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Tuesday, May 3, 2011

"Promised" Raises Can Send Employees Scurrying When They Are Delayed


Virtually every day I hear from candidates at all levels who have been promised raises that never seem to happen.  The result is almost always that the employee loses interest in their job and their company.  Within a month or so they become vulnerable to recruiters and other job offers.  I believe a lot of good people are lost because companies fail to administer raises and fail to manage the perceptions of their employees.

The issue is that sometimes raises are promised by supervisors who have no business promising them.  But even when they are not specifically promised, employees have a mind set that they will be given.  Often, employee manuals list the time periods in which raises may be given, but no one remembers the may and assumes that they will be receiving their expected raise within a reasonable period in that time frame.  Employees who are given a formal annual evaluation on a regular basis (say, annually) expect an increase within the time frame specified in the employee handbook.

With senior people, most agencies have policies which dictate how often a raise can be given.  Some are eighteen months, some are thirty.  Inevitably, as the time approaches, the employee begins to look forward to the additional money.  My observation is that the raises rarely come on time; They often happen (if they happen) two, three or six months later.  And all too often it is not in the expected amount (“Well, things are rather tough now and this is the best we could do.  But your raise is more than most at your level.”).  That’s just B.S

Among juniors, the raise can be life saving.  A huge percentage of recent (two years or so) college graduates are still supported or subsidized by their families.  They often have to have multiple roommates – a situation actually worse than what they had in college. And to top it off, many are paying college loans.  It is damn hard to make ends meet at $30-40 grand.  When the expected or promised raise doesn’t come, all too often, these people are forced to look for a job and become soured on their current employer.

What a waste.  This kind of turnover is expensive and, frankly, unnecessary.  There are many ways around the issue.

I have always believed in spot bonuses.  It doesn’t have to be much – even $1,000 for a junior – just enough to pay for some new clothes or a trip to see friends in Florida.  But it does wonders to keep employees enthusiastic and happy.  And in the long run, it helps keep employees loyal and motivated.

I also believe that small raises, given with greater frequency are a great motivator and may actually cost companies less money in the long run.

Once a raise is promised it has to be given. Not three or six months later, but when it is due.  However….

I would like to share a story of a wonderful raise.  There are very few agencies around like Wells, Rich, Greene. (Those of you young enough not to know them should click on the link.  They were one of the great agencies.  WRG closed in 1998.)  I will make it very brief.  It happened a while ago and I know that the person it happened to is one of my readers, so my details are purposely fuzzy.  An account executive was told by her boss that she would be given a raise in January, along with a promotion to account supervisor.  She was making $35k, which was a good salary for an AE in the late eighties/early nineties. She got her promotion, but of course January came and went with no raise.  So did February, March and April.  The employee kept being told her raise was in the works.  At one point, she asked me what to expect.  I told her she should be brought to $45, but more than likely would be in the low $40’s.  The summer went by, then September and October.  She was ready to look for a job; she hated her agency.  Then November came and she called me saying, “Holy, s---!”  Her raise came.  It was retroactive to the previous January.  Her check was so big she couldn’t figure out what her raise was.  Then she called me back.  They increased her to $55! And the difference was all in one check.  That was Wells. And employees who worked there knew that things like this happened.  But, alas, there are no more Wells Rich Greenes.  They were an extraordinary exception.

When a raise is due, it should be given.  Wage freezes and stalling are a too familiar subterfuge.Why chase employees away?

8 comments:

  1. I still remember staying in my first job a lot longer than I should have, in part because I received a $5,000 holiday bonus after 6 months on the job. That was like a million dollars to me.

    My love can be bought after all.

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  2. Excellent post as always Paul.

    I'd like to add that many good agencies, like WRG, made similar efforts to give the troops -- AE's/AS's, Media planners/Media Supes, younger Producers, Studio staff, etc. -- spot bonuses when they could. I worked for several of them, notably Ammirati & Puris (pre-Lowe merger) and BBDO NY. These agencies knew the long term benefit of giving financial rewards for hanging in there when times were tough or for when one went 'above-and-beyond'.

    I remember Bruce Meyers at BBDO NY once gave me a spot bonus in '90 because, while an AS on the US Navy account (mangaging a team of 13), I was also asked to worked on four agency new business pitches back-to-back (each a 2 month commitment). That bonus of $3,500 spoke volumes to me at the time: it meant that BBDO appreciates those who work hard, it signaled that perhaps I would continue to have a future there (in fact I remained for another 9 years) and it validated the idea that senior management really did keep an eye out for the younger generations.

    I also can relate to unkept promised promotions, and the devastating effect it can have on one's morale. It took two years after I was promised a promotion to SVP by the then President of the Agency to actually receive that title. It was pathetic really. And two months after finally receiving it one of my GE clients asked if I would become his Director of Marketing. I soon accepted, in part because I would be embarking on a new adventure, in part because I would get a healthy bump in salary and mostly because I could no longer trust my management.

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  3. I wish I had a job.

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  4. This post hits at the heart of the problem with most big agencies today. The only valuable resource that agencies have is people, yet holding companies such as WPP have done everything they possibly can to commoditize their human resources. People who actually perform, and are capable of making it rain, won't tolerate organization wide "pay freezes". Clients shouldn't tolerate being serviced by people who's motivation is "not being fired" - that's not what takes business to new heights.

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  5. Dave: Very well put. The holding companies, for the most part, have shown very little interest in training, compensating and moving their people. It is very hard to realize that at $150k or more that you are only middle management and a commodity at that.

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  7. Thanks for this post, I'm actually considering forwarding to the CEO of my current company.
    I have been promised a raise for not one month- or 6 But 2 years!! I was hired on a junior salary and know for a fact that I am making at least 20 grand less a year then my co-workers in my department doing the exact same job. The raise has been become a motivational tool that is thrown in my face to work harder and as much as a punishing tool. the state of the economy is brought up alot by the CEO and how lucky we are all to still have employment. As harsh as it sounds I am thinking "F" the economy give me my raise allready.. What do I do at this point ??? I am tired of having no motivation because I feel taken for granted.. and when I do work hard I feel like whats the point?? When should you count your losses and move on?

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    Replies
    1. What are you waiting for? $20k per year is $40,000. It will be years before you can make that up, if ever. Time to move on and get yourself to a company that at least will appreciate your efforts on their behalf.

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