Reimbursing employees for their contributions comprises a challenge in managing a startup. After all, there’s a fine line between over- and undervaluing your employees. Salary is a reward to show one’s appreciation and an incentive to work harder. Finding the balance is key.
18 years into my career as a professional human being, I value relationships as a driver of success. All the people in my team are my friends first and my business partners second. Emphasizing family has proven to be far more rewarding than any monetary payoff.
In economics, price discrimination is the most efficient method of pricing. It allows every consumer to pay exactly what they are willing to pay for. I am not in a position to tag a number onto the hard work of someone else, and I hope to be as fair as possible. Thus, my policy in determining salary involves one question.
“How much do you think your salary should be?”
This has many benefits.
First, it establishes a relationship of trust. Asking shows openness to suggestions and a willingness to support the goals the individual has set.
Second, it allows the employee to place value on their contributions.
Also, salary requests communicate their aspirations in the context of their personal circumstances. Often setting your own bar is an incentive to work harder — no one asks for a raise without results.
An employee is accountable to bring the results and honor your trust upon asking for a raise. Finally, clear communication circumvents future conflicts about salary. Now, everyone can hone in on the task at hand.
No one is forcing you to pay Dave twice the amount you thinks he is worth. The humility of my team members, who have refused to overestimate themselves, is refreshing. They have always asked for less than I’d expect. That makes giving a well-earned raise a lot easier.
Mutual trust builds success, and money can’t buy that. Use salary negotiations as a basis for trust, and you’ll be cruising.Opinions expressed here by Contributors are their own.