Caller Says His Employees Are Unhappy With Their Raises. Dave Ramsey Responds, 'A 2% Raise In A 9% Inflation Economy Is Insulting'

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A caller named Blake from a physical security company in Nebraska with around 100 employees called into Dave Ramsey’s podcast to discuss issues with employee raises.
The company currently provides a 2% cost-of-living raise each year, along with possible merit increases of up to 3%. This merit system has created confusion and frustration among employees.
Employees often perceive anything less than a 3% merit raise as an indication that they are underperforming.
In response, Ramsey revealed his company does not offer cost-of-living raises but adjusts compensation based on market value.
His team regularly reviews salary ranges for various job roles in their region, making adjustment decisions accordingly, and this information is shared with employees.
Ramsey also advised against using specific percentage increases for merit raises to avoid comparison issues between employees.
Ramsey and his team now conduct annual reviews to avoid missing giving raises, even though he was not in support of such reviews in the past.
Regular performance discussions with employees are also held so that there are no surprises during the review period.
If an employee isn’t performing well, Ramsey stated that retaining them isn’t of interest, thus monetary raise isn’t a consideration.
The key issue arose with a group of 25 to 30 employees, which Ramsey highlighted as a commonality in business tension points.

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