Navigating Inflation & Raises in Business
With inflation on the rise and the hiring crisis lingering on, business owners are getting hit with employee’s and/or contractor’s wanting a raise (and/or raising their prices). Which brings about the question – what should an owner expect from a team member (or contractor) in exchange for a raise?
As a business owner, it’s your job to think about the bottom line and profit margin as a whole within the business. But when you are continuously being asked for raises by your staff, it can start to feel like you are handing out money left and right. Which is why all business owners should think about the factors surrounding the request for “increasing an employee’s (and/or contractors) pay.”
- What value do they bring to the business?
- Are they contributing more since the hiring shortage?
- How do they show up for meetings? Prepared? Ideas?
- What’s their KPIs and/or performance?
- How’s inflation affecting them and how they show up?
Once you evaluate their performance and understand the value the employee (and/or contractor) brings to the business, it’s then that you can consider the raise and set the expectations.
When giving a raise due to inflation, there has to be a conversation around expectations. Inflation occurs when there’s an increase in production costs or an increase in demand for products and services. During the times of soring inflation, everyone feels the sting of these rising prices at home. Which is why setting expectations for a raise is so important.
- Share a specific thought or expectation with the employee or contractor.
- Don’t ruminate about said thought or expectation as your employee or contractor is not doing that either.
- Repeatedly communicate and take the time to emphasize what is important to you.
REMEMBER: Your employees and/or contractors are too distracted juggling their own recurring personal issues, so they aren’t thinking the same as the business owner and can forget the expectations from time to time.
Very few opportunities arise like this, so during times of inflation and pay raises, it’s your opportunity to re-evaluate the situation and make strategic moves within the business that could increase an employee’s (or contractors) pay and cut costs for you.
Seize the Moment
During times of hiring shortages, inflation, pay raises, material shortages, and so on is also a great time to re-evaluate what all you are offering your staff from day-to-day in the business.
- No more in-shop breakfast and/or coffee everyday (this becomes a special surprise/treat).
- No more recording lunches inaccurately (or looking the other way when they are recorded inaccurately).
- No more hanging around “helping” other crew members load
- No more forgetting to gas up in the evenings
- No more cigarette breaks
This is also a great time to speak with the staff about new equipment purchases and how efficiency of operations is ONLY achieved only when everyone pulls together as one team.
During times like these, don’t just seize the moment to make downgrades, but take the time to create incentives too. One way this can be done is through a career advancement called a “pay ladder.”
A pay ladder is where you increase a employee’s pay based on the skills they learn for a particular job. By teaching your staff what skills they would need to learn in order to advance in pay, you can offer them a way to increase what they make within your company on a regular basis instead of just times of inflation.
Hot Tip: To incentivize your staff company wide, create an area where you hang a career ladder with pay ranges on it so that everyone involved can see what they can do to increase their pay.
As you find yourself navigating the hiring crisis and internal raises due to inflation, keep in mind that the best form of action is to always get ahead of the situation by putting a plan in place. You can do this by working with your staff in order to create an efficiency-minded work culture, a growth-oriented work force, and a “one for all and all for one” team culture. AND… don’t forget to consistently share with your staff what you are ruminating on. The more you keep putting what’s on your mind in front of your team the more likely they are to start thinking like you and offering suggestions that lead to growth and stability in an ever changing world.
Need help navigating this in your business? One of the perks of working with The Green Executive® is that we actively own and run a successful lawn care and landscape business. Internally, we have in place career ladders, snow contracts, profit sharing forms and job descriptions — all of which you get full access to when you work with us. So don’t struggle with navigating inflation and pay raise, let us help you >> click here.