Management Matters

What You Can Offer Other Than A Salary Increase

Date Posted: 11/13/2015

At budgeting time, financial managers are scratching their heads wondering if sales and marketing can generate adequate revenues in the coming year to accommodate normal salary increases as expected by employees. Most companies are able to routinely provide for such cost markups in the normal course of their operations, but some organization cannot always be so generous, particularly if industry trends are bad or the sales graph is flat or drooping.

Paradoxically, in such bad times when companies cannot afford salary increases, managers need to pay greater attention on ways to extract increased output from disappointed employees in order to ride the storm. Some employees may get angry; some deliberately slow down to spite the employer. Others may even want to leave the company. Whatever the form of protest is, managers cannot blame the employees for their reactions because having done their best, they would justifiably feel very let down and de-motivated if their efforts are not financially recognized. This is when a different approach in handling aggrieved staff is critically required so that there is no exodus of good people deserting the ship.

Here are some aspects of the company’s attitude that can make all the difference.

Justify denial of increments

First of all, make employees understand and appreciate the reasons why there will be no salary increases this year. The reasons you give for the company not being able to afford salary raises must of course be very credible, and based on solid economics. Explanations such as unforeseen circumstances or a one-sided management decision will not be acceptable and will be merely seen as excuses to deprive employees leading to deep turmoil.


Prompt the staff for alternatives when no regular salary increase is possible. Ask for suggestions to induce them to throw up other options, like one-time cash or no-cash reward, that might help them tide over this period without the incremental income they expected. One such option may be giving them scope to earn extra cash through any additional incentive programs against specific achievements beyond normal targets.

Enable re-training

Enable your staff to update their knowledge and skill levels, in-house, or through external facilities with a one-time funding. Give them scope to update or specialize in their respective fields and obtain corresponding certification. This will increase not only their self-worth but also benefit the company by having a better skilled workforce.

Allow more work-related perquisites

Allow additional perks like increased leave, travel subsidies, transportation allowance, higher medical reimbursements, child related benefits or sponsorship for club and professional association memberships to make their lives easier and more open to swallow the bitter pill of increment denial.

Relax mandatory card-in/card-out

Against their assurance of higher output and delivery of results beyond targets, it may be a good idea to not get bogged down in straight-jacketed ‘rules’ and allow some selective flexibility in office attendance which is now a universal trend where mutual benefits are already well established.

Create opportunities

Find out what would be considered more professionally valuable to the employee than a normal salary increment and be prepared for some surprising answers. Statistics suggest that the ambitious and talented rate some intellectually challenging new opportunities far higher than a routine salary raise.

Enable visible recognition

A common tool for managers to boost sagging morale is by re-designating portfolios so that at least certain employees can show off new titles to feel important and perhaps even push their colleagues along till the cash crunch subsides. No change in salary or perks but rather an obvious elevation, and thus promotion, can drive many employees to overlook stagnant pay scales in the short-term. Some of the talented even see this as a chance to improve prospects in the job market and stop complaining.

Take a vote

A periodic anonymous objective test is to gather employee opinions about their jobs can throw up many aspects of satisfaction/dissatisfaction that could form the basis of corrective measures to make staff output more productive. Little things can add up to a lot of positive changes that employees will appreciate.

Social activities

Trust your employees to deliver and not be constantly after them. Give them elbow room and let them handle their roles in their own styles to execute their functions. A good delegate and review process can enable greater ownership and responsibility. Also create an extension of their homes in the office through empathy and responsive interest. Let the workplace not be for work only but an outlet for their social interchange underwritten by the employer.

There is more to work than just output.

Introduce a human element to the work environment and not associate everything with just how much your employees produce. Touching their lives through better staff relationships, visible appreciation and thanks rather than measuring performance only in revenue terms will give you staff that not only work for you, but with you.

Share decisions and information

If you want to put together a great cohesive team, you have to involve everyone to make that team functional. There is no better way to make up a team than to plan together, formulate strategies based on information gathered by every member and share ownership for success and failures.

To retain employees in bad times of stagnant salaries, managers must take several initiatives to keep the better people happy and productive. This is possible only by extending psychic rewards to employees when denying salary increases. Managers must make a sincere effort to understand people’s career aspirations to make them believe that they are indeed valuable and included and are in the right organization for better future prospects.

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