The EntreLeadership Podcast: "My Employees Aren’t Happy With Their Raises"
Host: Dave Ramsey (Ramsey Network)
Date: August 18, 2025
Episode Overview
In this episode, Dave Ramsey fields real-life business and leadership coaching questions from callers, addressing practical workplace challenges. Major topics include structuring employee raises, the complexity of buying into a family business, risk management in business decisions, and succession planning after the death of a business owner. Dave brings over three decades of hands-on CEO experience, delivering candid, actionable advice.
Key Discussion Points & Insights
1. How to Structure Raises and Merit Pay (Blake from Lincoln, NE)
[01:27–07:30]
- Caller's Issue: Blake is the controller of a 100-employee security company. Their practice: a standard 2% cost-of-living raise plus up to 3% merit increases—leading to confusion and morale issues.
- Dave’s Advice:
- Don't do generic cost-of-living raises; focus on marketplace adjustments—pay what the position is worth in the local market, not just arbitrary percentages.
- Raises should be based on what it currently costs to hire for that role, with clear benchmarking and comp studies.
- Quote:
“A 2% raise in a 9% inflation economy is not...that's insulting.” — Dave Ramsey [03:13]
- Avoid rigid, percentage-based merit raises—these create internal comparison and resentment.
- Explain to team members the salary range for their role and tie changes to market data and individual value.
- Regular 1:1s or accountability meetings should address performance throughout the year, not just at annual reviews.
- Administrative Roles:
- Rewarding non-revenue-producing staff is challenging; keep merit/pay structures realistic and transparent.
- Quote:
“I'd put the freaking receptionist on straight commission if I could figure out a way...but I have never done that.” — Dave Ramsey [05:09]
- If employees aren't performing, it becomes a matter of fit, not money.
2. Buying a Business with Family Involvement – Cautionary Tales (John from Philadelphia)
[09:42–23:07]
-
Scenario: John, president of a $13–15M construction company, is offered the opportunity to buy controlling interest. The owners’ child will be gifted the non-controlling portion, and the child's spouse works in the company.
-
Concerns:
- Silent partners who are family—potential for toxic dynamics, especially if non-performers can't be removed.
- Deal structure: Debt-financed purchase, no personal collateral required.
-
Dave’s Candid Analysis:
- Avoid deals where you don't have the power to remove problematic employees—regardless of whose family they're from.
- Never accept a minority position in a small business; you'll have no real power.
- Quote:
“The only ship won't sail is a partnership.” — Dave Ramsey [12:59]
“If you can't get rid of her, she's going to screw up the whole thing.” — Dave Ramsey [12:19]
-
Deal Structuring:
- Insist on clean ownership. “Better to pay twice as much and own the whole thing.”
- Structure buyout payments as a percentage of profits rather than fixed payments to manage risk and avoid default during downturns.
- Use high-percent-of-profit payments as leverage to buy out family more quickly and own outright:
- “How about 80% of profits until we reach $3 million? That might pry them loose from the kiddo.” [22:25]
-
Family Dynamics:
- Emotional motivations can contaminate business logic.
- Prepare for difficult negotiations: set clear, future-oriented terms, not deals anchored in family nostalgia.
3. Taking Smart Risks (Diane in Virginia – Written Question)
[24:44–34:31]
- Question: How do you distinguish between being bold and being reckless—especially with money, people, or your brand?
- Dave’s Principle:
- Never take a "James Bond deal"—don’t put all your chips on the table. If you can’t survive a deal’s failure, don’t do it.
- Quote:
“We don’t do any James Bond deals...We don’t slide all of our chips to the middle of the table.” — Dave Ramsey [25:10]
- Only take risks that your business can absorb without existential harm.
- Musket Balls vs. Cannonballs Metaphor:
- Jim Collins' method: Test ideas with small, low-risk experiments (musket balls) before making major commitments (cannonballs).
- Always “test the range” in the market before major launches.
- Quote:
“Don’t shoot cannonballs, shoot musket balls first.” — Dave [28:40]
- Iteration is crucial—almost every winning product is version 6, not version 1.
- Personal Story:
- Turned down a $10M custom product deal with a major retailer because it posed existential risk.
- Learn from failure but avoid catastrophic, reputation-destroying mistakes.
4. Navigating Succession After Owner’s Death (Mike from Pensacola)
[38:41–54:58]
-
Caller's Story: At 31, Mike inherits a share of the family floor company ($15M revenue, $2.3M net profit) after his father's sudden death; he and his sister are 50/50 owners, while stepmom has been handling finances.
-
Challenges:
- No succession or transition plan in place.
- Step-mom was used to "living out of the business" and faces financial uncertainty.
- Mike and sister never worked in the business before.
-
Dave’s Guidance:
- Generosity: Help stepmom get on her feet, but don’t keep her (or anyone) in a role they're not fit for out of guilt or obligation.
- Pay stepmom a fair market salary for any continued work—nothing more, and only as needed.
- Leadership for Callers Like Mike:
- Be humble, "ask lots of questions," learn the business from the team, and earn respect by being real.
- Quote:
“Don’t make a lot of statements…You’re not smart enough to make a lot of statements in this situation yet.” — Dave Ramsey [47:04]
-
Sibling Buyout:
- Set clear intentions early for future buyout; structure payout as a share of profits until the target is met.
- Avoid long, emotionally charged standoffs; maintain the relationship.
- Quote:
“When in doubt, be generous. You won’t regret that 10 years later.” — Dave Ramsey [53:57]
-
Succession and Estate Planning Lesson:
- Failing to plan causes immense stress and complication—have clear wills, trusts, and business continuity plans.
Notable Quotes
-
On Raises & Reviews:
“A 2% raise in a 9% inflation economy is not...that's insulting.” — Dave Ramsey [03:13]
-
On Partnership Complexities:
“The only ship won't sail is a partnership.” — Dave Ramsey [12:59]
“If you can't get rid of her, she's going to screw up the whole thing.” — Dave Ramsey [12:19] -
On Smart Risk-Taking:
“We don’t do any James Bond deals...We don’t slide all our chips to the middle of the table.” — Dave Ramsey [25:10]
“Don’t shoot cannonballs, shoot musket balls first.” — Dave Ramsey [28:40] -
On Humility in Leadership Transition:
“Don’t make a lot of statements…You’re not smart enough to make a lot of statements in this situation yet.” — Dave Ramsey [47:04]
-
On Generosity in Family Business:
“When in doubt, be generous. You won’t regret that 10 years later.” — Dave Ramsey [53:57]
Memorable Moments & Practical Takeaways
- Dave’s metaphorical style shines (James Bond, musket balls vs. cannonballs), making complex advice memorable and actionable.
- Real-life scenarios highlight how lack of planning—in raises, ownership, or succession—causes predictable pain.
- Emphasis throughout on clarity, market benchmarking, humility, firm boundaries, and family relational health.
Timestamps for Major Segments
- [01:27–07:30] Raises and merit pay (Blake)
- [09:42–23:07] Family business buyout, silent partners (John)
- [24:44–34:31] How to assess risk, personal stories (Diane's Q)
- [38:41–54:58] Succession and sibling buyouts after owner’s death (Mike)
Tone & Style
Dave’s tone is direct, practical, occasionally humorous, and always rooted in his core values: responsibility, generosity, and honesty. He offers tough love but balances it with empathy, especially where family and grief intersect with business.
This episode delivers practical, hard-won business wisdom, especially for entrepreneurs facing structural decisions around compensation, ownership transitions, and legacy planning.