Episode 144
When Raises Hit a Ceiling: Handling Wage Expectations in Small Businesses
What happens when you bring someone in at top dollar, and now they expect more? It’s a situation plenty of business owners find themselves in—paying a premium upfront to secure talent, only to realize there’s nowhere left to go when raise season rolls around.
Wage expectations can be a minefield, especially when you’ve hired someone at the top of their pay range from day one. Maybe it was out of necessity, maybe you needed to lock them in fast, but now they’re expecting more—except the numbers just don’t add up.
We break down how to navigate these tough conversations without making it personal, how to separate individual value from business realities, and why setting clear pay ceilings upfront is critical. Plus, we dig into alternative ways to keep employees engaged when raises aren’t an option—because not every form of compensation comes in a paycheck.
If you’ve ever struggled with how to tell a great employee “there’s no more money” without killing morale, this episode is for you. We lay out a game plan for setting wage expectations early, restructuring roles to create growth opportunities, and making sure your payroll isn’t running the business instead of you.
Highlights:
- The risk of bringing someone in at the top of their pay range
- How to handle the “Why am I not getting a raise?” conversation
- Why money isn’t always the answer to retention and motivation
- Setting expectations early to avoid tough talks later
- Structuring job roles to allow for growth without overpaying
Big news! We just launched https://bluecollarbs.com/ your new home for real talk on blue-collar leadership. Check out our brand-new BSers community, packed with exclusive resources, tools, and discussions to help you level up your business.
Also don’t forget to rate, subscribe and share this episode with someone who you know has struggled with the pay conversation.
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Transcript
Everyone welcome back to this episode of Blue Collar BS with your co-host Brad and there you go. There you go. Mr. Detroit, Michigan. What is, what is happening today, brother?
Steve Doyle (:Steve. Yeah, we got it right today. Yeah, we got it right today.
You know the sun's shining, cold as hell, so you know it's good days. It's good days, nice Michigan weather.
Brad Herda (:That's that's how it's supposed to be early February. That's what it's supposed to be. Did you guys get hit with all the snow and shit?
Steve Doyle (:That's right. Nope. Not that I'm I mean, I didn't but I haven't checked the news. Went to some clients had no issues driving. But they sure as sure as hell did cancel school because everybody got scared. So like whatever. Yep.
Brad Herda (:snowflakes, whatever. Exactly. you know, right pre planning. Now, some of that makes it was it if it was cold enough, I can understand to get for bus stops. But
Steve Doyle (:Mm-hmm.
Steve Doyle (:No, no, it's in the 20s. Suck it up little kids you can get to school.
the
Brad Herda (:Wow. Wow. You might you might be jumping you might be jumping generations here you might be going from millennial to boomer very quickly. With that attitude.
Steve Doyle (:Let's go.
Brad Herda (:So today's topic, Stephen, now you're coming in this cold. So I just got done literally a half hour, 45 minutes ago with a lunch from one of our previous guests on the show. And she brought up a very interesting topic on wage expectations based on roles and different things.
Steve Doyle (:Yeah
Steve Doyle (:Yep.
Steve Doyle (:Rolls.
Brad Herda (:Yeah. So, so small business, right? Smaller business. Let's just use a business doing a range between, we'll pick one from 500,000 to maybe $1.5 million, right? Three to seven employee type scenario, right? And usually you get a unicorn in there or whatever and they're doing the work and you pay them a little more and you do the thing.
Steve Doyle (:Whatever, sure.
Steve Doyle (:Okay.
Steve Doyle (:Yeah, that's.
Brad Herda (:And then all of a sudden it comes to the end of the year and it's review time.
Steve Doyle (:the draft will timeout. We're going to do reviews in small businesses. OK, I mean. OK. Again, are we dealing with a unicorn business here? Right?
Brad Herda (:Well, and compensation. So... So...
Brad Herda (:No, no, it's just pick anybody pick. could be, it could be windows, doors and more. It could be the flooring guy. It could be a concrete person. It could be a small electrical company. It doesn't really matter. it could be a small machine shop because it doesn't matter, right? This is, this is a leadership question and potential owner question and conversation for those that may have some employees and how do you deal with this? Right. So
Steve Doyle (:Sure. Okay.
Got it?
Steve Doyle (:Yep.
Brad Herda (:You know, right? You start your business, you go forward, you get the people that are there. You, don't want to lose them. So you pay them more. And then all of sudden you get to the point where, yeah, this, you don't deserve any more money. You're, you're maxed out. So my question for you, Mr. Doyle's for our audience, how or what suggestions do you have for our listeners to phrase that conversation position?
Steve Doyle (:Mm-hmm. Yep.
Steve Doyle (:Mmm.
Brad Herda (:The business as this is a business decision, not a personal vendetta against the individual to, demonstrate that you're kind of already the top of the pay range and, how do you demonstrate that how to get more? So that's kind of the, the conversation I wanted to have today is how do we position those expectations and things from a role and separate out and create.
Steve Doyle (:Yep.
Brad Herda (:meaningful conversations and nots. You just don't like me. You're such an asshole. Conversations.
Steve Doyle (:Right, so you kind of asked me two separate questions there. You did so yeah, there you know the two the two that I heard is hey, you're maxed out, but how can you make more? Essentially, essentially, so let's just let's break that into two parts here. So let's talk about you're at the top and. You know what are we going to talk about from a bonus standpoint? A bonus payout standpoint because we got other employees.
Brad Herda (:there's lots of questions buried in that thing.
Brad Herda (:That's one of them.
Steve Doyle (:Yeah, I'd rather pay them a little bit more on their bonus you I've already paid out X amount. Well. Well, you said that we were going to do something at the end of the year. For. You know bonus or merit or whatever.
Brad Herda (:Well, you're assuming there's a bonus program as well. So that's an assumption.
Brad Herda (:Hmm, you're like you're are we married because you didn't listen to a word I said, did you? The good thing is it's on tape, so I don't think I said I don't think I said bonus anywhere in there.
Steve Doyle (:Your words. Your words. Yeah, right.
you said something like that. At least that's what I thought I heard. Something like that. At least that's what I thought I heard. So that's what I'm to go with and how I'm going to phrase it. So this is why we're going to go down this route. So you're at the top. end comes up. Employees expecting some kind of compensation, some additional compensation.
Brad Herda (:Something like that. And this is why you have a dog.
Brad Herda (:We're expecting the end of the year raise to come into play.
Steve Doyle (:end of the year raise. Okay. So I'm to make a very general sweeping assumption is that there was a very frank conversation had when the employee was hired about their current their their compensation coming in. In that, hey, we we are paying you above where we normally would. Knowing that you are performing at this level. No.
Brad Herda (:let's, let's put some more context around that. It was a, Hey, they came in, they did good, right? We started at entry level, did well, accelerated, accelerated, accelerated, massive acceleration, very fast because there was, they were performing as well as the fear of losing. Right. From the owner's viewpoint, right? Cause it was busy and I can't afford.
Steve Doyle (:Okay.
Steve Doyle (:Okay.
Steve Doyle (:Got it.
Steve Doyle (:Got it. Okay.
Brad Herda (:I can't afford to lose somebody that knows about the things in our business. And I'm confident our listeners go through this all the time.
Steve Doyle (:Right.
Steve Doyle (:yeah, because because of that fear. So high probability there were no discussions on expectations when you're right there. There were no discussions on compensation expectations every single time. An additional compensation was handed to this person. It was probably viewed as a, yeah, you're doing a great job. Thank you for doing that. We're moving from here to here.
Brad Herda (:100%.
Steve Doyle (:Plain and simple. Yep. So plain and simple. We have now as leaders set ourselves up for this awkward conversation because we didn't set the expectations at the beginning. Hey, when we're having that, when we're providing these additional pay increases, we need to be very transparent with them to say, yeah, I recognize that we are paying you this. This is going to have an impact.
Brad Herda (:There. That's a fair assumption.
Steve Doyle (:at end of the year when we're evaluating everybody from a performance standpoint, a structure standpoint, but also we as business owners need to understand where pay ceiling limits are. If we can't do that, we have the foresight and the intestinal fortitude to have those conversations. We should not be putting ourselves into the position to fail when we get to that point because now we have these unspoken, unmet expectations.
of the employees expecting more because, guess what? You've already told me three, four times this year, I'm a good boy. And I got rewarded for it. So now I have this unspoken, unwritten expectation that you're going to provide yet again, another increase because, hey, other people around me are getting them, why not me? So now I gotta be sat down and have that conversation.
Brad Herda (:Okay. So, so, so we have created that situation and I'm confident many of our guests have created that situation. Or not a guest, but our listeners. so Mr. Big, went to Michigan University brainchild guy, right? yeah. You did, did you or did you not? Okay, great. I'm just stating facts. Okay.
Steve Doyle (:Yep, perfect.
yeah. Yep.
Steve Doyle (:Really? Okay. I did. I did. You are stating a fact. I did do that. That is correct.
Brad Herda (:Right. We're in that situation. How do we, what do we do to, to get out or position ourselves to move forward? Cause we can't undo the past. How do we turn, how do we turn the expense of learning, being an entrepreneur and being a small business, how do we, what are the things that we can, our audience members can do a to position themselves, not to
Steve Doyle (:Right, you can't.
Steve Doyle (:Mm-hmm.
Brad Herda (:put them in that situation again moving forward and B resolve that issue with that particular individual who has been maxed out looking for more so to speak.
Steve Doyle (:Mm-hmm.
Steve Doyle (:Yeah, so let's let's talk about what they can do with that person first and then the rest of it will come into play fairly easily, right? The number one thing is to sit down and have the conversation with the person. Don't him and how around it sit down and say hey, we need to have a conversation around where you currently are with compensation and actually show them where they are from a compensation standpoint in relationship to their role. And what that role earns don't need to get into.
anything else about anyone else, what they're earning, what they're doing, any of that other bullshit. You need to sit down and have a frank conversation about the role and the expectations, both salary and performance around that. And there's no wiggle room. It's going to be this way. Yes, you can adjust for inflation and all that other kind of crap that circles around things like that as year over year happens, right? That's not worth talking about. We're talking about this is the salary expectation for this role.
And just have a frank conversation. Now, it doesn't need to be cold. You can also give them a heartfelt thank you. But usually they're looking for some level of compensation. Are you OK with a gift card to somewhere? For them to go take and do something with and we're not talking like a. You know, a $10 or $20 gift card. Are you OK with a 250 or $500 gift card to something?
Brad Herda (:For what purpose?
Steve Doyle (:because you as the business owner fucked up. You are admitting a mistake that you made and you have to make you now need to take an uncomfortable situation and make it right.
Brad Herda (:How does the gift card make it right?
Steve Doyle (:There is compensation with a gift card of some sort. It doesn't need to be a gift card. It could be a check for an amount, but it is a fixed rate in letting them know that it is not going to be an adjustment in their hourly wages.
So why would you do that? What is your fear? What's your number one fear?
Brad Herda (:And why would I do that?
Brad Herda (:No, I'm just asking you, why would I do that if they're already maxed out in the role and they are already performing at X level? Why would I, why would I do that?
Steve Doyle (:Again, if you're handing out compensation to everyone, it is a gesture of thank you.
Brad Herda (:Well, so there's an assumption there as well, right? There's an assumption that there's... So, okay. I missed that assumption of, we're giving everything we're giving out across the board. Okay. From that point of view, I can agree with you that there's something there to do. Okay. That wasn't necessarily this particular scenario's qualification of... Because it was just ending your reviews.
Steve Doyle (:There is an assumption. yeah.
Steve Doyle (:Correct.
If you are
Steve Doyle (:Yep. If there is not. Yes. If. Yeah.
Brad Herda (:this particular organization does compensation typically Q1 and Q3s if there is anything to do at that point. So, that's why I want to ask that. That's why I want to get clarification.
Steve Doyle (:Okay, perfect. yeah, so if there was yeah, so if there was if there was not, I have been in this position as an employee. And honestly, it was a very frank conversation. Very, very, you know, there was nothing malicious, no, no malicious intent. It was just like, hey, you've been performing well. You've gotten you've gotten performance increases out of cycle.
Steve Doyle (:What we recognize is yes, you recently just got one. So it is, you're going to stay at this rate for a little while now because you need to continue to demonstrate that yes, you are now elevated and can sustain this level of performance. There was no other like, no other expectations. It was like, no, we're not, we recognize that you are still performing at these levels. You are performing at high levels.
But we're not giving you another raise for that because we just did it. Month ago, two months ago, three months ago, whatever that situation happens to be because typically people are doing it annually or you know if they don't really review it, you know some people might not be getting annual raises. They might be getting by annual raises.
Brad Herda (:Right. Okay.
Brad Herda (:Right. Or just whenever they feel like, we made some money this time. can do it at this point. Right. Cause the cashflow situations or wherever it might be happening.
Steve Doyle (:Yes, exactly. Yep.
Exactly. So it's just sitting down and having that very frank conversation and the realization, helping the employee realize. And if this happened over a year, like, you know, on your start date, you were here. Maybe it might have been three months in, you got a bump. Maybe it might have been at five months, you got another bump. At seven months, you got another bump.
Brad Herda (:There was, yeah, there was a, there was a heavy, it was heavy acceleration over a very short period of time. Um, very abnormal. And again, I'm confident that we have listeners that have done that with their employees. They may have a service tech that started at X and now they're doing this and this and this. you gave them cause you were afraid and afraid and afraid. But now there's going to be this awkward, this awkward conversation of, Hey, where are we at? What's going on? So how do we frame the.
Steve Doyle (:Something like that.
Right, whatever it was.
Steve Doyle (:Mm-hmm.
Steve Doyle (:Exactly.
Brad Herda (:opportunity for next level. Cause many of these organizations you might have, you might have a gentleman or a lady that might be acting as a, I'll call them supervisor, production supervisor or field supervisor or whatever it might be pseudo managing people, but really they're more of a team lead than a supervisor and organizationally you're not going to be able to afford to fill both roles, right?
Steve Doyle (:to it.
Steve Doyle (:Mm-hmm.
Brad Herda (:So what would be your suggestion for taking the, or creating the opportunity for person one that might be fulfilling, thinking they're fulfilling a leadership role when the realities are not, to set expectations for things to do to get portions of that, right? To be able to take away.
Steve Doyle (:Right?
Brad Herda (:opportunity from the business owner to do things so the business owner can go work on strategy and go work on selling more and go work on those other things versus all that stuff. Where would you go with that next piece of the puzzle?
Steve Doyle (:Great. Yep.
Steve Doyle (:So the next piece of the puzzle, I would be really having that hard conversation with the, so this is purely the business owner looking in the mirror going, do I have all the right roles on my bus? Do I have all the right roles in the right seats on my bus? Right, and if, without looking at the person, and this is the hard part for most business owners is they continuously look at the person, not at what is needed in the business. And if it's what's needed in the business,
I need a hybrid of these two employees or I need a hybrid of this employee. Right? And that's the role I need. To fulfill to fulfill me as a business owner, taking more time to actually be working on my business, not in my business. OK, great. Do I have what is the criteria for that role? What's the compensation for that role? And can my business sustain that additional role?
That's the key question. Can my business stay in?
Brad Herda (:It can't. So let's just say right now you can't fulfill two roles. You can't pay the $60,000 and the $85,000 role and survive. You're just not able to do so. But I need to have portions of, I need all of the lower level role fulfilled and portions of the upper level role fulfilled. You know what I'm saying?
Steve Doyle (:Correct.
Steve Doyle (:Perfect.
Steve Doyle (:Mm-hmm. Mm-hmm. I do know what you're saying. I do know where you're going with this.
Brad Herda (:Not even a letter, right? No regrets, not even a letter.
Steve Doyle (:No regurts. So as you're thinking about that, the question then comes into play.
Are you willing to transition this person to that quote unquote new role and eliminate that other role? But role into what that that other role was now that role doesn't go away.
Brad Herda (:Well, would be it would be probably an addition, right? So so here's where the hard part sometimes comes in is that that person that you've treated as the superstar isn't likely capable of fulfilling that next. There may be partially compensated that next level up, but they're not capable of fulfilling all the requirements within there. But you've not you've not defined all the requirements within there, but you can give them the chance to learn.
Steve Doyle (:Mm-hmm.
Steve Doyle (:Mm-hmm.
Steve Doyle (:Weird.
Brad Herda (:You can give them the chance to support.
Steve Doyle (:Isn't that how most of us were promoted to the role from which we next were moving to?
Brad Herda (:however, most of the time you didn't, you, well, if you were in a large enough organization, you were blessed not to have to take the shit with you that you were leaving that 500 that, but that typical, we're, when we framed out the 500 million and half type organization, there's nothing to, there's nobody behind you to do the other things. You know, there's, you're not going to get
Steve Doyle (:Thank
Steve Doyle (:Sometimes yes, sometimes no.
Steve Doyle (:Yep, you got to take everything with you.
Brad Herda (:both people at this point, most likely.
Steve Doyle (:So it's what else? So looking at what I just do the for me it's it's fairly simple. It's it's looking at the different characteristics of the role or the different activities, key activities for the role. What's critical for success for that new role? Are there things that aren't as critical that yeah, as we get to them they still need to be done, but they're not as important. That can then be pushed on the wayside.
But what ultimately we're doing is we're re-level setting what that quote unquote entry level role is versus whatever that new role is. We're re-setting what the wage expectations are.
Steve Doyle (:So that's that's where all of those things come into play. So in that frank conversation that we have of hey, I don't have space to move you up in this current role. However, if you were to take on additional responsibilities. This is what those additional responsibilities would look like. This is what that role would transition into and further down the line as you continue to perform. You have the opportunity for financial growth as well.
And what we're talking about is just re-level setting role expectations.
Brad Herda (:I don't disagree. Don't.
Steve Doyle (:But a lot of conversations are not had at that level.
Brad Herda (:Well, and the owners aren't taking enough time to understand what that really means for them to figure out the importance of what's going on.
Steve Doyle (:But if they did take the time, how much time and energy would they actually have saved by having the, you and I both know this.
Brad Herda (:Oh, well, I'm just being able to manage and do all the other things. know, that's why, you know, and a lot of this stuff, folks comes out of the book, E-Myth, you know, this isn't rocket science. This isn't anything that all of sudden, you know, the great, the great Gazoo that went to the University of Michigan is able to just pontificate from, right? So there are, there are things that are going on here. Gazoo.
Steve Doyle (:Right.
Steve Doyle (:Mm-hmm.
Steve Doyle (:Did you fucking say the great kazoo? The. I know a guy.
Brad Herda (:Flintstones, man.
Right. So there are things out there like E-Myth is where a lot of this is coming from. and, and hybriding out through E-Myth, traction, other things, make it your own, make it your own deal. But at the end of the day, the biggest thing is really understand what the role expectations are along the way. And as you do that, you are going to find out that you will be also be able to segment the roles into an A, B and C level or one, two, three, or.
Steve Doyle (:Mm-hmm.
Brad Herda (:entry mid juj senior executive, what, however you want to call your stuff based on what can be done, whether it's supervisory or quality or production rates or whatever those things might be. Now, all of a sudden you're in a situation where, Oh, I do know what the diff, I can truly identify what the difference is between $16 an hour employee is and a $28 an hour employee is.
Steve Doyle (:Mm-hmm.
Brad Herda (:And I can clearly communicate to the $16 employee how to get to $28, which is what you need to do in order to bring Gen Z's into the workforce to begin with. So it was a long circle to get through that, but Mr. Gazoo, as always.
Steve Doyle (:Exactly.
Steve Doyle (:Mm-hmm.
Steve Doyle (:Yeah.
Thank you for indulging me.
Brad Herda (:So as always, I greatly appreciate it. and, Hey, if you haven't heard yet, please go check out. launched our new website, blue collar BS.com. We also launched our BSers community out there. So, you know, we've launched a community that if, anybody wants to be part of, can learn more on that. What that all looks like. If you want more of this.
Steve Doyle (:yeah. Yeah.
Steve Doyle (:Mm-hmm.
Brad Herda (:And those ideas and conversations and tools and templates, we can make that happen. So again, Mr. Dole, thank you so much for the conversation today and stay warm in Detroit over this last few weeks of February.
Steve Doyle (:Yeah.
Steve Doyle (:Yeah. Yeah, well, thank you, sir. You have a good one as well. Yep, later.
Brad Herda (:Alright man, I'll talk to later.
