Saturday, December 02, 2006

Rewarding Employees - when the company does well.

My friend, Jane, works for a start up company. She's the manager of their small IT department - she's got about 8 direct reports and also heads up their project office. She's been with the company since it started six years ago. Last year, for the first time ever, they made a profit. This year, with sales through the roof, they crossed a revenue threshold that they thought was still three years out.

To celebrate they catered a lunch for all employees (about 150 - 180 people) and gave away about 60 "nice" prizes -- everything from iPods to $10 gas cards. They also invited the management team to a country club cocktail hour and gave them all a gorgeous silver clock.

Jane was thrilled that everyone in the company was able to celebrate.

She's now in the midst of salary planning for 2007. She wants to reward her employees for their hard work, but find that her budget for salaries has been restricted to 3% overall.

She's very frustrated by this as she feels the company is going to suffer when people, who have indeed worked their 'guts out' (as she puts it) get a raise that just covers the cost of living.

What would you do in Jane's situation?


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