Growth Strategies

How do I calculate a pay increase for an exceptional employee?

min read
Opinions expressed by Entrepreneur contributors are their own.
Not knowing more about your business or situation, this is a tad tricky. That is, calculating appropriate pay increases for a large organization is done using standard compensation tools such as job descriptions, salary grades, merit matrices and so forth. From your question, I am having to assume that you have none of this structure at your disposal.

If your business is small, you are essentially determining the value of the employee to your organization. One way to do this is to do some research.

How much would it cost for you to replace this individual, taking into consideration all that s/he does for your enterprise? You can get a feel for this by visiting websites such as,,, and inputting the necessary information to see what the various ranges are for the kind of job the person is assigned. These sites also offer information on average salary increases and so forth. You need to remember that often the data for these sites is provided by people in the jobs versus by compensation managers, so its accuracy may not be 100 percent. But it will give you an idea of the value of the job on the market in which you do business.

Salary is satisfies versus motivates, so keep that in mind. You want to be sure to give enough of an increase to reward the person sufficiently and let him/her know that s/he is valued in proportion to his/her contribution to the success of the company.

More from Entrepreneur

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.