Tough Call: The payroll secret is out

pay me too

After rewarding a top employee with a healthy pay raise, they shared the news and now you are faced with disgruntled employees who want more money. What would you do?

When it comes to having the right people in the right positions, your company is positioned right where you want it to be. Your team is a mix of long-timers—those who’ve been with your company for 10, 20 or 30 years— and newbies, which is essentially everyone else. The last time you had a job opening was last year, and you had the luxury of choosing between two qualified candidates. Believing that the market was only going to keep getting stronger, you rolled the dice and hired both. It couldn’t have worked out any better. Your staff level is healthy, no one is spread too thin, and that’s enabling you to capture business lost by competitors who are understaffed.

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You have no illusions about how fortunate you are. In fact, you can’t remember the last HBA, NARI, or lumber dealer association meeting you’ve attended where someone wasn’t bemoaning the lack of qualified prospective employees. “How are you so lucky that you have all the staff you need?” one competitor complained. You were tempted to answer, “Well, Bob, I treat my people well, pay them what they’re worth, and focus on a family-first culture.” Instead, you said, “Just lucky, I guess.” In truth, it’s anything but luck.

At the first LBM Strategies Conference, you heard two dealers talk about what they did to make their company a “best place to work.” Intrigued, you did some digging and found a service that would poll your employees anonymously about their attitude about working for your company, then share the unvarnished results with you. By taking the results to heart, you’ve made the necessary changes (some big, some small) in order to make yours a workplace where people love to work.

While pay isn’t everything, it is part of the equation, so you do all you can to make sure no one leaves over pay. And sometimes you go beyond when someone’s performance is so extraordinary, and their value to the company is so important. This happened most recently with Jill, an Inside Salesperson who consistently does more than her peers, and whose can-do attitude and sales ability puts her performance far above par. When you sat her down to discuss, and shared her increase, she was overwhelmed. “Thank you so much!” she exclaimed. “You’re very welcome, Jill. You deserve every penny,” you replied. “All I ask is that you keep your new pay level confidential.” She enthusiastically agreed, and that was that.

Or so you thought. Not two weeks had passed when Bill and Jack, two Inside Salespeople who’d been with your company far longer than Jill, confronted you. “We know that you gave Jill a big raise. We work just as hard as she does. Plus, we’ve been here longer. Plus, we do other things that are just as important. So we want to be paid the same— if not more, due to our seniority.”

It’s true that Bill and Jack have seniority and they’re solid workers, but the fact is that Jill consistently sells more, and at higher margin, than Bill and Jack combined. What you told her was true—she does deserve every penny. You’d like to pay Bill and Jack more, but their performance doesn’t justify it. What would you do?

1. Just say no. What Jill is paid is between the company and Jill—no one else. Tell them that it’s no one’s business what anyone else earns, and that’s that.

2. Earn it. Tell them that her sales and margin performance earned her that raise. Show them exactly what they need to do to earn the same. Then let them earn it.

3. Just say yes. Since Jack and Bill have both been on staff longer, it’s only fair that they earn as much as Jill, even though they need to work on their sales and their margins.

4. Promote Jill. Jill is the unquestioned leader among your inside sales crew. Elevate her and let her coach Jack, Bill and the others. That way they can’t argue about her earning more.


What would you do?
Something else? If you’d take a different plan of attack, email your suggested solution to Rick@LBMJournal.com. If we publish your reply, we’ll send you a LBM JOURNAL mug.

See how your judgment compares with others in the industry at LBMJournal.com.
Final results will appear in The Buzz section of the September 2018 issue.