When to Pay an Employee a Higher Salary Than Your Own
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowAs an entrepreneur, it can sometimes feel like you have to know everything about every single aspect of your business. But that’s simply not possible. So, you must be honest with yourself, and there’s a certain vulnerability in admitting you don’t have it all figured out.
Sometimes, what you need is a more experienced sidekick, someone who can challenge your ideas, fill in the gaps in your thinking, and help you paint between the lines. Someone who will occasionally exasperate you—in a good way. And that person may have a resume or skillset that warrants a larger salary than even your own as the entrepreneur behind the business.
No matter how smart you are or how good your idea is, you’re going to need talented people around you to help grow your business. Here’s how to know when an employee might deserve more money than you do.
They bring skills to the table you simply don’t have.
First, be honest with yourself about your weaknesses. Then surround yourself with people who have different strengths—and points of view—than you do.
For example, if you’re a big picture person but aren’t great with following through, you’ll need a detail-oriented person to counterbalance your weaknesses and help execute your vision. Or, perhaps you have an idea that is revolutionary, but you don’t have the tech chops to back it up. You can fake confidence, but you can’t fake a skillset. You have to pay for it.
They have enterprise experience and the agility to thrive in a different environment.
Someone with enterprise experience is valuable to a new company because they know what processes to bring in as the company grows and scales. But if that hire can’t adapt to your environment—likely a startup—that knowledge and experience doesn’t mean much. Instead, they’ll end up burning out or quitting out of frustration.
The key here is enterprise experience and adaptability—the experience to guide the company through growth and the adaptability to withstand the chaos of startup life. If you’re going to pay someone a higher salary than your own, they should have both qualities.
They recognize your potential and are willing to help you develop it.
Just because you’re leading the business doesn’t mean you can’t find tremendous value in a mentor. If you’re a leader with raw talent, you have to be open to mentorship—someone challenging your beliefs, helping you understand your strengths, and encouraging you through tough times.
Open yourself up to the idea that someone you hire may also act as a mentor for you. If that mentorship and guidance is valuable to your business or your career, it’s certainly worth the price of a higher salary. Plus, mentorship makes you a better leader, which impacts your entire business from top to bottom.
They execute their role flawlessly and won’t compete for the spotlight.
When a person makes more money than another, it’s almost always assumed that the person has more authority than the other. The reality is, every dollar spent on an employee should be based on the value they bring to the organization, and it definitely doesn’t determine who gets the final say.
In a small company, you want clear lines of communication and authority. It’s understandable to feel like you’re losing power by paying someone a higher salary than your own, but that doesn’t mean they’re going to fight you for control or that they’re the person in charge. If they’re great at their job and respect your authority, it’s worth it to pay for the value they bring—even if that is higher than your own salary.
They call you out when you deserve it.
Whatever you do, don’t hire a yes-man or woman. When you’re investing a good deal of money in a new hire that will dramatically impact the success of your business, you don’t want them to just nod and smile and agree with all your ideas. Instead, hire someone who understands how to engage in productive conflict, challenge your vision, and help you overcome obstacles.
Not only does it unlock a new perspective, but it also stops you from investing time and energy in ideas that are inherently problematic from the get-go.
Know when to bet big on your vision
Great companies don’t save their way to prosperity. Reinvest in your business, trust in the awesomeness of your people, and know when to bet big on your vision. That might mean adding a new product or service line that’s not in your comfort zone. It might mean creating a conference from scratch. Or it might mean hiring somebody at a salary that’s higher than yours.
Tiffany Sauder is the CEO of Element Three, a full-service marketing consultancy in Indianapolis. The consultancy works across digital and traditional channels to solve business problems for clients that strive for market leadership.
