Salaries and Raises

One of the hardest items to manage is that of compensation. We all want more money, we all value our employees and feel they should make more money, but we all have a fiscal responsibility to the firm. In short I believe we all want to be fair when it comes to compensation, but it is very easy to let emotion take over. I have standardized our process in that each job description has a salary range. The salary range is derived from the responsibilities of the job (not title) and compared to available industry benchmarks. Individuals are hired within the ranges and each year we check to confirm that all individuals are paid appropriatly for the position.

When annual reviews are preformed employees are elgible for up to a 7% raise. The reviews are done on a 5 point scale. If an employee scores at 3 or below they are not raise elgible. Score of 3-5 recieve a corralating increase in compensation starting at 2.5% for 3.1 up to 7% for a 5 (by the way - I have never given a 5 review). If the manager wants to give additional monies, they have to look for a promotion.

I believe this is as fair as can possibly be, but if someone has a better idea......

Hiring of Staff

In a small firm you must always be looking for new talent - even if you dont have available positions. Multiple times throughout my career I felt like we had a solid team and no one was looking to leave. In some cases I followed my own advice and had individuals "on deck". In many cases its easy to let the day to day grind get the better of you and to forget this.

Furthermore dont ever think that someone cant be replaced. I have lost some great employees over the years, only to find individuals that are much more talented.

Salary Increases

Compensation is one of the primary drivers for all employees. As you manage the firm it is important to have a detailed process on how you address salary adjustments. This goes beyond annual reviews and compensation committee, but explores what expectations staff and management should have on an ongoing basis. It is important to standardize positions, titles, and salary ranges for each position within the firm. This process provides individuals with general guidelines, but also allows one to eliminate the difference between a salary adjustment and a promotion.
A salary adjustment is the process of giving someone a raise for meeting or exceeding expectations at their review. A great benchmark for meeting expectations is 2.5% with increasing percentages based on merit preformance - maxing out around 7%. Comp adjustmenrs of over 7% are normally associated with someone who was underpaid in comparison to the salary ranes for that position or associted with a promotion. A promotion occurs when someone is displaing the traits of the position next in line with the employees career path.
In professional service firms managers are very dedicated to their employees and it makes it easy to provide cases for raises that would exceed the benchmarks. Although understood, one must consider the longivity of the firm and of the employees career path.