We took ages to find our IT director and I thought it was working out really well. But recently she told me she was seriously underpaid and that unless I raise her salary, she's off. Our business can't really afford the sort of money she wants, certainly not at this fragile stage, and I don't know what we should do.
Call her bluff, pay up and pretend we were about to give her a rise anyway, or appear to give in but start looking for a replacement?
ISSUES: How well you know your IT director will determine the outcome here. It sounds like you made a good judgment on hiring, but how effective have you been since at motivating her? Many IT directors complain that the only communication they tend to receive are complaints and budget cuts and few see any real career development or stand a chance of getting on the board.
Is it really the money or could it be something else? When did you last benchmark the job? The interests of IT directors and those of the board are seldom aligned either intellectually or financially. Be honest: is yours an interesting business from an IT perspective? She could just be bored. If so, maybe you should be outsourcing. Also think about whether she has a happy and effective team. Is there a natural successor from within the company? What would be the real cost and time involved in recruiting again externally? Are things really going as well as you thought?
The impact on others if she goes also needs to be considered. What signals does it send out: 'We don't pay market rates for quality people.' What about if you pay her more and she stays? 'Blackmail is what gets results around here.'
- Think before you act and decide positively whether you want to keep her or not.
- Benchmark the salary. If she's paid less, pay up quickly and enthusiastically.
If cash is tight, consider equity incentives as a good way of aligning interests. Grudging acceptance is a bad result.
- If you are already paying a fair rate, pay her more, then think about succession. She'll almost certainly be gone within a year.
- If she's just plain bored, think about widening her responsibilities.
- Consider the outsourcing option.
- Think about who else is at risk.
- Finally, remember that the builders of good businesses are usually great players of Call My Bluff.