Be Smart About Asking For A Raise
I would like to give my brother and myself a raise. It has been three years since our last increase. He is the general manager and president of the company and I am the CFO and treasurer of our family's resort business. We have an idea of what the increases should be, however we do need to justify them to the board of directors that consist of other family members not working in the business. Can you suggest a web site with good salary survey information for family firms?
Do not plea your case for a salary increase to inactive family shareholders and the board with information collected primarily from web-based salary surveys. Salary survey data can at best provide too wide a range to choose from. We think following these steps can make a more compelling salary argument:
Work with all the owners to develop a 10-year vision for the company.
Once articulated, it is up to management (led by you and your brother) to present a three-year strategic plan to the board that moves the company in the direction of ownership's vision.
After the strategic plan is approved, management will develop an annual operating plan also for approval by the board.
All three pieces: vision, strategic and operating plan should be logically linked and the linkages easily understood by all members of the board, the management team and your employees.
The strategic plan will include performance measures occupancy rates, food costs, beverage costs, labor costs, etc. The performance measures are the ratios the board deems best suited to measure management s performance AND ultimately lead to fulfillment of the ownership vision.
Then, and only then, can management address the matter of compensation reviews. Compensation is woven into both your strategic and operating plans. If you hit your numbers, you get the raise. Miss your performance targets, no raise. Bonuses can also be added to sweeten the pot if you significantly exceed your base goals.
Family firms with outside directors will often form a compensation committee of the board to review compensation packages of top managers as well as family members in the business. They will be more expedient in their recommendations if the above framework is followed. We also recommend that the family craft a compensation policy that clarifies for all family members employed in the business, the factors by which their salaries will be set.
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