When Do You Give An Employee A Raise?

   He seems to be happy with what he is making, so why should I give him a raise? The problem is he may not be as happy with his wage as you may think he is. Many employers don't find this out until they are broad sided. "What do you mean your leaving our company? But, I thought you were happy working for us."
    The truth is people need to feel appreciated. They need to know what they contribute to your company is appreciated. If an employee comes to you asking for a raise and after considering the facts you are in agreement. The question you should be asking is, why did he have to come to me? You should have a system for identifying who makes you money and who doesn't. Who deserves a raise and who doesn't. Put simply, pay should be based the profitability of each employee to the companies bottom line.
    I tell my employees flat out that they are the ones who will determine what wage they will ultimately make. A raise in pay should be based on the following criteria: Accepting new responsibilities, an increase in production, learning new skills and making the company more profitable. So, how do you determine who deserves a raise and who doesn't.
    You will need to do some job costing and employee reviews from time to time to get a read on who is really making you money. You may be surprised by what you find. Our company had a real reality check in this department last year. I had 25 employees and it was honestly hard to know what all was going on within our company. I was tied up with doing bids and just running all the jobs we had going. It was hard to get a real clear reading on anything let alone who was being the most productive. One thing I did know was that for the amount of work we were doing, I was not hanging on to enough of the money the way things were being done.
    I also new that production was not as good as it should have been. Often a job I thought should take 5 days would end up taking 7 or even 8 days. I decided I needed to find out who made me money and who didn't. I did job costing on each job for the next 30 days. I kept track of the employee's wages on each job, materials, and also factored in another 35 percent to cover payroll taxes, insurance, and other overhead. Then I took the amount of the contract and subtracted the expenses and came up with a percentage of profit for each job. Some of the guys were making a nice profit and some were actually costing me money. Now, to be fair you need to make sure the jobs were also being bid properly. You can also compare your employee's production rates to the PDCA's estimating guides production rates to see how they measure up.
    You should also plan a job schedule to let them know what is expected. Example day one pressure washing house and deck, day two Caulking and preparation and spot priming, day three paint body color, day 4 trim, day 5 treat deck and clean up. Then you can see if the job is on track or not. If they do not have a set schedule for when the job needs to be finished by it will always take longer.
We decided it was time to down size and gain better control of the business. So we gave walking papers to our least productive painters. We ended up keeping 14 and letting 11 go. The result is we became very profitable again in a short period of time. I was actually able to give the ones we kept raises in pay. Having a smaller crew also allows us to bid more than before as we don't need to take on as many jobs to keep the crew busy. We now control how busy we are by they way we bid. I used to think the answer was to land every job and then hire more guys. BIG MISTAKE! If you are landing every job you bid you are bidding way to low. How can you afford to give your guys a raise, benefits, and other incentives if you under price your jobs? The answer is to take more profitable jobs and to run them more efficiently. I used to here a guy brag about how he was booked for the next 6 months and think boy he must be good! Now, when I hear that, I say boy that guy must not be charging enough.
    What I try to drill into my painter's heads is that when they become more profitable we all win. They need to work and think as a team. When you present it this way and reward their efforts they will willingly buy into your company's plan.
    I recommend that do at least quarterly reviews with you employees. This does several things. First it shows them you have an interest in them. It also let's you know if they are improving in certain areas and identify any problems they may be having. Some companies make software now for just this purpose like Knowledge Point job reviews. You can then keep accurate computer records for each employee. You can also go back and review previous reports to see how they are progressing. I find you need to put them at ease and get them to open up. I like to use viewpoint questions to get them talking. For example, I may ask them how they feel about the way the last few jobs they worked on went? I try to always find something to commend them for and to always end the review on a positive note.
    Someone once said, if you pay your guys peanuts you are going to hire lots of monkeys. The truth is you need to pay a person what they are worth. You should actually strive to identify those who deserve a raise and give them one before they ask for it. They need to get the message that good production and profitability gets rewarded. At the same time you need to communicate clearly when expectations are not be met. If you follow these steps before long you should start to see production rates increase.

David Martin Dave's' Painting

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