When the economy is suffering, it’s tempting to save money by reducing or eliminating staff raises. While you may think your employees should be happy just to have a job, it’s important to remember that providing your staff with incentives—in the form of raises or other compensation—can be a big help when it comes to maintaining a happy, motivated staff.
Raises provide incentives, control turnover and foster good morale—things that become particularly important during times of economic uncertainty. In addition, making the decision to eliminate raises altogether may lead to increased turnover when the recession is over because the very people who need this job now may look for a better one the minute the economy rebounds. Remember, your best employees are the ones most likely to find another job easily, so if you value your staff, you simply cannot afford to use the economy as an excuse for skimping on raises—at least not for long. So, what sort of raise or incentive should you consider offering? And, how do you determine when—and why—to give a raise?
Cost of Living Adjustments (COLAs)
If you’ve spent any time in the work-a-day world, you are likely familiar with COLAs, an annual adjustment in wages designed to offset a change (usually a loss) in purchasing power as measured by the Consumer Price Index (CPI). Many practices give annual COLAs in an attempt to have wages keep pace with inflation.
So, is giving an annual COLA raise a good idea? No. When was the last time you consulted the CPI when reviewing your fee schedule? Never. Do your costs rise by that same factor? Unlikely. In fact, costs in many practices are rising faster than the overall cost of living. The CPI seldom even mirrors the local economy. Plus, given the stagnant economy, the 2010 COLA is negative. How would your employees react if you reduced their wages next year because the COLA went down?
Some veterinary practices give automatic identical yearly increases across the board. There are a number of ways to justify this, from a desire to be “fair” to the belief that automatic raises save time, are easy to administer, and please everyone—especially the people making the decisions about who deserves raises.
However, automatic raises rewards the wrong kind of behavior. People with little or no motivation to add value to the practice still receive a raise. Within this system, raises aren’t based on performance, but rather on having a warm body on the premises. This can lead to a drop in morale in your top performers.
Longevity and Attendance
If your practice has high turnover, should you reward longevity? By rewarding attendance above performance, you send the message that it’s more important to show up for work than to do a good job at work. Doing the same job at the same level of performance for years on end is neither exemplary behavior nor an attitude any practice should foster.
Merit raises are an alternative to automatic and longevity rewards. Ask yourself who has learned and demonstrated new skills, taken on additional responsibilities, increased the practice’s ability to provide quality veterinary care, and made it easier for the doctors and other staff to do the same. To be eligible for merit increases on an ongoing basis, the employee must take initiative to improve her efficiency and skills, thereby increasing her overall value to the practice.
Gaining technical skills is one way to increase value. Also consider less tangible factors like dedication to the practice. Who restocks the truck without needing to be reminded? Who is always willing to work late to accommodate a client, or cover shifts on weekends and holidays?
If a raise isn’t in an employee’s immediate future, tell him exactly how to earn one. Do you need him to work more hours? Take on new responsibilities? Be more courteous to other staff members? Again, specific feedback is more effective than a generalized “work harder and improve your attitude.” Employees need a “line of sight” between their pay increase and the behavior that earns it.
As an alternative to raises (or in conjunction with them) consider awarding one-time bonuses to deserving staff. In some situations, a bonus of $250 may say more than a $250 increase in pay. A bonus will get your employee’s attention without creating an ongoing payroll burden.
Raises in Practice
Now that you understand the types of raises and incentives you can offer, it’s time to think about when and why you give them. There is nothing sacred about adjusting pay once a year. If your practice can’t afford raises right now, review the numbers again in three to six months, but don’t penalize your staff by forgoing raises for an entire year. If the year isn’t typical, your pay review schedule probably shouldn’t be typical either.
Instead of issuing raises tied to the economy or because your staff expects them, give raises for a reason. Use them to recognize and reward skills and training that build the practice. Do all your employees “deserve” a raise? That’s up to you. But do those who are very good at what they do, demonstrate passion for their job, and a willingness to go the extra mile deserve more than someone who has done nothing to improve themselves or their skill set? Yes, they do.