I met my good friend Michael the other day at our favorite sushi restaurant. The fish is always great and the conversation is even better. I was gently reminded of our age difference (always hang around with people who are younger than you!) as he was telling me how he and his wife just gave a raise to their 14- year-old babysitter. "Did she threaten to quit?" I asked. "No," he said, "in fact, she hadn't said anything. We just thought we'd be pre-emptive." He went on to explain that it's his theory that a 14-year-old will never ask for a raise. Not only that, he explains, most are even reluctant to name a rate when you hire them for the first time. I babysat my way through high school and I was reminded of those awkward conversations about rates (made even more awkward by the fact that most of the people I babysat for were friends of my parents). "Why raise the rate for someone who, by all accounts, is satisfied with what they are paid?" I asked. "Because," he explained, "the girls in town all talk to each other." He further pointed out that if his family gets a reputation for paying below the market rate, they wouldn't be able to get anybody to watch their kids (i.e., all the girls will be "unavailable" whenever they call). I thought his reasoning made good sense and I told him that this is not unlike what happens in most companies. Most employees will never ask for a raise — they'll just leave. While It's Not About the Money — It Is About the Money Sounds strange, doesn't it? I firmly believe that companies do not lose their best employees because of money. But I also think that if there are other factors that are nagging at the employee, the money does become important. So, while you always want to root out those other factors (territory reassignment, marketing focus shift in strategy, new boss, etc.) and make sure things are copacetic, while you are at it, make sure the money is right. Here are a few suggestions to help you make sure your compensations are up to date as we roll into the New Year: Assess the Situation Have you had people who have been doing the same job for a long time? Have you likewise hired people to do a similar job within the last year? If so, you may want to make sure that both of those compensations are similar. If they are not and your older employees are paid less, bring them up to par. If they are not performing up to the level that your new employee is, then you have another issue to address. Change the Compensation or Change the Employee What you are willing to pay someone is a clear indicator of how much you value him. Like I said, when you do this type of assessment of bringing all compensations in line, you will either be happy about increasing the salary of a long-time employee, or you will feel they are not worth it. This should be a clear indicator of whether you should keep them on your team or not. Remember, People Talk Years ago I was selling for a start-up company. There were four salespeople and every Thursday night we would go to the local pub before heading home. We soon discovered (over very friendly conversation by the way) that we were all on a different compensation plan. And, none of us felt too good about it either. Within a year, two of us were gone. Here's what I think you should do to prevent this type of situation. If you have a sales force that is all doing the same job (similar territories, same type prospects, same quota, etc.) they should all have the same compensation. If, however, you have some extenuating circumstances where there may be a difference in quota or territory or product set that may require more experience, then you should have levels that have ranges in your compensation plan. For example, on a junior inside salesperson, your base range might be $35,000 to $45,000 based on experience. On an enterprise application software sales position, your base range may be $80,000 to $100,000. And, while the bases may have a sliding scale, it's very, very important that the commission compensation plan should always be the same. Use Your Resources If you're big enough or lucky enough to have an HR professional on staff, use them to bring these compensations into alignment. If not, here are a few suggestions: Salary.com is a great source of information — it even takes into account geography. Your industry association should be able to provide you with compensation information. Your recruiter spends her life talking to candidates so she should have up-to-date figures. If you have a good relationship with her, I'm sure she won't mind your picking her brain a bit! I believe people are loyal to a company when they believe that the company is looking out for their best interests. And bringing pay scales in line demonstrates that immensely. Just like Michael and his wife won't have a problem the next time they need a sitter, you won't have a problem with the people who are looking after your precious assets as well.