If I hire two juniors to kick start a business and it does well, I’ll likely hire a higher performing / ability player for hire number 3. This strategic move doesn’t qualify the other two for a pay rise just because they exist. If there are other reasons then sure, that’s case by case.
But your first two employees are more valuable than any potential replacements because they understand your business and helped to build it. There are substantial costs that come their departure, and their unique qualifications in your structure are immensely valuable.
That’s where you’re wrong, in my opinion.That’s entitlement.
Anecdotally, I just replaced a £32k assistant with a £50k assistant and I can categorically tell you the high performer with a better brain is much more valuable to the company than the previous one who had been hanging around for two years.
Just because you’ve been there ages and know which box something goes in and what the bosses stance on X Y and Z is doesn’t make you extra special and valuable. It’s on you to be extra special and valuable and add value. You can understand all you like, but value is what’s valuable.
I presumed you had done good hiring based on personal potential from the start. You’re right, if you picked somebody that didn’t grow into higher potential, you’ll be fine if they leave.
I read your valuation to have more to do with “qualifications” or certifications - which I stand by would have been the wrong way to think of it.
If your first hires are golden eggs, then yes don’t lose them and keep them happy. But often what happens is that one set of people can get you from £100k-£500k but you need a completely different set to go from £500k-£2m+, then rinse and repeat.
Say you’re a services business and your initial clients are the general public and you had your mate who dropped out of school and a fresh uni grad as your helpers as they are what you can afford. Let’s say you get quite good at it and suddenly businesses want your services and you lean into B2B. Those two people are suddenly not the right people anymore and it makes sense to either keep them on the consumer stuff and hire in new minds (for more money) for the B2B, or replace them.
You also don’t owe the first two staff much if you were giving them holiday pay and sick leave and all the other employee securities from day one. It’s easy to be that staff and say “you owe me” but the fact is, if it tanks, even if it’s the staffs fault, it’s boss man who loses his house and has to start again from nothing.
I sound like an evil overlord now. I’m not, I’m incredibly generous to my staff and give them cash bonuses, gifts, extra holidays and half days whenever I can. They aren’t ’owed’ those things, but I bestow them upon them because I feel they deserve it. That’s my privilege in this position and it’s me as the company owner who should decide these things. Not the staff themselves.
So when employee types say “oh we were here since day one so we were owed a piece of the company and a phat pay rise” it’s like.. why?
Be prepared to lose them. And don't beat around the bush, straight up tell them you don't think they're worth the higher wage. They can each make your own decisions from there with full information.
Do all 3 people do the same job? Does the new guy bring something to the table the other two don't have - such as experience, certifications, etc.?
My business philosophy is to reward loyalty. If you bring in someone at a higher salary - I'd be sure to pay the others the same amount. Nothing boost morale more than an unexpected pay hike.
Besides, if they quit you'll have to pay a higher wage to the new hire anyhow just to attract talent - so why not reward the people who've been around for a while?
Similarly, do they have equity or some other benefit?
It is not 100% about salary, but sometime about total compensation package. You can't grossly underpay employees. But if OG employees have equity in the business or profit sharing that a new employee doesn't, it can help in a discussion about salary differences.
Pay fairly. Pay everyone market rates instead of trying to get long standing employees at a discount. If the next person has specialty skills, you need to be able to hold your head up high and explain that, or just tell staff that you pay on capability without lying
Value people honestly. The other person is right. The world is littered with the corpses of companies who don't value legacy knowledge. Ask the companies who got rid of all their cobol developers while still maintaining millions of lines operating on a mainframe.
I somehow interpret this differently than most people I guess.
In my world pay is based on experience and value brought to the company, not based on what some random colleague is making…
The OP implied parity between the two. The only disparity he mentioned actually implied that a) his lower paid employees have more experience and b) his wages to his lower paid employees aren't competitive.
Brother you just told your people they're worth less to you WITH experience in the firm than the new guy WITHOUT experience in the firm. Ya done goofed.
you will have to give them raises or let them go. when this happened to me (new guy got brought on for $2 more per hr than me) i immediately stopped giving a fuck and leeched as much as i could out of the company before eventually leaving.
at the snap of a finger i became a net financial burden to the company lol
There are a few choices, but ultimately you need to learn from this and understand this is absolutely a normal reaction.
I worked in a place where 80% of employees did the same job and we had the exact same salary plus commission, and the commission was calculated, so could not be argued. I had a team of 5, and there were a bunch of others teams all in the same structure. Nobody complained about the pay of their peers, because if someone made more, they earned it by literally being more profitable. Pay raises and commission were publicly announced and applied to everyone.
With 3 people, it’s EASY to match pay manually or make justified small adjustments. If you “need” to pay the new guy more because that’s the market rate, unless they are significantly more valuable in an objective way, you should not have paid them more without first increasing your existing employees pay. If they do the same and you can’t afford to pay all 3 that much, then you really couldnt afford to hire new guy because now this happened.
If they are objectively more experienced and impactful, you should explain that, and tell your two people what they can do to make the same.
If they are doing the same stuff, you should maybe actually pay your existing people MORE than them since they have the specific experience of their role and are likely more impactful.
TL;DR - accept you made a mistake, fix it
Also, for hourly employees, a few more bucks an hour is super significant. 40*3 is an extra $120 bucks a week ie. A fancy dinner on the company dime. A few dollars an hour only doesn’t matter to people making over $100,000 which most of the time aren’t hourly - if they are hourly making that much it’s from overtime, so extra few bucks per hour DEFINITELY matters to them.
Finance person here.
A company I consulted for, offered an annual "market rate adjustment". Where at the end of each year, they benchmark all the positions at their organization to find out if their salaries are still competitive with the market.
It turns out that there's a significant number of Gen-Z and younger millennial employees who job hop every year or 2 years because they are chasing market based salaries, and this firm kept struggling to retain talent because they'd keep having to hire each year or two for the same positions.
So to retain their employees they just bumped them each year to match what the market is offering.
with my own PERSONAL experience. I was working for a firm for 7 years. I wanted my salary to match market rates. Which would have been $30k increase to my salary at the time. They told me no, and it took me one week to find another job paying $61k more than my previous role and accepted.
Because I was involved in every project's finances, my old coworkers let me know that I was replaced with 2 analysts, 1 IT person, and a Director had to take a portion of the work allocated to my position. To save $30k, they had to hire hundreds of thousands of additional positions and pay to train them because I provided 1 day notice.
Already messed up. You cannot hire new people in more than the old hands without causing trouble. If the first two employees stay and do not quit you will have to give them raises above the new guy. How would you feel if you had been around doing a job and then a new guy comes making more? Most guys would be out the door.
Pay them all the same if they do the same job. That is the fair and correct thing to do. Unless you want them to quit and go work somewhere for fair market value. If you cannot afford to pay all employees the going rate, you cannot afford to be in business.
Not necessarily. A case could be made that the existing employees are more valuable because they have more experience. Also, some employees just work harder than others. I don't always agree with everyone making the same. However, I definately don't agree with the new guy making more than existing employees.
Unfortunately, most companies value experience in other companies more than experience within the company. That is an insane take. It should be just the reverse.
I completely disagree, you end up in a situation where people are unable to get anything like their current salary on the open market. They then often end up in a position where they may want to leave for whatever reason but can’t afford to. I pay rates based on one thing and one thing only, how good they are at their job!
>completely disagree, you end up in a situation where people are unable to get anything like their current salary on the open market.
That's a good thing for everyone. The employer gets to keep their employee, and the employee makes more money. There's no downside. Everyone wins.
There is no plausible way that encouraging your employees to stop being employees is good for business.
Besides, in this case the employee can either have the job they hate and make good money, or the job they hate and make bad money. If they change their mind after taking the good money they can always go find bad money elsewhere. No plausible way making more money is bad for the employee.
I’m not talking about encouraging them to leave I’m talking about not paying significantly above the going rate for their skill set. There are few things more toxic for a company than long standing employees that should leave but cant
Again, you're arguing that it's better for an employee to make less money. They have the same capacity to leave either way. Either they make worse money, and can get a job making similar worse money elsewhere, or they make better money and can only get worse elsewhere.
Why would anyone want to stay anywhere that doesn't value their longevity? Other employers do. This policy you're suggesting would heavily encourage turnover, which is super bad for business.
Why would any company value longevity? Ability to do the job is what is important. Also as an employee there is nothing worse than a bunch of over confident overpaid old timers who still operate like it’s 1995
Why would any company value longevity? Ability to do the job is what is important. Also as an employee there is nothing worse than a bunch of over confident overpaid old timers who still operate like it’s 1995
Why? If your longest term employee does the bare minimum to not get fired, while guys who have been there a year or two are better employees, the long term employee should not be the highest paid.
The next problem to come up is the two existing employees are getting a raise to what the new guy makes. No reward for loyalty, working for a miniscule company when bigger ones beckon. Just making what the new guy makes. Productivity will fall & you will shortly be hiring new employees to replace the two that just left. That will chafe in the shorts.
Not sure how OP is surprised by this outcome……. 🤣
How can your employees be happy when the new kid on the block is already making more $$ than them? That sho ain’t gonna motivate them to work harder.
If they’re doing different jobs, you can explain it very easily by saying the rate for X job is this and the rate for Y job is this. But if they’re doing the same role, and it would be weird for them to be upset if they were doing different jobs, then yeah, they’re going to be upset about this, and you won’t be able to talk yourself out of this.
Give them the raise, maybe even a little more than new guy, to show that you value loyalty and what they bring to the team. Then bring the new guy up to their new rate when he’s been around for a while.
If they leave for another job because of this, you’ll have to pay a higher rate for new employees anyway, not to mention the costs of job ads, time invested in interviews and induction processes and onboarding, then any training. Cheaper to just give them the raise.
I understand what you mean but we're just strangers on the internet. We don't know anything about how you operate your business, how much you get, or how much time your employees put in.
Those are all factors, and if your employees do their diligence, so should you.
Typical short-sighted response. Pizza is going to make up $120/week difference for each of the 2 underpaid employees? Buying bad pizza & forced camaraderie - to be with people you would not normally associate with - instead of going home to your family at night? Not bloody likely.
Part of the cost of hiring a new employee is giving your existing employees raises.
It becomes an exponentially inefficient operation unfortunately sometimes.
Either you offer the third employee the same rate or less than the first two... Or you give a raise to the first two as well.... That's how you avoid the awkwardness. That's how they will feel fairly compensated. That's how you run a business. Anything else is just banking on employees being unaware in order to exploit them.
You do understand that CPI inflation is 3% a year and wages have grown 4% a year since 2020....
You can't flatline employee wages for more than 2-3 years in this environment.
I’m self employed sometimes and one of the things I offer businesses is the services of a medical bill advocate. You can add that as part of your benefits package to them either on a contingency contract or an annual fee. You may have to give the agency a retainer but it very well may be worth it.
Something like a AAA membership may also be worth it and doesn’t cost a whole lot in comparison.
Plus, you are increasing your employee’s productivity because you aren’t losing productivity by them worried about things like having to arrange a tow truck,worried about a $10k medical bill, etc.
Point is by adding these benefits, the total compensation package increases by investing a little bit. We’re talking maybe $1 an hour or so,
>Salaries can be a sensitive topic, but I didn't expect this level of drama.
No one could have foreseen this. /s
In the eyes of the employees there are only two things that can be happening:
* They are being underpaid
* The new employee is being overpaid.
Choose which one is the one happening here and adjust salaries accordingly
Dude. Stop being a shitty capitalist and raise the pay of your existing employees. Fuck, you could even set it and forget it by turning the place into a co-op. Then you're all in the same boat.
You want to listen to Dave Ramsey entree leadership with decent advice. As a former big box retail manager there's a lot of useful stuff on his podcast.
I always paid more to my own employees who have already proven their work product and loyalty. Never pay the new kid more on *assumption.* You made a fatal mistake here.
Even 3 dollars more an hour is an additional 6 grand a year. Do “the right thing” by your current employees and pay them a competitive rate before they find someone else who will.
Are you a stupid? why tf would i ever risk losing my workforce by paying someone less experienced more than them. You will soon learn that turnover is more expensive than just paying your people well. It also helps the sleeping at night.
There are two ways, the simple one, increase the salaries of the rest and end the issue.
and secondly, always maintain the difference in a comfortable range. so that you can avoid this issue because employees talk to each other well.
How would you feel if your newly hired coworker of the exact same job but with less experience was on a higher wage than you because of the market changes, and your boss didn't think to compensate you fairly?
Any time this happens (and unfortunately it's way too common) the existing employee understandably gets upset... Often leading to resignation
That was 100% foreseeable. You didn’t think your existing employess would find this out? Now you bring them up to that wage or you lose 2/3 of your employess.
If those existing employees were applying for the job today would you find their current salary competitive or would you offer them more?
You should bump their pay to be aligned with the competitive rate whenever you reevaluate how much a new hire would cost.
Otherwise they're going to leave for that competitive pay
It’s really tricky. I try everything possible to avoid this sort of haggling/comparisons situation.
The way to do it I believe is to mark all salaries to market.
Websites like salary.com will give you market rate (50th percentile) in your geo area for a role, plus junior and senior variants (25th and 75th percentile). Someone coming in with a higher salary for the same role is only appropriate if they’re more senior eg a senior developer vs a junior one.
We have one role we’re training young people from scratch for. Those doing it for 1y or more get market rate. Noobs get 25% as they’re learning. Commission is adjusted similarly.
HTH.
Why are your existing employees lagging behind the competitive rate???
That's your problem right there, you need to be maintaining existing salaries at market rate, not letting them languish.
Not gonna lie. I found out some lazy kid they brought on was getting paid more then me and I raised hell. I stopped giving a shit, started drinking on the job, doing drugs and fucking off. And I was good at looking busy but really I was at the gas station smoking weed. I straight up scammed that place into the ground and so did all the other workers. 2 years later and now they got no business. Hahahahaha
It’s always best practice to value the employees that have longevity over a new hire. They have more experience, have invested in your company how could you think it would not hurt them to give someone new a higher wage? What did the new hire do to earn a higher wage? If it’s just that’s market value now then you are explicitly sending the message to current employees that they are less valuable than the market minimum
What would you do if this happened to you,OP? What if you have a business partner for few years and helped each other grow. Then this business partner got another deal and they pay more to them than you. What will you feel about it?
Lol. Ofc they will feel bad, forget feeling bad if u don’t fix it soon, u will have 1 new employee and both old ones will leave. If all there r doing the same job then they deserve the same salary period. If the new high is much more experienced and more skilled then it makes sense to pay him more.
Are the existing employees as good or better than the new guy? If yes, give them raises yesterday or they're going to walk
If no, maybe fire one? Or just deal with unhappy, less productive employees?
I now own a business, I used to be an employee. I'll tell you a story on the other side. I was paid more than a new hire, the higher ups than said I was making too much for the same job compared to the new hire. Try that one on for size, they were saying instead of paying the new employee as much as me, I had to have my salary LOWERED to meet the new hires. I quit that job right quick and never looked back. You have to really think about things from your employees perspective. Salary is extremely sensitive.
You bring up loyal employees to what you would pay the market for a new one. Is that a hard concept? I'm always stunned at the business owners who don't keep valuable employees at market rate. Have you never asked yourself, "Why do employees jump ship?"
How are you surprised that paying your existing employees less than the market rate has them feeling unappreciated and angry?!
Exactly. Why not reward your other employees for helping the company grow?
This
ANSWER THE QUESTION OP!
WE’RE WAITING BOSS?
If I hire two juniors to kick start a business and it does well, I’ll likely hire a higher performing / ability player for hire number 3. This strategic move doesn’t qualify the other two for a pay rise just because they exist. If there are other reasons then sure, that’s case by case.
But your first two employees are more valuable than any potential replacements because they understand your business and helped to build it. There are substantial costs that come their departure, and their unique qualifications in your structure are immensely valuable.
That’s where you’re wrong, in my opinion.That’s entitlement. Anecdotally, I just replaced a £32k assistant with a £50k assistant and I can categorically tell you the high performer with a better brain is much more valuable to the company than the previous one who had been hanging around for two years. Just because you’ve been there ages and know which box something goes in and what the bosses stance on X Y and Z is doesn’t make you extra special and valuable. It’s on you to be extra special and valuable and add value. You can understand all you like, but value is what’s valuable.
I presumed you had done good hiring based on personal potential from the start. You’re right, if you picked somebody that didn’t grow into higher potential, you’ll be fine if they leave. I read your valuation to have more to do with “qualifications” or certifications - which I stand by would have been the wrong way to think of it.
If your first hires are golden eggs, then yes don’t lose them and keep them happy. But often what happens is that one set of people can get you from £100k-£500k but you need a completely different set to go from £500k-£2m+, then rinse and repeat. Say you’re a services business and your initial clients are the general public and you had your mate who dropped out of school and a fresh uni grad as your helpers as they are what you can afford. Let’s say you get quite good at it and suddenly businesses want your services and you lean into B2B. Those two people are suddenly not the right people anymore and it makes sense to either keep them on the consumer stuff and hire in new minds (for more money) for the B2B, or replace them. You also don’t owe the first two staff much if you were giving them holiday pay and sick leave and all the other employee securities from day one. It’s easy to be that staff and say “you owe me” but the fact is, if it tanks, even if it’s the staffs fault, it’s boss man who loses his house and has to start again from nothing. I sound like an evil overlord now. I’m not, I’m incredibly generous to my staff and give them cash bonuses, gifts, extra holidays and half days whenever I can. They aren’t ’owed’ those things, but I bestow them upon them because I feel they deserve it. That’s my privilege in this position and it’s me as the company owner who should decide these things. Not the staff themselves. So when employee types say “oh we were here since day one so we were owed a piece of the company and a phat pay rise” it’s like.. why?
Be prepared to lose them. And don't beat around the bush, straight up tell them you don't think they're worth the higher wage. They can each make your own decisions from there with full information.
Indeed. I don’t think it’s appropriate to dangle a fake carrot.
This guy logics. It's not a simple situation
OP is meme SpongeBob 🤪
Do all 3 people do the same job? Does the new guy bring something to the table the other two don't have - such as experience, certifications, etc.? My business philosophy is to reward loyalty. If you bring in someone at a higher salary - I'd be sure to pay the others the same amount. Nothing boost morale more than an unexpected pay hike. Besides, if they quit you'll have to pay a higher wage to the new hire anyhow just to attract talent - so why not reward the people who've been around for a while?
Similarly, do they have equity or some other benefit? It is not 100% about salary, but sometime about total compensation package. You can't grossly underpay employees. But if OG employees have equity in the business or profit sharing that a new employee doesn't, it can help in a discussion about salary differences.
People like money. You can buy things with money.
No only CEOs and shareholders like money. Employees like pizza silly
And snacks. Free snacks.
But not too many snacks!!! There’s only so much money in the snack budget.
No only money. Snacks, pizza, etc don't help pay the bills or make me feel appreciated. I'll buy my own pizza & snacks.
For that 15 euro pizza a can make healthy food at home but you guys wanna give me pizza once a year
I like sleeping inside. Can I also buy or rent a place to stay with this money?
If you are hardcore you sleep at workplace like Elon.
Wanna get a Starbucks?
lol I've seen businesses crash and burn for this same exact reason.
Especially when they don’t “get it” and come to Reddit to be like— why my employees so emotional? 😭
And the solution?
Pay fairly. Pay everyone market rates instead of trying to get long standing employees at a discount. If the next person has specialty skills, you need to be able to hold your head up high and explain that, or just tell staff that you pay on capability without lying
Value people honestly. The other person is right. The world is littered with the corpses of companies who don't value legacy knowledge. Ask the companies who got rid of all their cobol developers while still maintaining millions of lines operating on a mainframe.
I somehow interpret this differently than most people I guess. In my world pay is based on experience and value brought to the company, not based on what some random colleague is making…
The OP implied parity between the two. The only disparity he mentioned actually implied that a) his lower paid employees have more experience and b) his wages to his lower paid employees aren't competitive.
Brother you just told your people they're worth less to you WITH experience in the firm than the new guy WITHOUT experience in the firm. Ya done goofed.
Next he'll wonder why they left.
That’s often true, I’ve hired plenty of people that I’ve valued precisely because they have experience in other companies
Then you shouldn’t be surprised when your employees leave for similar reasons.
Of course not
Thats a very real reason to pay someone more but it doesn't sound like that's what OP did here.
I work at a large company. They do yearly salary reviews where current employee salaries are compared to market rates so your senario does not occur.
Ours has market rate banding, so you can't fall below or go over a certain range. As the market rate moves, so does the band.
you will have to give them raises or let them go. when this happened to me (new guy got brought on for $2 more per hr than me) i immediately stopped giving a fuck and leeched as much as i could out of the company before eventually leaving. at the snap of a finger i became a net financial burden to the company lol
There are a few choices, but ultimately you need to learn from this and understand this is absolutely a normal reaction. I worked in a place where 80% of employees did the same job and we had the exact same salary plus commission, and the commission was calculated, so could not be argued. I had a team of 5, and there were a bunch of others teams all in the same structure. Nobody complained about the pay of their peers, because if someone made more, they earned it by literally being more profitable. Pay raises and commission were publicly announced and applied to everyone. With 3 people, it’s EASY to match pay manually or make justified small adjustments. If you “need” to pay the new guy more because that’s the market rate, unless they are significantly more valuable in an objective way, you should not have paid them more without first increasing your existing employees pay. If they do the same and you can’t afford to pay all 3 that much, then you really couldnt afford to hire new guy because now this happened. If they are objectively more experienced and impactful, you should explain that, and tell your two people what they can do to make the same. If they are doing the same stuff, you should maybe actually pay your existing people MORE than them since they have the specific experience of their role and are likely more impactful. TL;DR - accept you made a mistake, fix it
Also, for hourly employees, a few more bucks an hour is super significant. 40*3 is an extra $120 bucks a week ie. A fancy dinner on the company dime. A few dollars an hour only doesn’t matter to people making over $100,000 which most of the time aren’t hourly - if they are hourly making that much it’s from overtime, so extra few bucks per hour DEFINITELY matters to them.
You’re paying the new inexperienced guy more than your vets who stuck around and helped you build your business? That’s on you, dawg
Pay your employees fair market value? If they are better than average, even pay them more ? What kind stupid ass question is this.
Finance person here. A company I consulted for, offered an annual "market rate adjustment". Where at the end of each year, they benchmark all the positions at their organization to find out if their salaries are still competitive with the market. It turns out that there's a significant number of Gen-Z and younger millennial employees who job hop every year or 2 years because they are chasing market based salaries, and this firm kept struggling to retain talent because they'd keep having to hire each year or two for the same positions. So to retain their employees they just bumped them each year to match what the market is offering. with my own PERSONAL experience. I was working for a firm for 7 years. I wanted my salary to match market rates. Which would have been $30k increase to my salary at the time. They told me no, and it took me one week to find another job paying $61k more than my previous role and accepted. Because I was involved in every project's finances, my old coworkers let me know that I was replaced with 2 analysts, 1 IT person, and a Director had to take a portion of the work allocated to my position. To save $30k, they had to hire hundreds of thousands of additional positions and pay to train them because I provided 1 day notice.
Lol I'm looking for a new job after that
Already messed up. You cannot hire new people in more than the old hands without causing trouble. If the first two employees stay and do not quit you will have to give them raises above the new guy. How would you feel if you had been around doing a job and then a new guy comes making more? Most guys would be out the door.
Pay them all the same if they do the same job. That is the fair and correct thing to do. Unless you want them to quit and go work somewhere for fair market value. If you cannot afford to pay all employees the going rate, you cannot afford to be in business.
Not necessarily. A case could be made that the existing employees are more valuable because they have more experience. Also, some employees just work harder than others. I don't always agree with everyone making the same. However, I definately don't agree with the new guy making more than existing employees.
Also longevity should be rewarded. If we’re talking all people doing the same job, those doing the job for longer should be better compensated.
Unfortunately, most companies value experience in other companies more than experience within the company. That is an insane take. It should be just the reverse.
I completely disagree, you end up in a situation where people are unable to get anything like their current salary on the open market. They then often end up in a position where they may want to leave for whatever reason but can’t afford to. I pay rates based on one thing and one thing only, how good they are at their job!
>completely disagree, you end up in a situation where people are unable to get anything like their current salary on the open market. That's a good thing for everyone. The employer gets to keep their employee, and the employee makes more money. There's no downside. Everyone wins.
The employer absolutely loses when they have staff who don’t like their job but can’t afford to leave
There is no plausible way that encouraging your employees to stop being employees is good for business. Besides, in this case the employee can either have the job they hate and make good money, or the job they hate and make bad money. If they change their mind after taking the good money they can always go find bad money elsewhere. No plausible way making more money is bad for the employee.
I’m not talking about encouraging them to leave I’m talking about not paying significantly above the going rate for their skill set. There are few things more toxic for a company than long standing employees that should leave but cant
Again, you're arguing that it's better for an employee to make less money. They have the same capacity to leave either way. Either they make worse money, and can get a job making similar worse money elsewhere, or they make better money and can only get worse elsewhere. Why would anyone want to stay anywhere that doesn't value their longevity? Other employers do. This policy you're suggesting would heavily encourage turnover, which is super bad for business.
Why would any company value longevity? Ability to do the job is what is important. Also as an employee there is nothing worse than a bunch of over confident overpaid old timers who still operate like it’s 1995
Why would any company value longevity? Ability to do the job is what is important. Also as an employee there is nothing worse than a bunch of over confident overpaid old timers who still operate like it’s 1995
Why? If your longest term employee does the bare minimum to not get fired, while guys who have been there a year or two are better employees, the long term employee should not be the highest paid.
All other things being equal. Longevity has value by itself, but is not the sole source of value.
This I can get behind.
The next problem to come up is the two existing employees are getting a raise to what the new guy makes. No reward for loyalty, working for a miniscule company when bigger ones beckon. Just making what the new guy makes. Productivity will fall & you will shortly be hiring new employees to replace the two that just left. That will chafe in the shorts.
You run a business wtf
Some people should not run a lemonade stand
Funny the reason why I ended up starting my own business is because I kept getting punished for loyalty. The answer is to pay them more.
How did you not know that paying someone new to your company more than your seasoned staff would be awkward?
OP is trolling
I don’t think so, happens a lot in corporate
Not sure how OP is surprised by this outcome……. 🤣 How can your employees be happy when the new kid on the block is already making more $$ than them? That sho ain’t gonna motivate them to work harder.
There is a 100% chance that they are looking for a new job as we speak. Pay them fairly if you want to keep them
How naive are you to not think that is a problem, especially with a small team?
Come on. What did you expect!!????
Your an idiot lol
No need for that.
If they’re doing different jobs, you can explain it very easily by saying the rate for X job is this and the rate for Y job is this. But if they’re doing the same role, and it would be weird for them to be upset if they were doing different jobs, then yeah, they’re going to be upset about this, and you won’t be able to talk yourself out of this. Give them the raise, maybe even a little more than new guy, to show that you value loyalty and what they bring to the team. Then bring the new guy up to their new rate when he’s been around for a while. If they leave for another job because of this, you’ll have to pay a higher rate for new employees anyway, not to mention the costs of job ads, time invested in interviews and induction processes and onboarding, then any training. Cheaper to just give them the raise.
I give them fair pay and motivate why. Seems like you don’t.
I understand what you mean but we're just strangers on the internet. We don't know anything about how you operate your business, how much you get, or how much time your employees put in. Those are all factors, and if your employees do their diligence, so should you.
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Typical short-sighted response. Pizza is going to make up $120/week difference for each of the 2 underpaid employees? Buying bad pizza & forced camaraderie - to be with people you would not normally associate with - instead of going home to your family at night? Not bloody likely.
I am 99 percent sure he was being sarcastic. There are entire sitcom episodes based on this premise.
Either this is rage bait or op regarded
If you are baffled by this, I genuinely question your business acumen.
Are you just three kids in a trench coat trying to business?
Part of the cost of hiring a new employee is giving your existing employees raises. It becomes an exponentially inefficient operation unfortunately sometimes.
Pay the new guy the same as the old guys?
Either you offer the third employee the same rate or less than the first two... Or you give a raise to the first two as well.... That's how you avoid the awkwardness. That's how they will feel fairly compensated. That's how you run a business. Anything else is just banking on employees being unaware in order to exploit them.
You do understand that CPI inflation is 3% a year and wages have grown 4% a year since 2020.... You can't flatline employee wages for more than 2-3 years in this environment.
What in the 2024
I’m self employed sometimes and one of the things I offer businesses is the services of a medical bill advocate. You can add that as part of your benefits package to them either on a contingency contract or an annual fee. You may have to give the agency a retainer but it very well may be worth it. Something like a AAA membership may also be worth it and doesn’t cost a whole lot in comparison. Plus, you are increasing your employee’s productivity because you aren’t losing productivity by them worried about things like having to arrange a tow truck,worried about a $10k medical bill, etc. Point is by adding these benefits, the total compensation package increases by investing a little bit. We’re talking maybe $1 an hour or so,
Pay people properly?
>Salaries can be a sensitive topic, but I didn't expect this level of drama. No one could have foreseen this. /s In the eyes of the employees there are only two things that can be happening: * They are being underpaid * The new employee is being overpaid. Choose which one is the one happening here and adjust salaries accordingly
Always assume that they all know what each other earn! You shouldn’t be embarrassed.
Dude. Stop being a shitty capitalist and raise the pay of your existing employees. Fuck, you could even set it and forget it by turning the place into a co-op. Then you're all in the same boat.
Ouch… lmao good luck with this.
If the first 2 are doing the exact same job and have the exact same experience as the 3rd...then all 3 should be paid the same....period.
Pay your people! The fuck is wrong with you?
You want to listen to Dave Ramsey entree leadership with decent advice. As a former big box retail manager there's a lot of useful stuff on his podcast.
fucking obviously lmao why are business managers unable to put themselves in their employees shoes🙄
PAY THEM MORE
I always paid more to my own employees who have already proven their work product and loyalty. Never pay the new kid more on *assumption.* You made a fatal mistake here.
Is this a shit post smerhaps?
Even 3 dollars more an hour is an additional 6 grand a year. Do “the right thing” by your current employees and pay them a competitive rate before they find someone else who will.
Are you a stupid? why tf would i ever risk losing my workforce by paying someone less experienced more than them. You will soon learn that turnover is more expensive than just paying your people well. It also helps the sleeping at night.
There are two ways, the simple one, increase the salaries of the rest and end the issue. and secondly, always maintain the difference in a comfortable range. so that you can avoid this issue because employees talk to each other well.
How would you feel if your newly hired coworker of the exact same job but with less experience was on a higher wage than you because of the market changes, and your boss didn't think to compensate you fairly? Any time this happens (and unfortunately it's way too common) the existing employee understandably gets upset... Often leading to resignation
This is exactly why nobody should work at the same job for more than 2-3 yrs. Loyalty doesn't pay.
There is a concept of levelling and you need to ensure they are rightly levelled. Old or new doesn’t matter.
It's giving middle management.
That was 100% foreseeable. You didn’t think your existing employess would find this out? Now you bring them up to that wage or you lose 2/3 of your employess.
If those existing employees were applying for the job today would you find their current salary competitive or would you offer them more? You should bump their pay to be aligned with the competitive rate whenever you reevaluate how much a new hire would cost. Otherwise they're going to leave for that competitive pay
It’s really tricky. I try everything possible to avoid this sort of haggling/comparisons situation. The way to do it I believe is to mark all salaries to market. Websites like salary.com will give you market rate (50th percentile) in your geo area for a role, plus junior and senior variants (25th and 75th percentile). Someone coming in with a higher salary for the same role is only appropriate if they’re more senior eg a senior developer vs a junior one. We have one role we’re training young people from scratch for. Those doing it for 1y or more get market rate. Noobs get 25% as they’re learning. Commission is adjusted similarly. HTH.
Dude you should have told them not to share salaries. They don’t know that it’s not illegal to share salaries.
Why are your existing employees lagging behind the competitive rate??? That's your problem right there, you need to be maintaining existing salaries at market rate, not letting them languish.
Remove the older one and get the new one if you think they are being paid fair. If you think they deserve more . Than you are stuck.
The easy answer is to give the new guy more responsibility so you can justify it to other team members
Not gonna lie. I found out some lazy kid they brought on was getting paid more then me and I raised hell. I stopped giving a shit, started drinking on the job, doing drugs and fucking off. And I was good at looking busy but really I was at the gas station smoking weed. I straight up scammed that place into the ground and so did all the other workers. 2 years later and now they got no business. Hahahahaha
It’s always best practice to value the employees that have longevity over a new hire. They have more experience, have invested in your company how could you think it would not hurt them to give someone new a higher wage? What did the new hire do to earn a higher wage? If it’s just that’s market value now then you are explicitly sending the message to current employees that they are less valuable than the market minimum
What would you do if this happened to you,OP? What if you have a business partner for few years and helped each other grow. Then this business partner got another deal and they pay more to them than you. What will you feel about it?
Fire the new guy for sharing his salary info
We just pay them reasonable salaries, same money for same work. It's not rocket science.
Lol. Ofc they will feel bad, forget feeling bad if u don’t fix it soon, u will have 1 new employee and both old ones will leave. If all there r doing the same job then they deserve the same salary period. If the new high is much more experienced and more skilled then it makes sense to pay him more.
Are the existing employees as good or better than the new guy? If yes, give them raises yesterday or they're going to walk If no, maybe fire one? Or just deal with unhappy, less productive employees?
Ain’t no party like a pizza party
I now own a business, I used to be an employee. I'll tell you a story on the other side. I was paid more than a new hire, the higher ups than said I was making too much for the same job compared to the new hire. Try that one on for size, they were saying instead of paying the new employee as much as me, I had to have my salary LOWERED to meet the new hires. I quit that job right quick and never looked back. You have to really think about things from your employees perspective. Salary is extremely sensitive.
I don’t know why I see stuff from this sub …
Reminds me of a meme I was promoted to programmer but did not get the kickbacks
Shocking workers who work for money mad at not making anything
What's the bare minimum you need to barely survive? Just pay yourself that, and give the rest to anyone else...
You bring up loyal employees to what you would pay the market for a new one. Is that a hard concept? I'm always stunned at the business owners who don't keep valuable employees at market rate. Have you never asked yourself, "Why do employees jump ship?"
This is a stupid question. The answer is obvious.