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Dear ReWorker,

I'm a small business owner, and like most small business owners, I'm not rich. I put every penny into my business and only draw a reasonable salary myself. I don't have any extra money for employee raises, but when a valuable employee has another job offer, I'll make a counter offer to keep them. I realize this probably isn't the best practice, but I really don't have the extra cash to provide raises. If I do give a raise to keep someone, it comes out of my pocket—I literally have to cut my pay to give someone a raise. Is there a way out of this cycle?

Sincerely,

Vicious Cycle

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Dear Vicious Cycle,

Yes, there is a way out of this cycle, but it's going to involve two painful things. So, take a breath and keep reading.

Step One: Give Everyone Who Deserves a Raise a Raise

Yes, this takes money out of your pocket, the very thing you're trying to avoid, so why am I advising this? Because you can't keep your best employees if you are paying them below market rates. You need to take a really hard look at everyone's salaries and make sure you're paying them the market rate.

That can be a bit difficult in a small business—after all, almost every employee wears many hats. Salary.com doesn't have an average pay for someone who takes care of IT, Marketing and ordering office supplies, but you may well have someone who has that exact job description.

So, if you can't turn to traditional sources for salary information, where do you turn? This is where networking comes into play. Networking is helpful for more than hiring talent and finding customers. The people you want to talk to are people in your geographic area who have similarly sized businesses. It's not critical that they are your direct competitor—in fact, your non-competitors are more likely to speak up.

Figure out who you are underpaying and bring them up to an appropriate wage. Of course, a superstar should make more than similarly situated people at other businesses and a slacker should make less.

Step Two: When Someone Quits, Say, "We'll Miss You"

Yes, that lump you feel in your throat and the sense of panic are normal. Just how are you going to meet your deadlines if Jane leaves? Well, I don't know, but you have to say this—because you've made a counter offer more than once, your employees know getting another job is the way to get a raise. You can't do it anymore. So, the next time someone says they are resigning, say, "We'll miss you and I wish you well in your new career. Let's make a transition plan for your last two weeks."

These two things will stop your problem. You'll keep your employees as long as they are happy. This doesn't mean that everyone will stay for ever—small businesses can't offer the growth and opportunities big companies can so people have to leave for new opportunities—but it will stop people from jumping ship just for more money.

If you can change this dynamic, you'll likely see an uptick in your business as your employees recognize that they are treated well, which might end up fixing your cash flow problem and fattening your own paycheck.

Your ReWorker,

Suzanne Lucas, Evil HR Lady

Photo: Creative Commons