My employee keeps asking for a payrise. Should I pay up?

Hi Aunty B,

I run a small manufacturing business and we have a head office-based sales representative, along with two part-time interstate representatives.

My head office sale rep does a great job and we are very happy with their work, but every five months they ask for a raise. Each time the request is accompanied with a list of their duties of which they claim to have changed and increased since employment. I don’t agree with this and in fact, we employed the interstate sales reps to help out after this staff member was employed.

The role is predominantly office-based with the staff member taking phone calls, orders, inputting orders, liaising with clients, assisting the dispatch department, with approximately one face-to-face meeting with clients per week in head office or local premises and perhaps interstate travel to one of these meetings per month. There are no out of hours or weekend work required and super is paid on top of salary.

I feel that as the staff member had no experience or qualifications in sales when they were given the position, that the salary at the time was more than reasonable (over 45k for a 21-year-old). The salary however, does not have commissions tied to it and it is not performance based. Since employment the staff member has also received a $2k pa salary increase only six months ago (over $46k).

The business can probably afford this pay rise if pushed but to be honest I don’t think the role is deserving of a higher salary, and along with this, the company sales have dropped over 30% since 2009.

I guess I would really like to know if there is anywhere I can get her position evaluated by an external organisation so that I can be ‘put in my place’ if need be or the staff member can see that we are paying our staff fairly.

Thanks in advance for any assistance or advice,
Cheers

Dear Cheers,

Heavens!! Where to start! The first point to make is that your sales have dropped 30% since 2009! And you are worried about paying a few thousand more in salary??? Forget evaluating positions. You need to learn about selling. The first thing you need to do is set an aggressive sales target and a plan. What new customers can you target? How do you get back repeat business? What more can you sell to existing customers so they become more profitable clients? How are you going to turn the company around so sales increase?

Then you need to separate out a sales role from an accounts management role. Now I have good and bad news for you. The bad news? You don’t have a sales person. You have an accounts manager. That role you described is what a typical accounts manager would do. And it sounds like you have a good deal. About $45,000 for a good accounts manager who shows great potential and has been with you for a few years is pretty standard, but expect to pay them more in the next year or two or they will leave. Remember it is not about fairness but what the marketplace will pay and it will pay for a keen, bright young person with a few years experience in sales and accounts management.

To stop the salary requests, make it clear that you do performance and salary reviews once a year. Set clear guidelines and goals and then be prepared to reward.

Now about your sales. You don’t have anyone really concentrating on sales.

A good sales person just sells. I know, I know. In a perfect world they would do a lot more. But let’s face it. If a sales person is bringing in a lot of revenue – and they should bring in at least five times their salary – then you want them focused on bringing in that revenue. You find a good sales person, pay them a base salary and put them on a big commission for over budget performance.

They should cover their salary from day one.

The big lesson? You are far too micro focused. You need to concentrate on strategy and growth. So instead of obsessing about a small salary increase you obsess about this: how do we keep your staff because they are key to making sure we meet our growth and sales targets.

Good luck!
Your Auntie B

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