Periodically, we ask three HR managers how they’d handle a difficult situation at work. Today’s problem: The company is getting ready to announce a no-raise policy, and HR has to figure out a way to soften the blow. 

The scene

As HR manager Lynne Blakely walked in, CFO Carl Greene said, “Close the door, Lynne. This is highly confidential.”

Carl pulled up a spreadsheet on his computer screen, and pointed to it. “We’re looking at projected sales, and the picture’s dim for the next several months,” he explained. “We’re confident we can pull the numbers up eventually, but for now there’s going to be some belt-tightening.” 

“Since you called me in here, I’m guessing we’re talking about salaries,” Lynne said.

Until things turn around

” That’s right,” Carl nodded. “It’s not a disaster or anything, but we’re going to mandate that no one gets a raise for at least a year. That’ll give us a little breathing room.” 

“There’s bound to be some grumbling,” Lynne noted. “Is there room in the budget for some type of benefit to soften the blow?” 

“That’s a possibility,” Carl said. “Maybe we can offer something to make up for the no-raise policy.” 

“Do you have any ideas?” Lynne asked.

“A few,” Carl replied. “We could provide some type of flexible schedule. Plus, we do have a few bucks to spend on something like tuition assistance, within limits. But I really want to know what you think,” he continued. “What should we choose? What’ll keep people onboard and productive until things turn around?”

“Let me think about it,” Lynne said.

If you were Lynne, what would you recommend as a benefit to keep morale up and lessen the shock of no raises for a year? 

Bonnie Steinert, HR director, Unity Bank, Clinton, NJ
What Bonnie would do: Since there seems to be a little money available, I would divide up that amount equally among our employees as a small bonus in lieu of a raise. And everyone, regardless of salary scale, would get the same amount.
Reason: I’d of course explain we’re taking that action instead of layoffs or other cuts, to help people understand that we’re doing all we can and we still value them. And giving out an equal amount would reinforce the idea that we’re all in this together and everyone is being treated equally.

Rosalie Crump, HR/Payroll director, Williams, Inc., Ketchikan, AK
What Rosalie would do: A lot of people here come from busy families with two wage earners, so I’d recommend some kind of flex-time in place of raises. We’d have to put some limits on it because of business reasons, but I think we could make it work and have people see it as a valuable benefit.
Reason: Next to money, time is the most valuable thing. People are so busy with work and families that they appreciate a little extra time or some flexibility. If we implemented flex-time, I’d explain why and note that it’s on a temporary basis until business picks up.

Gary Lane, owner, Lane Exteriors, Cutler, ME
What Gary would do: I’d consider using some kind of profit-sharing or incentive bonus for employees - as business improves, people would get more money.
Reason: You have to give people a sense that if you’re asking them to share the pain when times are tough, you’ll give them a chance at the pleasure when things pick up. In other words, we would have them understand that, yes, things are tough right now, but if they pick up, you’ll be rewarded.

Tags: flex-time, layoffs, profit-sharing, salaries