Factors to consider for employee raises

Written by Erika Winston

5 min read

The end of the year brings up numerous questions about the direction of your law firm and concerns about employee raises are probably among them. When determining whether to increase staff salaries, there are numerous considerations. This post seeks to help you make this sometimes difficult decision. It will discuss a number of relevant factors and hopefully provide you with some valuable guidance that benefits you, your staff members, and your law practice as a whole.


Staying competitive

I have no doubt in my mind that your firm runs best when you have talented, driven attorneys and staff members on board. But these types of employees don’t come cheap, so you need to ensure that you’re providing wages that are comparable to other firms in your area. Now, I’m not suggesting that your small general practice firm pay the same salaries as the mega firm downtown, but your wages should compare to the small family law practice around the corner. If you fail to stay competitive in your salary structure, you will have a difficult time attracting, and keeping, talented employees.

If you aren’t sure where your firm stands among competitors, take a moment to check out the employment ads in your area. You can also just ask. Call up a colleague you trust or ask a few practice owners at the next bar networking event. If you find that your firm’s compensation is lacking, take a look at what you can reasonably afford and make adjustments. Talented employees often equate to greater profits, so a small salary increase now could have lasting effects for your firm.


The pros and cons of performance-based raises

Performance-based raises are commonly used to motivate employees and provide them with incentives for optimal work output. Those providing exceptional work output receive larger pay increases than employees who fail to meet performance standards. In order to efficiently  implement this type of pay structure, it is important that you set specific, quantifiable goals and clearly communicate them to your employees. Ambiguities can cause major problems when raise evaluations come around. If one of your associates mistakenly believes that he met his performance metrics, you may have an extremely disgruntled employee on your hands when you deny his raise. Quarterly or bi-annual performance reviews can assist in keeping you and your employees on the same page regarding perfomance.

Some HR experts assert that there is a downside to performance-based compensation. First, it causes employees to stop focusing on the quality of their work and instead focus on the size of their raises. An article in Forbes interviewed senior managers at 150 mid-sized and large companies. Only a fifth of those surveyed felt that merit-based pay increases improved individual performance among their employees. Performance-based raise structures can also create an environment where employees become competitors, which can either work to your firm’s advantage or become a serious problem. A highly competitive workplace can weaken employee morale and potentially lead to a hostile work environment. So, it’s important to consider your firm’s culture when deciding whether to institute merit-based pay raises.


Your total compensation package

When thinking about employee raises, don’t forget that pay is only one part of your compensation package. Your benefits package may also offer some room for increased compensation, particularly if financial constraints are limiting your ability to provide traditional pay raises.

Review your offerings periodically to ensure that they are also comparable to other firms in your geographic area. Most practice leaders create a compensation package early in the firm’s existence and leave it in place for years, without any review or additional consideration. If you fall into this category, you will likely find that your offerings are a bit outdated. You may also find that you could be getting better rates from your benefit vendors, which could potentially free up some funds for employee raises.


Raise alternatives

An improved benefits package is not your only choice for a pay increase alternative. Here are some other options that your employees would appreciate:

  • Greater work flexibility – Not everyone thrives in the traditional 9-5 setting (It’s more like 8-8 for attorneys, but you get the point). Some employees may appreciate the ability to work nontraditional hours, even more than a small pay raise. Let’s say that one of your attorneys is a single parent. Flexible work hours may enable him or her to save significant amounts of money on daycare. The viability of this option obviously depends on your practice type and the need to be open during court or traditional business hours. But if you can make this option work, it may result in happy employees, along with cost savings for your firm.
  • Vendor discounts – Car insurance discounts, free entertainment packages, gym memberships – these are all financial benefits that can help your staff members in various ways. It’s not hard to find willing vendors, since many businesses see these discounts as a way to attract new customers. If possible, try to offer a variety of discounts that will appeal to the various personalities and interests within your staff.

Financial wellness packages  – Why not show your employees how to make the most out of their pay with some sound financial resources. Financial education courses, or even a free consultation with a financial advisor, can be the incredible bonus that your employees did not even realize they needed. You never know what’s going on in the private lives of your staff members. Maybe someone is struggling with a child’s college tuition or trying to figure out how to purchase a home. These types of stressors can spill over into the work environment, resulting in decreased productivity and focus. As explained by Aldor H. Delp, vice president and general manager at ADP Resource and HR Solutions, when employees feels confident about their personal finances, they are more focused at work and experience fewer illnesses. That means that this small investment may ultimately result in increased productivity within your law office.

About Erika Winston:

Erika Winston is a freelance writer with a passion for law. Through her business, The Legal Writing Studio, she helps legal professionals deliver effective written messages. Erika is a regular contributor to TimeSolv and a variety of other publications. 

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