Set pay increases

1. Why have a pay policy

As a business scales, what it needs grows, and the skills of the people in it will also, hopefully, grow. More skill and more responsibility bring higher pay. The policy on this page is given to every teammate, so they know what to expect, what is rewarded, and the right way to ask for a raise. Putting everyone on the same page is said to make a team more productive, avoid needless drama, keep teammates longer and protect the bottom line. It also avoids the mistakes of overpaying and underpaying, which both end in losing great teammates.

Many companies have no philosophy for how they pay people or how they give raises. That hurts as you grow: good people leave, either because the bad ones are overpaid or because the good ones are underpaid. Not to mention that with no standard way of explaining how you pay, pay ends up unfair and unequal.

People talk. They share what they are paid far more than you would guess, so be as transparent about pay as you can.

Set the policy before you grow. If you have not done it yet, you cannot put it in place too soon.

2. What the policy is, and who gets it

The policy is an outline for how to give pay increases, and it is also something to hand your team when they join, so they know what to expect from the start. It is described as a transparent pay policy, and transparent pay policies are favored in one practice here. Use it yourself, and use it to educate your team.

3. The key: consistent excellence

The single most important factor in earning a raise is showing consistent excellence in the work. High performers are rewarded fastest. This principle overrides every other consideration: excel, and the chances to earn more follow.

4. The four categories and their bands

Leadership, working with human resources, reviews each teammate's performance and places them in one of four categories. The category a teammate is placed in is what sets their pay increase.

Category	What it looks like	Raise band
Standard performance / not meeting criteria	Regular performance, with no exceptional results	1 to 3 percent
Consistent performance and reliability	Meets expectations consistently; a reliable contributor	4 to 5 percent
Excellence / high performance / added responsibilities	Consistently exceeds expectations; takes on extra responsibilities	5 to 10 percent
Promotion to management / new skills / significant increase in responsibilities	Recently promoted, has gained new skills, or has taken on significant new duties	10 to 20 percent

The bands overlap. The second and third bands share 5 percent, and the third and fourth share 10 percent. No rule is given for a raise that falls on a shared boundary.

5. Circumstances that lead to a bigger raise

1. A significant increase in responsibilities. A raise is often warranted by a substantial change in the role, a significant increase in teammates, or new tasks that are formally documented (for example, changes to a JD document).
2. Promotion to management or leadership. A move into management, or a leadership role overseeing a team, can justify a salary increase.
3. Consistent performance and achievement. Steady hard work and consistent achievement make a strong case for asking for a raise, especially when they lead to taking on tasks beyond the job's original scope. Great individual contributors are rewarded no less than leaders; both are crucial to how the company performs.

6. How often raises come

• Raises follow no predetermined schedule, and they are not spread equally across the company or within departments. Each one is weighed individually, case by case, on that person's own contributions and performance.
• As a general rule, a teammate typically gets no more than one raise in a calendar year, unless there is a special circumstance such as a promotion.

Flag: how often pay can rise. SOP 251, section 10, sets a faster pace on a sales career path: steps in title or pay several times a year, earned by cumulative closes, some of them pay changes with no new title. What each costs: one raise a year, as here, leaves repeated roles with few points of reward to look forward to; the faster pace means several pay changes a year without a promotion, which this page keeps for special circumstances. This page does not settle which reading is right.

7. How a teammate asks for a raise

This part is written for the teammate who is asking. It goes to them with the rest of the policy.

1. Understand your value and the market rate.
   • Research what your position is worth. Find what people with your job title are paid on average, by salary or by the hour, in your region, allowing for factors such as your level of experience, industry standards and the cost of living. Sites such as Glassdoor, Payscale and the Bureau of Labor Statistics can give useful benchmarks.
   • Assess what you contribute. Identify your contributions and put numbers on them, such as finished projects, revenue brought in, costs saved or processes improved. Knowing your value helps justify the request. Lead with data, not emotion.
2. Work out the right increase.
   • Know what percentage to ask for. Keep the request realistic, back it with data, and keep it within the raise policy the company uses internally.
   • Have specific numbers ready. The example given is a request, based on your research and your contributions, for an increase of $5,000 to $7,000.
3. Prepare for the conversation.
   • Go in professional and calm. Do not make emotional appeals or put your supervisor on the defensive. Open on a positive note: that you are satisfied with the job and enjoy the work.
   • Sample opening lines are offered. In substance:
     • You enjoy working there and find your projects challenging. Over the past year the scope of your work has grown a great deal, and so have your roles, your responsibilities and your contributions. You would like to discuss the possibility of reviewing your pay.
     • You would like to talk about your career, and how you can keep doing your best work for the company.
4. Present a strong case.
   • Be specific and use evidence. Give examples and metrics that show your larger responsibilities and contributions, lead with evidence rather than emotion, and use the framework provided to you.
   • Have supporting documents ready: data behind the request, such as industry salary reports, or your achievements listed against the company's goals. Salary websites can supply the data. The best requests seen in one practice here came with a slide deck the employee had built.
5. Be patient and professional.
   • Give your manager time. Pay decisions need careful thought, reviews and possibly talks with upper management. Do not expect an answer on the spot.
   • Stay calm and patient, and do not follow up too often. Typically, it is acceptable to discuss salary once a year, unless there are exceptional circumstances or a chance of promotion.
6. Do not over-ask. Asking for a raise too often can look as if you are unhappy, or always after more money, rather than committed to the role. Annual reviews are usually the standard, unless you have been promoted or your responsibilities have changed dramatically.
7. Follow up with respect. After the conversation, send your manager a polite email that thanks them for their time, restates your commitment to the role and the company, and gently reminds them of the request.

8. What this page does not decide for you

• A raise that falls on a shared boundary. 5 percent sits in the second band and the third, and 10 percent in the third and the fourth. Not established on this page.
• What places a teammate in a category, beyond the four descriptions in section 4. Not established on this page.
• What the percentages are taken of. Not established on this page.
• Whether the policy holds its own annual review. Raises follow no predetermined schedule (section 6), while annual reviews are usually the standard (section 7, step 6). Not established on this page.
• The salary behind the request example. This page gives no figure for the pay that the $5,000 to $7,000 example starts from.

9. The checklist

Question	The answer
Who gets the policy	Every teammate, when they join
What earns a raise	Consistent excellence; high performers are rewarded fastest
Who places a teammate	Leadership, working with human resources, in one of four categories
The bands	1 to 3, 4 to 5, 5 to 10 and 10 to 20 percent; 5 and 10 are shared boundaries
Bigger raises	A significant increase in responsibilities (often); promotion to management or leadership (can justify); consistent performance and achievement (especially when it goes beyond the original scope)
How often	No predetermined schedule; case by case; as a general rule, typically not more than once a calendar year unless there is a special circumstance such as a promotion
Asking, steps 1 and 2	Research the market rate in your region and your own contributions; ask for a realistic, data-backed figure within the policy
Asking, steps 3 and 4	Open calm and positive; make an evidence-based case with documents ready
Asking, steps 5 to 7	Give the manager time; typically discuss salary once a year unless circumstances are exceptional or there is a chance of promotion; do not over-ask; follow up by polite email

10. What this page does not cover

Rewarding reps with money for the right daily behavior, and ranking them, is SOP 88 — Pay and rank reps on show rate. Deciding whether to train someone into a skill or hire someone who already has it is SOP 44 — Buy or build talent.

Employment law and pay-transparency law are not covered on this page.