Less than or equal to 3% is more like a cost of living adjustment than a raise, IMHO.
I would expect more than 3% if my job duties are expected to change, with no adjustments to title. Where I work, 3% is standard for a lateral transfer.
A raise of 10% or more is worth writing home.
Which is your right as a business owner, but when your top employees are all jumping ship to an employer that pays them what they’re worth, it might be time for the business owner to rethink his policy on raises.
A business that gives all the profits from a single employees increase in productivity to him as a raise isn’t going to last long, so I’m not worried about it. It’s possible in sales, I believe a good salesperson can be the highest paid employee in a business, but that’s based on commission, if they stop selling like they used to then they won’t make as much money. If that employee we’re discussing stops producing as much I’ll have to fire him because I’m losing money on him. That doesn’t include the fact that I deserve to profit from my own risks and efforts, as may other owners of the business, and that the business may need those increased profits to be re-invested in order to maintain that level of profitability. So go ahead and jump ship if you can find someone who will pay you on that basis, but I might not take you back when they go out of business.
This.
The proper reward for doing a good job is you get to keep your job. If you do an unusually good job, you get more than inflation, but not a huge amount more. Two or three percent above inflation is a nice raise.
If circumstances change - you get promoted, different duties, fundmanetal change in the company - well, that may be different, but then what we’re really talking about is a different salary.
If employees are jumping ship en masse because the salaries are too low, the problem is not a lack of “raises,” it’s that the company’s salary bands themselves are wrong.
In general, I look to inflation as the guide, like many others here.
However, I live not too far from the Seattle area, where a $15 minimum wage is being implemented $1 at a time (each year). Many companies/employees tend to think of pay scales between positions as all being related, so my impression is that lots of people are expecting to see more than just inflation, even though they make more than minimum wage.
I’ve always seen it as adequate job = keep job, good job, better job ,excellent job = steadily more compensation.
I think where I personally get frustrated with it is that every company I’ve worked for has never viewed the adequate job as adequate. Someone who comes in every day on time, works a full day, and does a workmanlike job of whatever they do doesn’t get any credit for that, even though they do add a lot of value to the company.
And it always seems doubly hypocritical when companies that espouse “work life balance” or “family values” consistently reward the people who work on weekends, or work long hours, rather than the people who do a solid job but prioritize their families first.
Not sucking at your job should be enough to at least get regular cost-of-living raises (i.e. tied to inflation), and then you ought to get merit increases above and beyond that based on how well you do. Otherwise, like **Crafter_Man **points out, all they’re doing is giving you less of a pay cut each year than you’d have without any increase in compensation.
As a general rule, like others said, compare to COLA, typically around 3%, IIRC. If you’re getting roughly that, you’re not getting a raise, if you get less than that, you’re effectively getting a pay cut. If you’re get more, you’re getting a raise, but even then 4-5% compared to 3% COLA is more of a pat on the back and won’t meaningfully affect your lifestyle or spending habits.
To that end, I don’t really think of something as “a raise” unless I’m getting at least 8-10%, and that usually comes with a change in responsibilities or changing jobs.
However, like others said, that’s a broad brush look at it. If your industry or company is having poor profits, sometimes getting no or a small pay cut is good when the alternative is a larger pay cut or getting laid off. Similarly, I remember just a few years ago as part of the recession it was calculated that COLA was actually slightly negative so, my company used that as an excuse to give minimal pay increases that year (despite their profits being up). In that regard, even no raise could be looked at as a small raise through that lens.
Agreed. What one deserves is market value and even being proveably twice as productive doesn’t necessarily mean that your market value is twice as high. Given the example refered to here, one person being paid $10/hr to make $30/hr worth of material being “fair” and another being paid the same and making $45/hr, making $15 more doesn’t mean they deserve more, even proportionally, they deserve 50% more not 150% more.
What you’re going to get paid is either what they think they need to pay to keep you while still being as profitable as possible, or what you negotiate. Otherwise, if you think you deserve $25/hr to do that work, try to find someone else that will pay you that. If the going rate is $10/hr, you have to justify why I should pay you the $25/hr you think you deserve when I can just hire two people at $10/hr who make $30/hr each, even if that doubles my overhead, now I’m making $20/hr where I’m only making $10/hr with you. With two people I get 50% more widgets and 100% more profit. No way in hell I’d hire someone at that rate.
Further, also as mentioned, those additional profits don’t “belong” to the employee, that’s what the wage is for. There’s tons of other things profits can be used for, particularly growing and expanding the business. By all means, push to get what you deserve, but you have to consider all the factors and be reasonable in understanding your market value.
I wholeheartedly agree that some companies are like that.
My employer before my last employer was like that. Being productive was not good enough; you had to be ridiculously productive, and then they hiked the expectations above that. By the time I left the average person in my capacity was billing 65 hours a week. That was the AVERAGE, I stress. I had weeks above 80.
My last employer was too disorganized to really know for sure who was or wasn’t productive. You had some people working 75 hours a week, some 25, and management really couldn’t sort out who was who.
At my current employer, no one is expected to work weekends. You put in a solid 40 and you’re good, but you’d better put in those 40 'cause they know how much billable time you’re doing (assuming you’re in a role we bill to a customer, but the culture bleeds into non-billable roles.) If you’re putting in more than 40 every week, they start looking to hire someone. If it can’t get done without weekend work, well, the customer can pay us to have more people on the job.
So, believe me, different places can be different.
I thought of a more accurate way to describe the phenomenon that I’m describing. Coming in, putting in your solid day, doing an adequate, if not spectacular job, and going home on time, is looked at as the bare minimum, with all the negative connotations associated with that.
I tend to think it should be looked at as “getting the job done” with all the positives that come with it. Maybe not stellar, but enough to get the job done in a timely and quality fashion. I mean, if you show up on time, put in the right number of hours, and your work meets the quality standards, there’s no reason that should be perceived negatively, but it is.
I like the way my current company handles merit increases. I, as a manager, get a set percentage of my actual payroll dollars as the merit pool - usually 3%. For easy math a payroll budget of $100k would mean my merit pool would be $3k. That is awarded pretty much by formula, your position in your salary band + your review score. For example, low in band + high review score gets 4-5%. High in band + average review score = 1-2%. Poor review gets nothing. I can tweak it a bit, but the ranges for that pool are pretty narrow. In addition, however, I get a separate pool of 1% that I can award to my top performer(s) as I see fit. Using the numbers above, that would give me an additional $1k. I can, and have, given that entire pool as an additional raise to one employee who simply outperformed everyone over the prior year.
This method means everyone has a chance at a fair raise and superstars have a chance at a stellar raise.
Any raise above inflation is adequate, representing mediocre performance and no skill growth. A decent raise, assuming that the year has been productive and the employee has shown some growth (either through applicable training or experience) would be 2-3% above inflation, so typically 4-5%. (As a general rule, your annual raise should be at least 1/3 of what you could get if you went out on the market and were looking competitively. Generally, you should only switch jobs on a fiscal basis if you can get at least a 12-15% raise; otherwise associated costs and risks are not worth it, although obviously there may be other career or personal reasons to switch jobs even if there is a negative fiscal impact.) If you are in an organization with a salary structure and you are at the high end of your job level/title, or if the company or industry is doing poorly that year then a lower raise may be acceptable although if you are getting nothing at all for good performance you should have a resume circulating and be actively interviewing, because that is a sign of a company that sees no value in individual skills and negotiating is the only way you may ever get another raise.
My biggest in-job raise was around 15% (switched into an administrative management role). My biggest switch job raise was around 30%, which was nice (although reduced by moving into an area with a proportionally higher cost of living) but the real reason I changed was for greater stability and more career opportunities.
Stranger