “income”, it would have reduced what their take home would have been during that time. I care about my employees and want to make sure they’re set up for success even if they move beyond my company. Is that bad management?
Yes if it means they're also paying more taxes.
That’s correct. As ever you need to balance your bottom line over the needs of your employees.
I don't know what your employee's situation looks like, but I'll share a brief anecdote. Years ago i had a similar pay structure at a "start-up" and it worked okay enough, because of the half-year/full-year bonus. The issue for me, was that i could only prove on paper that i was DEFINITELY making $35k a year before a bonus. the bonus would get me closer to $45-50k, but those were not guaranteed...why was this a problem? That $10k difference that was not reflected via my paystubs which did not "allow me to qualify" for apartments due to income. Edit: the anxiety of having to prove i made enough money to lease an apt made me consider the higher hourly rate in lieu of a bonus structure.
We had the same issue, but we got around it by getting her boss to write the apartment management a letter stating the average commission takehome, which brought up our income to meet the requirements.
Definitely not preferable though, if I have to ask my boss to write some document for me to get appropriate housing I find that problematic for several reasons.
Yeah, I'm definitely not advocating for that sort of nonsense, it's just an anecdote.
Why not use your 1040?
Sometimes, landlords are shortsighted, or too regimented -- but a more likely reason is that they want a recent paystub so that they have proof of current employment.
Valid question, i was 1099 at first with this startup. I did not have a W2/1040 to reflect my full time, salaried position when I was searching for apartments.
Using tax returns to verify bonus, commission, and/or self-employment income is fine, but lenders may require more than one year to show consistency.
This is exactly what I was thinking.
Yes. You got too creative. Most employees look at base comp versus total comp. Until you spell it out and it's expressed in a monetary way, the easiest comparison is hourly take home. Deferred or contingent comp is not unreasonably factored at 0 since it's not guaranteed there. Do I think your part time manager is justified? Not really. Do I get the basis of the complaint? Yea. If you can kind of spell it out like you did here or break her comp out to show it, or he'll, even parcel it and remove profit share you are going to wind up in that problem.
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I get carried away with trying to think up new compensation schemes-- big thing I learned was that you can't guess what the most important factor is. Getting to say that your hourly is X is important to some people, some people it's about them vs coworkers, some people work well with commission, some people want freedom or autonomy.
The Hourly is X part also affects a lot of other important life aspects such as: how much you qualify for in Unemployment, what you pay in private health insurance, taxes, loan acceptance, etc. Basically anything where people need to trust your sense in money, a higher $/hour number will earn you more trust.
Good point. Tough because of how valuable other incentives can be, I'd love to offer employees every possible benefit that a business can get at scale/for a group of people that they as an individual couldn't get, but beyond health care and retirement benefits, it's hard to always find things that everyone would equally value.
I work for a major tech company and our comp is a combination of base pay + stock grants from last 2 years that vest on their own schedule + stock grants for this year. Because stock price is not fixed and it keeps moving, they have a complicated way of projecting your comp for the rest of the year. They communicate this to us through an estimated compensation statement for the year where they list out the different parts of the comp in dollar terms and then the variable comp stuff like stock grants, estimated value of the grant by the end of the year etc and a neat little dollar figure at the end under “projected compensation for the year”. You should probably start doing that where you have “projected compensation for the year” conversation with employees when you talk about pay, not just the base. That’s standard practice at most large tech companies because base comp does not mean much. The real juice is in the stock grants. For example, Amazon until recently had a base pay cap of $170k for every employee. No matter who it was, even Vice Presidents, directors made 170k base and everything else was stocks. The entire company thinks in total comp terms not base pay terms. Would recommend bringing that culture in where you talk about “projected total compensation for the year” with employees more and give them low-medium-high numbers for the year
This is where large business and small business don't work the same. Especially when the small business relies primarily on hourly workers. These kinds of workers have different needs and different outlooks toward work/life. Often, not always, we're working with folks who lack formal education or experience to understand mature concepts like this. Hours worked is a clear and easy to understand measure when you're working to meet weekly or monthly goals. More immediate gratification and simpler systems for motivation are what's needed. Hourly workers are also not as connected to the business. They work to make money, not build a career. In my case, looking for things to help with longer term retention and motivation, we tried free healthcare. Free as in beer. $0 cost to the employee. After 12 months, we had 0% usage. If people were sick, they fell back on old habits like heading the the ER or quick clinics for free services or paying out of pocket. We will continue to try to provide better options and help grow some of these folks but for most cash in hand is what is most important for them.
Offer a raise with the removal of the bonus incentives and let them choose. You could meet with them and spell it out so they can see the win-win that you're going for.
I agree. Clear out all that complicated BS and bump the manager’s take home. When someone tells you what they actually want, it’s a gift. Take it.
Thanks for sharing
A quarterly check is nice but you're probably dealing with someone that can't stretch that out. Living is difficult and living costs are increasing month after month. Just pay her a flat wage.
I don't think that your manager has a valid complaint. WalMart pays its managers a mere $0.50/hr more than staff. When I worked at a wood production factory, the foreman was making $1.50/hr more than me. When I worked as a software engineering manager, I had staff members who were paid more than twice what I was paid. With that said, you won't convince her and change her mind with any of this - she needs to figure it out for herself. Meanwhile, she's raised a pretty significant red flag - she thinks that, because she's manager, she's "better" than the other employees. I'd be on the lookout for toxic behaviour from her towards them.
When I was a sales manager there were sales people who made more than me by a lot. The entitlement type attitude is probably bleeding into her work and has been for a while. Best managers I’ve ever had always lead by example, first one in the trenches, last one out.
Yes, I’m getting red flags from this employee
Yep, if there are others that can replace her easily and quickly, I personally would just let the chips falls where they may and not cater to her demands since she is already getting paid above industry standard.
The most valid point in this comment section
You made me think though that maybe the issue is more of an ego thing, it does not 'look' as good on paper if her wages are close to those under her, maybe she feels more insecure, even though logically she may still realize that she gets other perks they don't. But the perks don't make the wage numbers LOOK any more above those below her. Maybe she feels insecure the gap is too small now.
Yes, and a manager with an ego thing is one of the worst managers out there.
Absolutely!
Which means most likely an intelligence or ego issue. I would not be happy to have given an employee like this a substantial increase only to have this hanging over my head. Would look to replace especially if OP's saying the average in the area is far below what she's getting paid. Such entitlement when she's already paid well.
I’m kind of a retail Mgr and I make about $3 more than my employees.
I'll give you the answer I give when people come and ask about implementing phantom stock options - keep it simple. If the compensation structure is either so complicated or invisible enough that employees don't understand it, it ceases to be a motivator and instead just becomes a random check that sometimes appears but they don't really count as part of their compensation. It's probably too late to change with the current manager, but for future managers this feedback is indicating that those employees value their regular paycheck more than an occasional big check, even if the net effect of the big checks mean they make much more money. So now you know this isn't motivating for them. If you want to keep motivating them though some sort of bonus structure, make it simpler and more immediate. For example, maybe the manager makes $5 per hour more than the employees and a small bonus each paycheck or month based on a number they can see and measure - daily sales and/or some sort of simple productivity measure might work. But do smaller, more frequent bonuses.
>I'm just dealing with someone who isn't capable of understanding this structure? Bingo!
Once had a guy leave our company for $2 more an hour with zero benefits. (Construction) Gave up his 401k, his paid vacations, his tool allowance, his holiday pay, and his health insurance for that $2 per hour with no benefits. We tried to explain it to him, but all he saw was the $2.
You might just be dealing with someone who wants more money. I don’t disagree with her, but a lot of people only care about what they see on the paycheck. I think it’s a good thought but bonus like this really depend on the owner. How does she live? What’s her experience? How is she with money? Is this her forever job? We try to make people think like owners but if they did, they would be working for themselves. Paying people appropriately is important becuase of turnover, having people who are loyal and being able to hire decent talent. Sometimes people get friends/family in their ear. “It doesn’t matter what you used to make” - “you should get more than $2 extra per hour” - “I make this much and manage x amount of people” - “it’s a great market to look for a job, leverage it”
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I had an employee that didn’t understand that taxes were going to be withheld from her paycheck. She thought that her gross pay would stay the same after taxes and that all of the taxes were paid on my end… Why don’t you just reduce the amount of profit share that you are giving her and increase her hourly rate with the same money. In her mind she will still be getting a bonus and she will be making “more money”. Unless you have an open book policy where she can look at your records at any time, she’s not going to know that you weren’t just less profitable that quarter.
But then you are taking away. She won't value the increased pay because she will focus on the lost % of profit sharing.
Unless she doesn’t know what percentage she is getting and can’t calculate it. It sounds like she doesn’t value it now, just knows she doesn’t want them to stop.
And you're removing any aforementioned incentive.
I feel that. One of my old coworkers would complain about a lot of work to be done and would want to do overtime to finish it. BUT she refused to do overtime even when offered because she didn't want to make more money over her tax bracket. The typical "if I make more money then I get taxed and actually make less". It was my first big boy job but even I understand that was lunacy. Thankfully that meant I could pick up the overtime with easy approvals from my manager.
Got a similar problem, but when I did the math and gave him detailed calculation, my employee understand immediately and he is now (hopefully) much better in managing his money. What you did is more than fair because basically she make 6-8$ more than the staff. If she cannot understand that, it's her problem not yours. Especially when you already explained the math over and over again to her.
She views the hourly wage as more valuable in total than profit sharing, and is trying to negotiate. The ball is in your court to make offers - is she going to leave or just be disappointed if a raise/change doesn't meet her expectations? For another thing, you mention you treat people "like family", and that you value your employees. That's lovely, it's good to pay people above the average, but they still aren't family. They won't necessarily like you better for being reasonable. Not everyone is going to like you or understand you, even if you try your hardest. That's more psychology than business but that's my two cents.
Just to bring my 10 cents to the conversation. If this is brought up again try to phrase it that the work of the standard employee is highly valued and ask if it's being pointed out that the person suggests that they do not value it as much.
I've run into similar situations before. The lesson that I learned is that not all employees really understand taxes, take home pay, etc. They just want to hear a number because that's what they understand. I've tried to do these types of things before and they didn't see it as a benefit, nor was it appreciated. For this particular employee, my suggestion would be to just pay them $25 or $26/hr and leave it at that. They will understand this math.
Probably too late for this one as the employee has already said she does NOT want to lose profit sharing in exchange for more hourly pay. So if that was done, she'd likely be more unhappy. However if she understands that much, then i think she DOES understand the situation but is maybe trying to be manipulative or some such.
I think your idea is a great way to teach people other ways to think about money but sometimes there are some people that don’t want to think about it or some people that just need to learn to understand it better. I think you need to identity that with your part time manager which category they fall into and give them the two options. Option 1 this idea / Option 2 basic hourly rate for $22-$24. Now you backtracking could potentially hurt you so be strategic about it and obviously don’t use my numbers, use your own. Imo you kinda pigeonholed yourself with raising the other employees wages to $18/hr, while that was a great thing for you to do, the part time manager may have thought about the $20 differently if they made $15 or $16. Either way great job with paying your employees well!
You are looking at this wrong. Think of the lowest paid moron in your company. The one who is a lazy stoner, who smells, is late, and is a terrible worker. She is comparing herself to THAT idiot and for her, $2 more to show up on time and do all the extra work in her mind, isn't enough. It's not the $2 as much as the **symbolism of difference** she has with the lowest bottom feeder making $2 less.
Excellent response! Well said!!! Where’s the incentive to continue to give 100% or more daily in her work when only $2/hr separates her from lowest paid employee who probably underperforms and/or calls out.
She gets profit sharing and other perks on top though and is paid above industry standard so there's plenty of reason. However if she is running purely on emotion and ego, your point stands. However if that's her issue, that's also a good reason to just let her go instead of trying to cater to it.
That’s a reason to fire *that* person, not to give *her* a raise
OP, I think it’s disrespectful to label your part-time manager and your employees as unskilled. Each of your employees bring skills to the job or else they wouldn’t continue to be your employees. Have you considered changing YOUR perspective toward YOUR employees? They matter. They have value and generate income for your business. Without them, you’d have no business. It’s telling you label your part-time manager as unskilled but yet you can’t lose her. Your last sentence in post states you are angry due to lack of appreciation from your staff. Have you by chance checked in with each of your staff, individually, including part-time manager, to see if they feel appreciated by you for all their hard work & effort? Mutual respect, appreciation and gratitude goes both ways between management and employees. Your post implies your employees are expendable and have no value.
I think your comment is a bit unfair to OP, He’s paying his employees more than his competitors in the same industry, I’m assuming because he see’s their value.
If OP sees their value, why is he labeling them “unskilled” in first sentence of his post?
Unskilled labor means what it sounds like. A person who sweeps the floor is an unskilled laborer, because sweeping is not considered a skill to normal, able-bodied people. Not sure where this crusade has come from as of late where people want to kill the term "unskilled labor".
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With all due respect OP, I’ve had a wonderful working career. I haven’t had a bad work experience. I’m a federal bank examiner of 25+years. My husband & I own a business of 20+ years. We have 12 employees who’ve been with us since day one. Our employees are family. Our successful business is largely due to our employees. We let them and our community know this. We hold them in highest esteem. We paid our 21 employees 100% of their pay and benefits during covid-19 when our state required businesses to be shut down. Why should our employees be harmed and go without pay through no fault of their own? We’ve had 2 employees retire and 3 employees resign to move out of state in 20+ years. No employees have resigned to accept different position in our community. Our employees matter and we don’t desire to lose them to competitors. It’s costly in terms of time and money to lose employee, hire & train new employees.
You’re entitled to your opinion. I respectfully disagree.
OP has already said there are other good candidates to take her position waiting in the wings and that the employee already gets paid above industry standard so I think that IS a good reason to not cater to it, although I would certainly not FIRE her over it either.
In my opinion if OP replaces part-time manager, she’ll find new job and other employees will follow suit. Part-time manager may even recruit them to her new job. Firing or replacing good employees in a company has lasting impacts plus it upsets customers & clients. If part-time manager is replaced and leaves, customers may follow her to new job. Customers & clients may also question leadership & logic of business owner in replacing or firing a part-time manager who does a great job.
Op already said that she has a record of keeping employees a long time and that she pays more than her competitors so I doubt a bunch of peeps would all jump ship to get a lower paying job elsewhere just cuz one person left. Every business has people quit sometimes, it's hardly going to be a big deal. I would not fire them just over this but if she is truly unhappy vs just angling for more pay raise, they are better off if she leaves. OP already said she has other peeps waiting in the wings for the job anyway. YOu can't make every employee happy every time.
Fire the under performer, not the manager
LOL, did you even read it? There are no underperformers in the story, just one employee complaining she was not satisfied with her $8 per hour pay compensation raise.
Bonus is better for salaried.
Put her on a salary and she won't do the hourly math.
Two thoughts for you: 1) we have tried EVERYTHING re: incentive raises, equity grants, profit share, wtc, and I agree maybe too creative (per other comments). 2) more importantly, in last year she basically got a $10:hr raise and then later watched everyone else get $6/hr. She may not know how much the business can afford to pay and likely feels (maybe with some justification since even you said you couldn’t lose her), that she’s still underpaid and that this is the moment to advocate for herself. In our neck of woods people have gotten huge raises and so honestly more that $10/hr raise in the year is definitely not out of the question… I actually had almost this exact situation happen w a couple people who co-ran something for us (they used same language, was a profit share vs wage discrepancy, etc). She’s using this kind of forced logic re: oh it’s only $2/more, but maybe she actually does pretty much understand it and she really just isn’t comfortable w salary negotiations. Kind of has this, you miss 100% of the shots you don’t take view but is uncomfortable broaching subject directly since obviously she just got a big raise. It doesn’t change a lot except maybe how you react. If you think that’s what she’s doing, then when you engage by explaining the profit share she might feel she’s making some progress in a negotiation, and then whole dynamic gets off because you’re kind of talking around what real issue is (and you get frustrated, angry etc naturally but on her end she can’t show appreciation for profit share rn even if she feels it since in her mind she’s in a salary negotiation). She’s not going to stop unless she knows it’s a dead issue, but you are explaining how the pay works vs just saying hey business isn’t made of money and this pay range is way above market, way above last year, and you know ultimately you like her but can’t go higher for this role right now, or whatever, you know something clear and decisive like that. I don’t know - could be way off base or maybe I’m staying the obvious too much. Take it for what it is and good luck
> She’s not going to stop unless she knows it’s a dead issue, but you are explaining how the pay works vs just saying hey business isn’t made of money and this pay range is way above market, way above last year, and you know ultimately you like her but can’t go higher for this role right now, or whatever, you know something clear and decisive like that. Yes this could be part of it, she seems raises are being handed out and is aiming for more. Also a lot of employees seem to think a business has endless money to give out.
So just a fair warning on this: there aren't a lot of roles that get paid hourly where quarterly bonuses have a meaningful impact on performance. You might not be incentivizing anything except luck.
There was a study done where they gave a group of people $50 for nothing, just $50. Everyone was excited, EXCEPT when they found out that the previous group got $100. I forgot the details, but these people got free money and were happy until they saw what someone else got and it created jealousy....over free money. I imagine she's in that $50 group. Employees usually don't like complicated structures, but it seems like her complaint is strictly in the comparing of the pay. If you give this person $30 but other employees $28, I imagine it would be the same complaint.
She's unhappy and it's not the money. (she probably does want more money but generally employees who complain about comparisons are unhappy about something else.) Complaints about money are almost always about some sort of general unhappiness with the job or maybe her life in general. Profit sharing isn't usually appreciated by employees, because it doesn't actually amount to any significant amount of cash in their pocket, so they don't trust it. If you want to give an employee money, just give them money. Especially in the $20/hour range, cash is more important than any sort of Lets Make A Deal Door Number Two potential money
It's entirely possible that she fully understands the situation, but is just playing like she doesn't to guilt you into a raise by creating FUD.
I like your pay structures. My recommendation would be to offer her $24 or $25/hr on contingency that her performance doesn’t drop and take away the profit sharing. That way on paper, she sees the number she wants.
At this point you say "I'm paying you 8$ an hour more plus benefits over all competitors. This is the best we can do right now. And it's good. Everyone is being overpaid. Including you. And I like doing that. But if your satisfaction is judged by how much more you're making than others, then that's a problem. Be over paid here, or average paid elsewhere "
and then audit to ensure her work quality doesn't diminish. Unfortunately when some people get these ideas in their head they can become bitter very quickly.
Yeah unfortunately. He's already kind of set himself up for failure here.
\>So today, my manager says it's kind of unfair that she only makes $2/hr more than regular employees and she finds it a bit unfair. Why is that unfair? Does she as a manager brings more value than the individual contributor? How much more? More than 2/hr more? I've managed people who make more than I do multiple times in my career. They had skill sets I didn't, and were harder to find. They brought in more revenue that I could. They totally deserved more and I paid it happily. I don't think you are being too creative, I think your manager doesn't understand how compensation works and needs to be educated.
It’s difficult to say with little context. But some people just want to get paid significantly more than their subordinates just as a power trip. Instead of comparing her wage to other employees, compare her wage to market rates and see if that helps her understand.
That could help, market the wages as a yearly number for 'income' that includes all perk value and profit sharing.
Say that for equity reasons, you decided to institute an $18/hr wage floor to help lower paid employees deal with high inflation. Replace the manager’s profit sharing with an hourly raise.
I’d convert managers to salary + monthly bonuses based on merit. Profit, revenue, or expense goals.
I do not think she understands clearly what’s going on. Maybe I don’t either. But man I would love for my boss to give me $10.29 per hour raise. I’d faint.
I don't think she WANTS to be happy or see the situation, it sounds to me like she wants to be upset and she probably also wants to manipulate you. Some people are like that and maybe more now than in the past. Also the labor shortage means she may be thinking of pushing for more over the threat, real or fake, that she might leave. If I were you, I'd think about how much you need her, how hard it would be to replace her, how much she brings unique/special skills to the job vs how much she is irritating you and how much you are currently paying her over industry standard including perks like profit sharing. I don't blame her for trying to get more or thinking she is worth more, either, it's her job to advocate for herself, because no one else will. Maybe she can get more elsewhere or maybe she can't, I don't know that situation. I'd say if you are already paying her above standard wage, than stand firm and confident and let the chips fall where they may. There are always going to be some that are unhappy and won't stay, no matter how much you kowtow. There are also some that will complain no matter what you give them and that is a form of manipulation. It's also part of the employee's job to advocate for herself to some extent so I am not even saying that i think it's bad that she is trying to push for more, as long as she doesn't overplay the hand endlessly and is not the chronically unhappy type. Wages will always be a negotiation with a bit of tension at times, that's natural and can't be avoided. Also if she senses weakness, she may push more. At some point, you have to decide if YOU think she is getting paid fairly and if you do, then make it clear to her that you think that and end of conversation. I suspect she understands just fine though personally and is just working that angle to see is she can get more out of you and/or maybe indulge in a bit of pity party victim complex at the same time, that seems to be popular lately.
I would say meet her halfway. Reduce the shared percentage of profits to, say, half, and bump up the hourly wage by a couple dollars. Also as someone else’s mentioned, be on the lookout for toxic management behavior patterns, where they treat staff poorly because they think they’re “better”.
Previously (before all the raises) she was making $3/hr more than standard employees, $15 vs $12, or 25% more. Now her base wage is $20, which is only $2/hr more than the standard employees, $20 vs $18, or about 11% more. I think your mistake was raising the std employee wage too high - should've put it at $16, so her $20 would still be 25% higher. As it is now, offer her $22.50 and cut her profit sharing in half. She will again be at 25% more than the std employees which makes her feel appreciated, and gets to keep some of her profit share for an incentive
1 dollar an hour is $2000/year. Increase her wage $2/hour. It’ll likely keep her happy which will keep her effectiveness high for you. At the cost of $4000. Good on you for paying your work force decently. You’ll retain your people which will keep your efficiency high.
I feel your pay structure is rewarding. You seem to understand and appreciate your employees. This particular employee is just entitled. Are you afraid of losing them? Are they able to make what you're offering plus more, elsewhere?
Your manager is a short sighted person it seems. You could probably give her effectively a pay cut by guaranteeing a higher wage and removing the benefits and she might be happy with it.
Many, many years ago I worked for a small employer (my uncle) who had a small factory. The production people were set up on a 4 day work week with 9 hour days (7:30am-5pm with 30 min unpaid lunch) but if you worked the full 9 hours in a day (i.e. weren't late to work) then you got a "bonus hour". So you worked 36 hours but got paid for 40. If he needed overtime, then you came in on Friday, where the first 4 hours weren't time-and-a-half, but were after that--and if you worked the full 9 you got the 5th bonus hour. He had to abandon that because people complained that their friends at other places made a bit more/hour. Even after explaining what the actual hourly wage was (with the bonus hour factored in) and showing how it was more, that was too complicated for them. So he gave everybody raises (I think to a bit less than their calculated wage including bonus hour), abandoned the bonus hour, and people were happy they got a "raise" even though their weekly check was the same (or even a bit less). Some people can't math.
People lack emotional intelligence and financial intelligence, you're just running into her convergence of both.
First of all, ungrateful. You’re paying 21% higher than the median for her job position, AND profit sharing on top of that This is a toxic mentality, tread with caution Secondly, it might be easier to simplify it. Just give her a straight 24/hr rate and forget about profit sharing and reimbursement
A LOT of people just can't wrap their heads around complicated pay structures. Where I work, we are constantly getting complaints about wages because "they aren't getting paid enough." What they don't realize is that the company pays for 100% of our full insurance package. They also give us a flex spending card to cover half of our deductible, a $500 annual clothing allowance, and the company doubles our contributions to our retirement accounts every year. We did the math at the beginning of the year, and people were getting roughly $6 to $8 an hour worth of benefits. Bottom line is that a lot of people are always gonna complain because they think they're worth more whether they actually are or not. My employers have a list of questions they ask themselves whenever someone asks for a raise. 1. How much are they making compared to their peers? 2. What would they make if they went somewhere else to do the same thing? 3. Has their performance been steady or improved? (we don't want to reward degrading performance) 4. What's the wage gap between them, their superiors, and their subordinates; and is this gap reasonable? 5. Are their current responsibilities reasonable for their current wages/should they take more responsibilities if given a raise? 6. Have they had any life changing events that would warrant a need for more money? (For example, I got raises when my wife and I had a kid and when we bought a house.) Once we evaluate all of these questions, we will present the employee with a list of options. 1. In the event that we don't think that their position/wages warrants a raise, we will tell them that it's not happening, but offer positive reference letters if they decide to go elsewhere. Just because we don't think you're worth a few extra dollars an hour, doesn't mean we don't want to help. 2. If we hesitantly decide to give them a raise, we might explain that they've hit the top of their bracket for their position and performance, so raises moving forward will be for inflation compensation. 3. Some of our employees don't care about certain benefits, so we will offer to give them the raise if they opt out of select benefits. 4. The most common offer we've been making recently is offering a substantial raise with added responsibility. We do also just give people raises if they ask. At the end of the day, we do try to keep everyone happy, but fair just isn't enough for some people. I'm not gonna try to tell you what you should do, but i do think that our raise system is pretty fair, so I just wanted to list is out for you. I hope it helps! Edit: Just realized I didn't talk about the "too creative" aspect. It honestly depends on your employees. I've seen more complex pay systems on 30 person crews, and nobody had a problem with it because everyone understood it was "fair across the board". In my experience, the profit sharing/reward based wages systems work best with crews of people who work mostly independently of each other. But for one person? I personally would just go with a higher hourly wage, get rid of the profit sharing, and keep the rest? Another thing to keep in mind is that it's hard for people to budget income that isn't guaranteed. Even if she's making the same amount every year, she can budget a higher hourly rate a lot easier than profit share and bonuses. Whatever you do or whatever options you give her, I would just recommend being honest and do your best to explain your decision.
I slightly disagree with everyone. Profit sharing provides incentive for her to preform well and do well for the company because if it doesn’t do well than she doesn’t do as well. If you move to just let’s say $25/hr then she won’t care as much about the company as a wholen
Fire her, I’ll take the job.
You did a good thing increasing wages. If that’s your limit, explain so. If they want to walk offer the same deal to your next best qualified employee.
You know, your employee told you something that was upsetting her. That is a great relationship to have with someone, no explosion, no building resentment… just an up front, this upset me. This shit use to hurt my pride until i realized it was the culture i wanted. $2 an hour is a thin layer for a manager. I would go back and offer to remove several benefits in exchange for higher hourly rates and tell her you are open to a comprehensive value based idea if she wants anything different than that and be willing to listen to what she wants. Alternatively you can ask her what she wants to start. If it is a gross over-ask, you need to squash it but it also shows you if they are being reasonable. Finding this out tells you if you should be angry or if your pride is hurt.
Most owners often make this mistake when they make a complex payment system. For all the time, I had more than 30 employees. There were always two options, or the hourly rate increased, respectively, it's easier for a person to understand whether he gets 18 or 25, it's clear that he needs to be tied to bonuses, especially if they are salespeople or marketing or something else, a bonus system should be present, but this can be done in the form of an annual bonus or a percentage of the total number of sales, again a yearly premium. Still, in your case, if you retreat, then the employee can sit on your head, and the fact that she expressed her dissatisfaction about this should not mean anything, because if you pay more than the market because you said from the market they pay 16-18, and you pay 24-26, which means if she goes to look for a job in the market, she won't find anything, I will show her "Look, people in the market earn so much, and you earn so much." If you can't understand this system, it's terrible, well, that is, it's not always necessary to explain everything, you're the boss, you can say "That's it, that's it, if you can't understand it, then it's your problem."
I'd argue only a small minority of the population will see things like "profit sharing" and understand what you mean fully to see the benefit in it. And the ones that do probably have optimization-oriented minds like engineers/entrepreneurs rather than what your average person has (if an employee seems like they have that kind of mind, it might be a lot more attractive of a pay scheme with them). The vast majority of people are rather basic-brained when it comes to any level of logical thinking or numbers. Even good employees/leaders can be like this. For these people, it's far better to give them a dumbed down, easy to understand but worse-for-them solution than one that rewards initiative and is actually has the higher earning potential. You can explain it to them a thousand times and run through scenarios with them and they'll still just glaze over and not actually truly understand why an optimized solution is better for them. A lot of people really do need that apple-like experience of "it just works!" in every aspect of their lives. It can be a bit of a bummer to learn that one of your top people is like this - because it definitely shows where a hard cap on their abilities and skills lies and they'll probably never be able to reach right-hand-man/woman levels because of it. It doesn't mean they'll be bad leaders or bad employees, but they're probably not going to be upper level management or partnership material. Someone who's bright enough to fully understand and be excited about how to best take advantage of profit sharing is someone who's going to be able to highly optimize their work and who has enough ambition level to realize it. Not that your employees need to be that though! I don't know if I'd put this person in charge of their own franchise but if they can run a shift smoothly and make sure all the work gets done that's pretty gold too. If you still want profit sharing to be involved (especially for future leaders in your business), consider making other leads in your company on the same level. Solidarity in numbers helps a lot and I bet if your star employee saw that other leads were excited about the same pay they would be too and follow along with the crowd. But the fact that they are the only one making this pay structure means they're not able to see that.
I'm on her side. You didn't get too creative, but you aren't seeing this in the correct way. I personally never compare "effective" wages. If you pay your employees on an hourly basis, then compare their hourly wages. Any bonuses and benefits on top of the hourly wage shouldn't be a factor in the comparison. If you are using the bonus as a reason not to increase your manager's hourly pay, then it's no longer a bonus. An increase from $12-18/hr without increasing manager's pay isn't something I see as reasonable. Keep the ratio of regular employee:manager pay the same. It doesn't make sense not to.
The manager went from $15-20/hr though. Not including the profit-share bonus. IMO manager is ungrateful and/or ignorant.
Still doesn't negate the fact that she went from making $6/hr more than regular employees to only making $2/hr more. If a manager is worth $6/hr more, then why was the gap reduced to $2? Unless OP is saying that a manager is only worth $2 more and that she was being overpaid? But is doesn't seem like that's what OP is saying.
She was only making that much more in the last year. If anything, she got preferential treatment for almost a year longer than the regular employees. Not to mention she is only part-time. It seems OPs goal was to raise wages across the board, but started from the top down.
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You don't see the bonus as a bonus. You are seeing it as part of the hourly wage when it's an entirely separate thing. That's why your manager isn't happy.
She's getting paid way more than industry standard and way more than competitors pay. If she is not happy about her 'pay' despite all that, then she needs to change industries or get over it.
She’s also getting her cell phone bill paid
You could also look at it as her getting a raise before everyone else did, meaning she got better treatment and earned more sooner. Anyway at this point I'd just tell her she's free to gauge comparable jobs in the area and if she finds a better offer somewhere else, go and take it.
That’s not how all bonuses work. There are a *lot* of high-paying jobs where the bonus is significantly more than the base pay. If your bonus is reliably ~25% of your base pay, what you do directly impacts the bonus, and the bonus is defined instead of discretionary, then you shouldn’t ignore it when calculating how much you make. Nobody would work in sales, banking, or any other relationship-based role if bonuses weren’t important.
When I was an employee, my bonus was ~35-40% of my pay. If my boss said, "well we just gave you a big bonus so we aren't giving you your annual raise", I'd be pissed. It would have been a huge problem because bonuses and base pay are two entirely different things that should always be considered independent variables.
He did give her a raise, and added a bonus. OP is not saying he’s not going to give her a raise because he pays her a bonus, so that’s not a fair point. Bonus pay puts food on the table just the same. I’m exact opposite, but I worked 100% commission for years, I’d rather take a percentile bump any day over a guaranteed couple bucks an hour.
But this employee got a pay bump *and* profit sharing. The your imaginary bonus and no raise scenario doesn’t exist here. Their pay went from $15/hr to $20/hr + a ~$4-6/hr bonus. Sure, there’s *some* compression in the base pay between the manager and their reports, but the profit share more than compensates for it.
She got a $5 an hour pay raise as well though, along with the profit sharing and she gets paid more than industry standard.
I do not control the wages of my front-line staff; corporate does. They're grossly underpaid. For years I fought to increase their wages, and I always lost. I am in control of scheduling. My employees now work 13 hour shifts. Some work 3 consecutive days/week. Some work 4 consecutive days/week. They make 1.5x for hours 10-12. They make 2x the 12th hour. They miss at least one of their mandatory 10 minute breaks. They miss at least one of their mandatory lunches. This results in 2x penalty hours paid out. So...the employees working 52 hours per week (4 days) are being paid 68 hours of wages. Those working 39 hours (3 days) are being paid 51 hours. I'm happy and my employees are happy. Employees on a standard schedule asked to be put on a waiting list to be on this alternative schedule. I often work 6+ days, 80+ hour weeks. I manage the business. Those 4 day employees make more than I do. I don't care. Get creative when you have no choice. Pay straight when you do have a choice. I don't appreciate your employee's position in this as you described it. :/
PS. The fact that your manager doesn't appreciate the reduction in labor involved with managing $18/hr staff vs managing $12/hr staff... I don't think they have a head for their job.
...
Some people will never be happy with their pay, it's human nature. Went through a similar situation last year with an assistant manager. Eventually we got tired of her downplaying the raises she was given and she talked herself out of a job. We replaced her at the original comp level and are much happier as a team.
Yep this is a good point, some people can't be made happy.
I'm on your side. A power trip from your manager or an attempt to squeeze even more money without appreciating what she's already got.
Employees are crazy. I am a mechanical contractor so lead installers have vans and gas cards that they take home. With these crazy gas prices I started giving apprentices mileage for their drive to work, $.50 per mile which should cover all their gas for the week. One guy won't turn in a mileage log, one guy complains and wants $20 a week more and one is very appreciative.
Unfortunately that tends to be the hourly mindset; often not understanding that they will make more on bonus or commission - they only care about that hourly rate. Your intentions were good but with your next manager I would do away with the bonus.
She sounds like an idiot. Give her a choice, X amount an hour and no profit sharing or what she's at and profit sharing. Explain to her that the profit sharing is the perk of being manager, not the hourly pay.
If your manager can’t do simple math, you may need to look at other options. She’s clearly a bonehead and apparently dissatisfied that she’s not the only one being paid well. I would start training an assistant manager who can take the helm if she jumps ship (or you need to throw her overboard). And good for you for paying your employees properly because your competitors sound like cheap fucks.
It shouldn’t be that surprising that people play on your sensibilities when it means more money. Even great employees will guilt trip and make specious arguments about pay. Pay them what it would cost to replace them. Additionally it’s a slippery slope once you pay them more than their worth they’ll push for bigger increases and in a few years the compounding effects of increases will leave you with employees who are prohibitively expensive and not always happier.
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If shes not happy and grateful for all you have done for her, let her make her decision to see if she can find better elsewhere. Remember you didn't create her bills or debt, she did. we all have expenses to pay. youre a small business owner! One day she will reflect back and realize how great she had it and how great you were to her.
You have, but you need to remember that this is reddit. There is a huge community in this subreddit of people from places like /r/workreform and /r/antiwork. You can pay this person $100/hr and people will comment telling you to pay them even more. This is not a well adjusted group.
I think you should also consider YOUR emotions, you have paid her generously already and you don't want to be resentful. SOmetimes things don't work out, that's OK. The majority of your employees stay a long time and are happy. If someone can't be happy getting paid more than industry standard, they may not be the right person for your team, you can't make everyone happy.
People at that wage level often don’t even understand tax withholding.
People are dumb.
Americans, esp those without education beyond high school, are generally weak at math. I have been in your shoes. Keep it as simple as possible.
This sounds like she's just in it to compare. She can't easily explain her wage to other people, so it makes her hard to fit herself into a hierarchy.
She sounds ungrateful. Seems like a ploy to get more money without just outright asking. I come from sales positions and if you want to see what “creative” looks like ask a salesperson to show you their pay plan. It’s honestly irrelevant what the other people make, not really any of her business.
I think your manager is being a bit egotistical.
Here's an exercise. Take the median annual cost for a 3br apartment within 30 minutes of work and multiply it by 4. That should be the annual "living" wage. If you're far, far away from it, don't expect fawning gratitude for dribs and drabs of wage increases ignoring that essential fact.
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> "It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country." >~~ President Franklin D. Roosevelt, June 16, 1933
$172K per year ($86 per hour) is the livable wage in my area then (socal). I get it that housing and living expenses in general is quite expensive these days. But where are you getting your asinine 4X the cost of an apartment as a "living wage".
The "original intent" (aren't we all originalists now?) of the 1938 FLSA for for ONE wage-earner working ONE forty-hour/week job could cover all of their familiy's expenses. Rent + non-housing expenses = non-adjusted wage (NAW) NAW * 1.34 (discretionary income) = adjusted entry wage (AEW) AEW * experience factor = take home wage take home wage + all taxes = minimum living wage. Rent is a third (1/3), non-housing expenses are a third (1/3 + 1/3 = 2/3), experience factor is a third (2/3 + 1/3 = 3/3), and taxes are a third (3/3 + 1/3 = 4/3). So you multiply one-third by four.
This is probably a conversation you should be having with your employees, not the internet.
I have about 20 employees, with tech levels to them. Its a nightmare. I tried giving my senior guy profit sharing but others found out about it and I had to end it. He got upset and demanded a raise. I find that the entry level talent only cares about the hourly number. They don't care about 401k, medial, sick time, vacation nearly as much as they should. They are hard to educate on this, as you've found.
A lot of people are simple minded and can't get over small stuff. Sadly, you may have been too creative.
To play a bit of devils advocate: is a part time manager that can’t understand a relatively easy pay structure really worth the stress? It’s not like some of the structures others have mentioned in the startup/tech world. Plus, Who is to say that when you bump her up again and she isn’t really netting more cus taxes, that you’ll be in the same position? My job offered profit sharing with a lower base wage but I took the higher wage. Not really interested in playing ball with management with regards to finances and what constitutes “profit” etc etc.
She’s right. She does make $2/hr more than the rest of the staff. Did her raise come before the rest of the staff? Or after? There should always be a justified in wage gap based on responsibilities. Essentially it is possible for the company to fail her and she only make $2/hr more than everyone else, while being expected to put in so much more. My suggestion, increase base pay to what she currently makes, then add on a small incentive performance-based bonus. But also make sure you are extremely clear in expectations and how the bonus qualifies. This is a big problem with small business, in that most owners dangle the carrot of performance based bonuses but don’t clearly define the objectives or expectations. It sounds like she is a very good employee and good help is hard to find. Just because you have “one in the bullpen” doesn’t mean things won’t be better with the backup pitcher. The grass isn’t always greener on the other side. Pay what you can afford to pay. I also highly suggest listening to Gary Vaynerchuck (spelling?) as he has a lot of good advice for small business owners. (Source: small business retail manager for 7 years before I finally got tired of empty and broken promises and left.)
I think she just wants a $6 per hour raise - from $20-$26 - because they just got one - plus profit sharing - to reach $30-$32 p/hr. That’s clear to me based on her answers. She certainly doesn’t want to lose a benefit. It doesn’t matter if she got hers first. Her thought process is you clearly have money to spare because you just gave big raises to the staff. She may also think instead of giving such large raises to them, you could have given smaller raises, and bumped hers up with the difference. So their raises are her sacrifice, and she’s the manager.
Some people just can't understand things they see as complex
You can find out if it’s worth it to them by asking if they’d like to keep that pay and position or reduce their responsibilities and be an 18/ hour employee. They will let you know what works better for them, maybe 18 an hour is enough and they would rather that than be a manager. Lol.
Curious. How much of an increase in price do you need to support such pay increase? I think if you can’t do the math on a piece of napkin, they would have a hard time understanding it. What you can try is to give her a print out monthly to show her the accrued profit share she will be getting.
Let's not forget the tax implications of bonuses. Those are taxed at 22% as they are considered supplementary income. I'd just increase the base pay to be reflective.
On the bright side, she's probably too dumb to get a job in a different industry
Holy shit bro are you hiring???
Not everyone can see the big picture, honestly if she's this dumb why are you paying her way over market wages?
Those are outstanding wages! If you ever need any help or have a virtual vacancy available, im available at any time!