Why you need to pay your team members more (even when budgets are tight)

I want you to ask yourself the question, would I do a good job at this job for this pay? And if the answer’s no, why the hell are you trying to pay somebody else that? Welcome to the Managing Made Simple podcast, where you get a masterclass in managing your team with ease in 15 minutes or less. I’m Leah Garvin, your host and team operations consultant. Through this show and my programs with small businesses and corporate teams, I condense a decade of experience driving team operations in some of the most influential companies in tech into strategies to save you time, money, and most of all, stress.

Doesn’t matter if you’re a business owner who realized that running a team isn’t as easy as you thought it would be. Are a new manager learning the ropes or a seasoned manager ready to up their game? Everyone is welcome to hang out with Managing Made Simple. From conflicts to feedback to delegating and more, we leave no stone unturned when it comes to what makes us love managing, kind of hate it, and everything in between. Let’s go.

Welcome back to the show. This week, I am coming at you with a hot take, and that is you’ve got to be paying your team members more. Look, I know budgets are tight. I know headcount is down. I know maybe you can’t get backfills. I know maybe everything is getting more and more expensive to run your business, but you know what? Everything’s getting more expensive for your team members too, to live their lives, to buy a carton of eggs, to pay for their kids’ preschool tuition, whatever.

Everything is harder. What I’m hearing more and more and more from business owners and what I’m seeing showing up in the corporate world more and more is that we are trying to solve this squeeze by paying people less, by trying to get a better deal out of somebody, by trying to have someone do more than one job at a time, which not only leads to them burning out, but it leads to them leaving. And I want you to ask yourself the question any time you’re going to hire someone, would I do a good job at this thing for this pay?

Now, for my business owners listening, okay, a lot of the work that I do with my clients, folks running businesses from med spas to PR agencies, to home building companies, to law firms and beyond, we talk about the kind of hiring planning, how to map out a job description, what we’re looking for, what kind of interview questions to ask, what’s that person’s onboarding going to be like, what is their role expectations? How do we make sure that person’s set up for success, not just in the first couple of weeks, but to have an ongoing thriving career.

In all of these questions, pay naturally comes up. Well, hey, I have all these expenses, here’s the minimum I’m thinking. And it’s been frustrating lately, I’m hearing more often than not folks trying to pay people on the lowest end possible. And again, I want you to ask yourself the question, would I do a good job at this job for this pay? And if the answer’s no, why the hell are you trying to pay somebody else that when that person doesn’t even care about your business?

We right now in an effort to save money, to hit our revenue targets, to hit profitability, to hit your quarterly revenue goals, whatever you have, no matter what kind of business you’re in, large, small, corporate, small business, in effort to hit these financial goals and understandably being under so much pressure, I’m seeing, I’m hearing, I’m witnessing all the good things, employees being paid less. In the corporate world, salaries are flat, folks aren’t getting raises, bonuses are going down, if that was something that folks had been used to in the past.

And do we really think people are going to keep showing up in 10X in it when they don’t get paid more for doing more? Like really? And this is why I talk about having to tie incentives to output and priorities and why that is so important, right? I call it the trifecta of priorities, expectations, and performance, because if we see that third leg of the stool, the performance one, that I’m not getting paid more for doing more, that performance, that effort, those expectations, that’s going to fall off.

So we have to understand that we’re hiring people, we’re paying them, there’s like an energy exchange of money and time for effort, so we have to show up for our team members. I’m going to say it again, when you are thinking about what to pay someone or how to figure out this distribution of raises or bonuses or if you can afford this this year versus something else, investing in growing the team or giving more as opposed to hiring a new person or hiring this kind of consulting service, maybe marketing, ad spend, whatever it looks like, would you do a good job at that job for that pay?

Now, a lot of the things that I hear come up from business owners, from managers in the corporate world, anybody that’s dealing with people, is there’s a feeling of a lot of entitlement right now. Like, hey, I did hire someone and pay a good amount of money. I am giving folks incentives and they just want more and more and more. And it can make you feel like, well, gosh, what’s the end? When’s the limit? And I typically see that solved and alleviated by setting really clear expectations around, okay, when do we talk about raises and bonuses or promotions?

That happens in June and December, we talk about it twice a year, here’s what goes into that, here’s how we come up with the amount that a raise would be, here’s maybe a profit sharing goal, like if we hit this number, we get a bonus from here, here’s when bonuses are paid out, here is the criteria for promotion. The more you spell all that good stuff up front, the less people are coming to you and saying like, hey, I ran an effective meeting, time to get paid more, right?

They’re not coming to you just grasping at straws for what’s going to get them more. I really more often see that as something folks are doing when they don’t feel like it’s clear what success looks like, or it feels like it’s a moving target, or they saw someone get a bonus or a raise or promotion for some unclear criteria, and they think, well, shoot, if we’re just throwing out more money, can I get some of that too?

And so the more clear that you make it and the more you contextualize how you advance and how that performance piece works, the less you’re going to get those random questions. Now, I think if you’re feeling like your team members are saying, you know, that’s not my job, or I don’t do this, and they’re not really stepping up where it doesn’t feel like it warrants getting paid more, then that’s another way to set expectations. And that’s why with my small business clients, I set up a performance rubric with them in many cases, and we say, well, what does it look like to do a great job?

How do you get that raise? How do you get that bonus? Again, we spell it out so that it’s not a question of like, I think I did a lot more and you think I didn’t, where are we going here? Now, in the corporate world, a lot of times this shows up in the standard performance reviews, but this is something you still have to navigate with your employees. Now, back when I was managing teams at Google, I would have team members come up to me every one-on-one and say, hey, you know, I’m ready for my promotion, you know, can we talk about it?

I think I did this one good thing, and I’d have to say, okay, well, let’s take a step back, look at the criteria, look at, well, you know, what are you, what projects are you doing that really map to these different things, like, you know, leadership, complexity, difficulty, scope, cross-team, you know, alignment of stakeholders, whatever it looks like, and then having a negotiation conversation around, well, here’s some things that are really working there, here’s some things to fine-tune, so that we’re all on the same page around how close that person was to getting there, which would then result in a high probability of getting promotion.

Now, again, this still doesn’t mean we’re trying to save every buck on people, and I would say, no matter what situation you are in as a leader, ideally, we want to be finding every possible way that when folks are doing good work, we can pay them more money, and we can incentivize them through the tool that we have, that they are coming here to work, in most cases, to receive. Now, yeah, folks can be intrinsically motivated, they can feel very connected to the purpose and the mission, but I’m not saying that’s not a substitute for paying them more.

I’ve talked a lot about, on the show, about gratitude and appreciation, thanking folks, not a substitute for paying people more, right? It’s a yes and. We all see corporate companies with these massive profit goals and these massive revenues, billion and trillion-dollar companies, work with small businesses that are trying to hit eight, nine figures in their business, and then we’re thinking individual employees are going to want to operate at, feel a thriving career, like just above that minimum wage.

I just don’t see how it adds up. And again, it doesn’t mean we pay people, like overpay them when they’re not hitting the mark. No, it means we think about, well, what is a competitive amount to pay somebody? How can I make sure I’m bringing in the right people, right? So figuring out what’s competitive pay, well, you can look on sites like Lastdoor, LinkedIn has a ton of pay data, right? So you can start to see what ranges are appropriate for the type of role, level of experience, location, remote, or in-person, right?

All those things. You can get a good range. It’s not really a mystery. Now you can decide to do it at a low end, looking at the national requirements for like a minimum salary, or you can say, well, I want to be on the high end of that. Like, why would that be so bad, right? To be on the high end. Do you want some hands-on support for all of the topics I talk about on this show?

Like a team expert who has worked within tech giants like Apple and Google, as well as small businesses on hand to help you delegate and get out of the weeds, handle tough conversations with team members, plan your hiring strategy, and get your teams to help bring in more revenue? Then it’s time to sign up for my Team Whisperer Consulting Sprint. For 90 days, you have me in your back pocket to help you navigate any and every issue happening on your team.

DM me the word sprint on Instagram or email me at hello at leahgarvin.com and let’s build your unstoppable team. And one thing I really encourage you to think about is pairing the pay with the title and level of seniority that you’re specifying in the role. So for example, I’ve seen a lot of folks with smaller teams want to attract people with a really nice title, head of marketing, VP of marketing, director of marketing. Now, when you have those titles, it’s very likely that person’s going to assume they have a team under them implementing because what would you be the head of if you didn’t have people that you’re heading up, okay?

And so one challenge that I see teams run into is mismatching a title, a salary, and then the lack of a team under them to be executing and implementing. So if you are expecting someone to be doing kind of designing the strategy and the plan and also be implementing it, then a role like lead or manager, so marketing lead, marketing manager, ops lead, ops manager, project manager are way more fitting titles. Then that’s much more fitting with the level of experience you want.

Maybe that’s a five to eight years of experience instead of 10 to 15 where you’d say like a VP level would be at. And then that then pairs to the appropriate pay range, okay? So if you want to bring in a VP of marketing, have no team, and then pay them, you know, $60,000 a year, everything is out of alignment there. And I’ll tell you this, that if you have been bringing people on on the low end of that range and it’s been working for you, fine.

But I got to wonder, is that person looking for something that’s going to be paying them more? I have to believe I’ve been there. I have felt like, well, I agree to this job because I don’t have anything else right now, but man, I am really scraping by and I am looking on LinkedIn and Indeed and wherever else every single day for the job that’s going to pay me what I feel like I’m worth and the pay that I need to live and pay my bills right now.

So I really worry about us when we are bringing people in on the low end and we’re like, oh, like I hope someone goes for this because even if someone does, we didn’t really luck out. We probably got that person for three months, maybe six months max, the whole time that person has one foot out the door looking for another role that’s going to pay them better. I’m telling you, I’ve seen it too many times. And so instead of looking at the lowest range, I want to encourage you to think about what is the number of years of experience that I need?

Sorry, actually before that, what is this job entail? Write out that job description. What does success look like? What are the outcomes you want to see? What are the metrics? Really map that out. Then think to yourself, what’s the appropriate level of experience? Could someone that’s two years out of college have that background, have that skill set to be able to do this? Is someone with five years of experience? What kind of relevant experience is going to help them get there?

What kind of varied experience would be really cool that’s a little bit different and off the beaten path? Is this more of a 10 years of experience? Should there be a team under this person executing on this? All of those questions have to be answered first before you just think of a number. Because if you just pull a number out of a hat, you haven’t really thought about, you know, what is that person’s growth plan? You may be doing that because that’s what you have budget for.

But then I think you got to work backwards and say, you know, what is the minimum sort of expectation that I have when someone’s on this low end of this range? And it’s just, it has to come together. And that’s why I said I think the easiest way to empathize with this is again, I will say it one last time, would I do a good job at this job for this pay? Would I feel motivated? Would I stay long term?

Would I want to do my best work? Would I feel really bought in to this company? Would I feel like this company’s investing in me and my career for this pay? And man, if the answer to any of those questions is no, then you have your answer. It’s too low. And that means maybe you say, okay, I want to bring you on. I’m going to bring you on for fewer hours so that it’s more worth your time.

And ideally, you know, this role is going to help us grow the business, grow our budget so that I can put you at full time in this amount of time. So you want to give someone a clear like, hey, we’re going to do this for three months, six months, and then go from there. You know, if you’re in the corporate world and you don’t have access to, you know, be able to pull those strings, we say, hey, you know, I know raises are flat this year.

And that is such a disappointment really for all of us. Here are some of the ways I’m going to help, you know, reach, bring stretch opportunities to you or give you more visibility so that you are building up more awareness in your work so that when we can pay you more, you are dialed in and lined up to get there. So if there’s situations when it’s out of your control, totally understand. But we want to keep that person motivated and invested by telling them what we are doing to help them get to where they need to be, want to be, and really deserve to be.

Okay, so there it is. There’s my hot take. We’ve got to be paying people more money because we want to be earning more money, right, ourselves. So why would we think it’s okay to have someone that’s just barely scraping by when it was we had a role in helping figure them out how to get the best thing for them? Okay, now, again, different conversation if they’re underperforming, if there’s issues, if they’re just starting out right, then there’s different things at play.

So that’s why it all comes together of thinking what’s the expectations of the role, the output, what does success look like, how much experience we need to go into that, and then what feels like the right level of pay. That order of questions is going to really help you get to the right answer. All right, see you next time. That’s all I have for today. Thank you so much for tuning in to the Managing Made Simple podcast, where my goal is to demystify the job of people management so that together we can make the workplace somewhere everyone can thrive.

With that said, let’s spread the word. If you love this episode, please pass it along to someone who might benefit from it. See you next time.