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Guidelines for Employee Raises

Shop Management

Bob Cooper

by Bob Cooper , President

By Bob Cooper

Think twice before you start giving auto shop employee raises based on tenure alone…

Before you start giving raises to your auto shop employees based on tenure alone, consider this: outside of raises that are based on an increase in the cost of living, all raises should be commensurate to the productivity of the employee. If you decide to give pay raises as a way to reward loyalty, then be aware that you’re heading down a dangerous road. The employee will continue to get their raises for the same level of productivity, and before you know it you are paying them far more than what you would be paying someone else to do the same job (Airlines and many major US companies have fallen into this trap over the years).

I’m not suggesting your employees shouldn’t be able to earn more money, because they should! The operative word is “earn.” So when an employee is up for their performance review, if it is clear that they are bringing a greater value to your company and if they have met your predetermined performance standards, then they should get the raise you agreed on because they’ve earned it. So sit down with each of your employees and discuss your expectations and what they will need to do to earn a raise. Tenure alone should never cut it. Reward tenure with paid getaways, tool credit, etc. Not raises.


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