How Raises and Promotions Work at Relationship Hero
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I recently shared this Raises and Promotions Guide with the team at Relationship Hero. Companies who also believe in these principles might benefit from creating a similar guide.
Raises and promotions are a win-win for you and the company. Read on to understand why that’s true, and learn how your next raise and promotion will work.
Relationship Hero Promotion Levels
At Relationship Hero, coaching and management are two parallel tracks that offer similar promotion and raise opportunities.
The levels for coach promotion are based on higher value-add:
- Senior Coaches bill 2 credits per minute instead of 1, which brings in 2x more revenue per coaching hour
- Master Coaches also bill clients 2 credits per minute (sometimes even 3 or 4), and have extra high utilization and retention
In management, there are many different roles and ways that value-add is measured. As an example, Quality Team members can become more senior if they create more value, which is measured according to these factors:
- How many of their Standard Coaches successfully become Senior in a 6–12 month timeframe
- How many of their Senior Coaches continue to work productively and happily at RH
Also, everyone in the company (coaches and non-coaches) may earn Seniority Raises as explained below
Seniority Raises
The most common type of raise that companies give is a seniority raise. It goes like this: “Hey Joe, you’ve just reached another anniversary working here, and your performance is good, so we’re giving you a 5% raise. Congratulations!”
The underlying reason for a seniority raise is that your effort over the last year has turned you into a 5% more value-producing team member than you were last year. This logic is roughly accurate across a wide range of jobs and companies, which is why these kinds of raises are so common. For example, if you’re a coach:
- You’ve had training and experience to increase your average client satisfaction
- You’ve made some progress figuring out how to approach your work to increase stamina and avoid burnout
- You’ve built up a larger base of returning clients now than you had last year, so you don’t need us to find you as many new clients
Realistically the actual change in your value to the company year-to-year (assuming such a thing could even be precisely measured) might be: 20%, 8%, 12%, -10%, 4%, etc. But generally the trend is to get more valuable every year, so companies aim for a more smooth and predictable yearly seniority raise.
Raises are Win-Win
At RH, we see a raise as a mutually-beneficial situation for you and the company.
Consider a hypothetical employee named Joe who doesn’t yet have this win-win mindset. Joe has a zero-sum mindset: he thinks he has to take from other people in order to get a bigger piece of a fixed-size pie. Joe wants to earn a raise, but because of his zero-sum view, the thought of bringing up the topic makes him feel guilty and anxious.
Fortunately, Joe works at RH and learns the win-win mindset: that creating more value for the company is what earns you a raise. Joe wants to make the pie bigger for himself and everyone else at the same time, and he doesn’t mind putting in the work to make that happen. When you make a larger contribution to growing the company’s value, it doesn’t take anything away from anyone else’s contribution — it just makes the whole company more valuable, i.e. it grows the pie, so there’s more pie for everyone. Then of course you deserve a larger slice, because your larger slice is coming out of the extra ring of pie that you created.
When Joe asks his boss how to earn a raise, his boss will smile and say, “great, let’s talk about how you can create an extra ring of pie, and keep part of it for yourself”. The boss’s job is to get the most value out of everyone they manage, so they want this just as much as you do.
When you add a new ring to the pie, you won’t keep the whole thing for yourself. In fact, as the diagram illustrates, the amount of extra value you’ll keep for yourself is less than half of the total extra value you’ll create for the company. That’s just how the math works in every company, due to the many overhead expenses that companies pay.
Now that you understand how earning a raise is a win-win for you and the company, hopefully it makes the subject less scary to bring up, and more fun and exciting.
When Promotions Happen
The smoothest kind of promotion is when you get recognized as having a new role because you’ve already been doing the work of that role, regardless of still having your old position’s title.
A common misunderstanding of promotions is thinking about them as a discontinuous jump. If Joe has this discontinuous mindset, he’ll think: “Someday, the boss is finally going to decide that it’s time to give me a new title and a raise, and then I’ll finally have the authority and the motivation to do higher-level work than I’m doing now.”
In reality, Joe’s value-add to the company is a more continuous progression, and his promotion will come once he’s already progressed to a higher level. The new title and raise will reflect the higher-level value creation.
The situation in Figure 3 rarely happens. The company is unlikely to promote Joe yet, because they don’t want to gamble on whether Joe’s promotion will trigger him to make a quick sudden jump to a higher level of value-add. The company prefers to assume that Joe’s rate of value-add next month will follow the pattern of his value-add last month, like in Figure 4.
In Figure 4, the company is likely to promote Joe because it’s easy for Joe’s boss to ask, “What’s it worth to the company if Joe keeps doing the same thing next month that he did last month?” It’s clearly worth a Level 2 title and salary.
Also note that in Figure 4, Joe demonstrated that he can operate at a higher level before being given a title and promotion. Many people feel uncomfortable going “beyond their role”, but in fact, going beyond your role is exactly how to get promoted beyond your role. We encourage taking initiative and maximizing your value-add to the company, regardless of whether you’re a Vice President or a new intern. We believe every company should encourage that kind of initiative-taking (though sadly, some don’t).
You can follow these steps to earn a promotion:
- Think about ways you can create more value. Talk with your manager about what might be a milestone that represents a new level of value-add.
- Gradually start creating more value, and talk with your manager to see if you’re on the right track
- Keep going on that track to increase your total value-add
- Reach the next milestone where your increased value-add deserves a promotion
Our company culture around raises and promotions
The principles here are not really specific to Relationship Hero; they apply to every company in a capitalist market economy. Some companies have cultures that discourage these discussions, but we’re not such a company.
We know that everyone wants to make more money and advance their career. You’re not selfish if you want that. If you increase your value-add to your company, you’re just asking for what you deserve.
In our company, you’ll never risk any negative consequences for asking how to reach the next level of value-add to the company. In fact, we recommend checking in on the topic every couple months with your manager! You can also chat with me (Liron) about this subject any time. I wrote this doc and I’m happy to answer your questions about how to grow your value-add here.
P.S. We are a corporation, not a family business. We don’t play favorites about who gets a promotion. Our mission is to create an extremely large pie.
For more information about our company, check out why you should join Relationship Hero.
