If you've ever laid awake at night wondering whether to give a team member a pay rise, and how on earth to afford it, this episode is for you. It’s a topic that comes up all the time in my mentoring sessions and inside The Connection Co. membership, so I wanted to get honest about what really happens when we start increasing wages without a clear plan. Spoiler alert: I’ve made all the mistakes.

In this episode, I chat about the sometimes tricky, often heartfelt process of giving pay rises in a way that honours both your values and the financial reality of running a business. There’s no dry Fair Work lecture here, just real talk, some gentle truths.

Here's what I cover:

• The first uncomfortable truth about pay rises: the money has to come from somewhere (and no, it’s not Monopoly money)
• The three buckets that pay rises can come out of—profit, your own wage, or practice expenses—and why all three can cause resentment if not managed well
• How to avoid generosity becoming self-sabotage
• What to consider when deciding how much to increase a wage
• Why you need to be clear about whether a pay rise is a thank you for past work or a carrot for future expectations
• The importance of balancing your nice-boss heart with your business-owner brain
• A great little calculation: the wage to income ratio, what it is, how to work it out, and what it can tell you
• Why clarity and communication with your team is just as important as the dollars on the payslip

Key takeaways and reflections:

• Pay rises are not just a lovely gesture, they’re ongoing financial commitments that must be backed by a sustainable plan
• You can be both generous and responsible, those two things aren’t mutually exclusive
• Clear communication about wage levels, award rates, and business sustainability can save everyone from future misunderstandings
• Checking your team’s wage to income ratios can help you make smarter, values-aligned wage decisions
• It’s okay to pause. You don’t have to say yes to every request out of guilt or fear

If you’re currently wrestling with whether (or how) to give a pay rise, I hope this episode has helped you feel less alone and more equipped. The balance between looking after your team and looking after your business is a delicate one, but you can absolutely do both.

I’ve also created a free fact sheet to walk you through the wage to income ratio—what it is, how to calculate it, and what it means for your team. You can download it over at theconnectionco.com.au on the podcast page.

Thanks for being here—I’m so grateful to share this journey with you.

Foreign welcome to My Good Allied Health Practice, the podcast for allied health business owners who are looking to bring smart and heart together on their journey.

On the podcast, I'll cover things about being vulnerable and brave, pivoting failures, good wins, things that work, things that don't work, and I'll talk with other practice owners who are doing good in their journeys.

I'm Amy Geach, practice owner and mum, and I'm here because I believe in you.

So let's go forward on this journey together.

Hello and welcome back to My Good Allied Health Practice.

I'm Amy Geach.

I'm a practice owner, I'm a mom, I'm a business mentor, and I am definitely someone who has spent a lot of time laying awake at night thinking about numbers, wages and how to make this whole running a business thing work without losing my sanity and feeling like the business is running me.

Now, today's topic comes up all the time in in the membership.

Often get questions about this emailed to me, but it also comes up in my mentoring sessions and it came up this week.

In fact, I was doing a mentoring session with a beautiful practice owner and we were talking about putting one of her staff's wages up.

And so I wanted to make this episode today because I think there are a lot of considerations around putting your employees wages up that I really want you to be thinking about.

Now, I'm not going to do a dry fair work handbook style chat.

I really want to get into some real conversations about this and I'm very happy to share what I've messed up in the past and try and help you get that balance between being the lovely, generous human that you are, but also the business owner that you need to be.

Because getting that balance right around how you reward your staff and show your staff that you value them can be a little bit tricky sometimes.

Okay, so let's dive in.

And one of the very first things I want you thinking about is where does the money actually come from?

Here's the first uncomfortable truth.

Every single pay rise that you are providing as a business owner has to come from somewhere, right?

It's not Monopoly money, by the way.

I really don't like Monopoly.

I have never liked it.

Even when I was little.

I just never liked Monopoly.

It went on and on and on and I really wasn't that interested in buying houses or blocks of land or whatever it was.

Yeah, not for me.

However, I did love Squatter, which was a similar style of game, but it was about buying paddocks to put your sheep in on your farm that floated my boat.

But Monopoly, No.

So in our practice, we can't just pull money from thin air, right?

We don't just say, here's a pay rise, pat ourself on the back for being generous and walk away.

The money has to come from somewhere and it normally comes out of one of a few buckets.

The first one is it might come out of your profit, right?

Which means at the end of every month going forward, you have less profit as your safety net.

And that's not really what we want.

The other bucket it can come from is your own wage.

Sometimes we end up paying ourselves less because we are paying our staff more by putting their wages up.

I've done it more than once.

And you know what?

Every single time I've done it, I wasn't conscious, I was doing it at the time, right?

So if you've done this yourself, I'm here with you.

Let's stand and unite together.

Because I've done it before too, and I.

And it wasn't until doing the payroll like, you know, months later.

And I thought, hang on a minute, what's happened here?

Why am I getting so much less than some of my staff?

And we don't want to go down that path because nobody wants to feel resentment about running their business.

And that's a surefire way of having some resentment when you don't feel like the money you're bringing in reflects the work that you're doing as a business owner.

Because there's a lot to carry as a business owner.

So even though when we put wages up, that can come out of our own wage, again similar to profit, that's not really what we want to be doing.

The other bucket it can affect is the money that we then have aside to pay for our expenses.

So rent, electricity, insurance, all those never ending expenses, right?

Here's the thing.

A pay rise isn't a one off gift.

It's ongoing every fortnight, every month, year after year.

So when you put your wages up, you're locking in a new level of ongoing spending.

And you really have to get your head around that.

Because one of my mistakes I made years ago and I've learned from this is I think I really had the mindset that here's a one off thing, you know, here's my announcement to you that how good a boss am I, I'm giving you a pay rise.

Love.

That feels good.

They feel good, you feel good, you've done something really great for your team member.

But I didn't click on early enough that that was going to be this new level of ongoing spending.

And I didn't allocate the funds to that going forward.

And all I did was I dipped into the money I needed for other expenses, I dipped into my own wage, and I dipped therefore into the profits as well.

And over time, when you start to look at pay rises for more than one staff member, all of a sudden the business can feel really under the pinch.

So I've learned this the hard way where I have given pay rises in the past without properly mapping where the extra money was going to come from.

And you end up, you know, three months later, scrambling, moving numbers around like you're some kind of desperate magician trying to just keep cash flow coming in and having enough for the wages you each fortnight.

And it's really not a great feeling.

So the first question before you consider a pay rise is where is the money coming from?

And there are different ways that you can do this.

You might think, okay, well, what are some of the expenses I can decrease to allow the money for this pay increase?

Or can we increase the income that is coming into the business to offset this wage increase?

So they're kind of the two main ways that you can look at it.

Now that might be money coming in from another part of the business, or it might be extra income that you are expecting that particular staff member to bring in to allow them to have their additional wage.

Now that's a whole podcast episode in itself and I might cover that coming up shortly.

Okay, the second thing I want you thinking about is how much do you actually go up?

How long's a piece of string?

I never knew the answer to this.

So let's talk some numbers.

On one hand, right, you've got fair work obligations and they have awards that tell us the minimum levels.

And sometimes you must increase wages.

Right.

You don't have a choice.

If the fair work obligation says your employee has reached this level on the award, then you must increase it, then.

Yeah, you must increase it.

Right.

Because staff have moved up a level or because there's been a national increase and that's non negotiable.

If you're paying well above award wages and that amount covers any increase from fair work.

Yeah.

Then it can be negotiable whether you put it up or not.

But if you're not paying, you know, much above the award, maybe it's, you know, a couple of percentages or you're paying the award level, then when those fair work obligations roll around, then yeah, you need to Put wages up.

But on the other hand, you've got your values and your desire and those desires can be around rewarding and recognizing your team.

And maybe somebody's been loyal, perhaps have taken on new responsibilities or just been an absolute bloody rock star and you want to say thank you.

And I really find that the tricky bit is finding the sweet swap between what fits feels right and what's actually affordable.

So one of the things I've learned over time is that being generous is beautiful.

It feels beautiful.

Your employee feels good.

I felt good.

But if the business can't sustain it, it's not generosity, it's self sabotage that you are putting on yourself.

So I often ask myself, if I increase this wage, will I still be able to pay everyone else on time, keep the lights on and take a wage home for myself?

And if the answer is shaky, I wouldn't rush in.

It's time to pause.

And you might then start to think a little bit more creatively about what you might offer a particular staff member.

That might not be a wage increase, but it might be something else to offer some recognition that's not that continual ongoing spending, right?

It might be a one off purchase.

So it could be bumping up their professional development, it could be getting them some other mentoring in for a certain period of time.

It could be giving them an allowance for something for the month.

Maybe they're moving house or something like that.

So there are other ways that you can reward your team without necessarily having the reward as always being a pay rise.

So if it does feel shaky, right, and it is going to put you under financial pressure, really pause and think about whether you're going to go up and how much you can actually afford to go up.

Now the third thing I want you thinking about is being nice versus wearing your business hat.

And this is where a lot of us, me included, we just get so tangled up, right?

Because we want to be kind, supportive employers.

I do.

Like that's really important to me.

If my.

Without my team's help, I can't do all the things that I want to do in my life and in my career and in my business.

And I want to be a kind, supportive employer.

I really want to care about my staff.

They mean a lot to me and I see how hard they work and I hear their challenges and I'm sure you do too.

If you are listening and you have staff and you know them like, right, those good eggs, you really care about them and you are probably seeing how hard they're working in your business.

And you're probably seeing the challenges as well that they are coming up against.

And like me, you might want to say yes every time they come and ask for money.

But then there's a business hat, right?

The spreadsheet, the reality that if the numbers don't add up, the business isn't as sustainable or isn't as secure.

And honestly, putting your business at risk to keep one person happy isn't actually kind.

At the end of the day, it's not kind to the rest of your team and it's not kind to you because you are putting everything at a higher risk level.

And one of the things I notice practice owners do, I've done it.

And the reason I can see it in other people is because I've experienced it myself and somebody called it out in me many, many years ago.

And I'll always be so grateful to this beautiful woman for doing that.

But one of the things we do as practice owners is when money feels tighter and we are a bit more worried about the cash flow and the sustainability, we start vomiting fear accidentally.

I don't think anybody does it intentionally, but we start vomiting this fear out externally and that normally lands to our team, right?

That's when we start getting a bit stressed and we start really talking about billable hours.

And if you've listened to my previous podcasts, you'll know I don't love talking about billable hours.

I think it needs a whole reset in our industry.

But that's a talk for another day.

But I don't want you to be vomiting fear onto your team.

That's what happens when things start to feel tight.

And that's not being kind to yourself or your business, and it's not then being kind to the rest of your team.

And I've definitely had moments in the past where I've said yes because of guilt or I want them to keep liking me as a boss.

I know.

I can't believe I just said that out loud, but it's so true.

I want my team to like me.

But also we have this gray little hover cloud.

You might have it, too.

And we try not to let it hover too much over our heads, but it's there.

It just kind of follows us around a little bit.

And that gray cloud, that hover cloud is that worry that if we don't please our team members, they'll go, they'll leave, and then, shit, what do we do then?

We've got to take on their caseload.

We've got to.

We don't Feel great.

They don't want to work with us.

What are we doing wrong?

Right?

So that little hover cloud gets in the way really often, and then we end up giving a pay rise that's too high or at the wrong time.

And you know what?

It doesn't feel good.

And that's not what we want.

So here is your permission slip.

You can be both caring and sensible.

The two aren't mutually exclusive, right?

So, yes, if you want to give a pay rise, love that.

But put that business hat on and look at the spreadsheet as well and marry up the financial obligation of that ongoing spending with your values and what feels right.

And I think that balance is harder to get going and matching really well than I think we give credit for.

And if you're finding that hard, I think that's really normal.

So don't beat yourself up about that.

Okay?

The next thing I want you thinking about is past performance versus future expectations.

And this one is really important.

So I want you to ask yourself, is this pay rise a reward for what they've already done with nothing else changing, or is this pay rise a carrot for future performance and responsibility?

Now, both approaches are fine, but you need to make it clear to the team member about which one it is.

Because if it's recognition, tell them this increase is in recognition for the amazing work you've done over the past year.

That way they know it's a thank you, not a new benchmark to suddenly work towards.

If it's future focused, be really upfront about that.

We're moving your wage up because we see you stepping into this next level of responsibility or next level of income earning or whatever that higher expectation is.

Make it really clear, right?

Because clarity saves you from then awkward misunderstandings down the track, and that can lead to resentment between yourself and that team member.

And no pay rise is worth that down the track for either party.

So it's really important, you know, going into this.

Is this a reward for the work so far?

Or is.

Or is this about what I'm expecting in the future?

Okay, the fifth thing I really want you thinking about is a calculation.

It's a ratio, and it's called the wage to income ratio.

It's a really practical tip.

And you can grab a pen and pause the podcast and when I explain it and then go and work it out and come back and listen if you'd like.

But in allied health, it's really important to know for all the income therapists or practitioner might bring into your practice, how much of that income that they are generating goes towards the expenses to employ them.

So that would be for example, wages, the tax you need to pay on their wage, but also their super.

And then you may include things in there like workcover expenses and it's up to you then if you want to also include other expenses, perhaps you provide them with a mobile phone and you pay that mobile phone bill, maybe you want to add that in as one of their expenses or you could keep that over in just general expenses.

So up to you what you classify as employee wage expenses.

For me personally, I do wage, I do work cover, I do the tax and I do super.

And I put in their PD allowance for the year.

So that's what I include in my wage expenses.

And so what this ratio allows you to do is work out how much of the income they are generating goes towards paying those wages and then what's left over.

A healthy range for a therapist that gives you lots of extra money left over to pay for other expenses and going to profit is about 45 to 60%.

That's quite a range, right?

That's a 15% range you've got there.

So it means that for every dollar a staff member brings in, about half goes towards their wage and the other half goes into the back into the business to pay for other expenses and to put towards your profit, for example.

Now it's really going to depend on quite a few factors as to whether all of your team members sit at that 45 to 60% mark.

And don't stress if some are higher than that.

So obviously if they're higher, then you're needing to use much more of the income generated to pay for their wage.

So if they're sitting at about 70%, right.

For every dollar they bring in, 70 cents is going towards their wage and you've got 30 cents left over.

Right.

That's another way to kind of look at it.

So if someone wage is up at around 70 to 80% of the income they generate, I won't necessarily say to you that you've got a big problem, but just need to think about why it might be up that high.

And often they go up that high.

If you've got a team member who has less of a clinical load or less time doing work that you would bill for and generate an income from, but maybe they're doing more work like providing supervision to the rest of the team.

And that's one of the, probably the most common reasons you would have a staff member up, you know, maybe about 70 to 80% because they're kind of coming off the tools or coming off, you know, the clinical work and spending more time supporting the team.

So they're not generating as much income.

But also when people are at that level where they're supervising others, they naturally have a higher wage because they've got more experience and there might be up a higher level on the fair work award.

So you're paying them more per hour.

So if someone's salary is higher and they're not doing as much clinical work, then naturally they're going to be higher in the wage to income ratio.

And look, that's completely fine if that works really well in your team.

Like I've got team members sitting on that because they help out with supervisors, seeing the younger therapists.

And so I don't have a problem with that.

If all of my staff though, however, were only sitting at 70 to 80%, that's a problem because that's not going to leave me enough money after I've paid wages to pay all the other expenses in my practice.

Okay, so I normally like to know what each of my therapists wage to income ratio is at.

And I look at this when I'm putting wages up, I'm getting really honest about it and thinking, okay, well if I adjust it and it goes up to this on the ratio, is that still going to work for the business?

And does that still work for that individual?

And where I kind of see them progressing to.

Okay, so to calculate the wage to income ratio, there is a formula.

You take the wage expenses that I mentioned earlier, you divide that by the income that that individual person has brought in and then you just time that number by 100, which will give you a percentage.

Right?

It's nice and simple.

Wage expenses divided by income earned times by 100.

Now you could look at it monthly, right?

So what's the wage expenses per month divided by the income brought in by that therapist per month?

Or you could look at it quarterly, or you could look at it annually as well.

Okay, the next thing I want you thinking about with wage increases is your ability to communicate with your team.

And it's about how you actually deliver the message.

One thing that I've learned is that staff often don't realise how far above the award they're already being paid.

And you might be paying someone five to ten dollars an hour above the award and they still think that they're being paid relative to the award or not enough or grass screener somewhere else simply because they've never seen the award rates.

Perhaps written down.

So I like to be really clear that we're paying you X above the award because we value what you bring to this role, etc.

It show them the gap and it helps them appreciate that you're investing in them.

If any of you are paying above award wages, I think it's really important that you communicate this really solidly to your team.

And I also try and frame wage increases within the bigger picture of the business.

Things like we want to pay you well and to do that sustainably.

We also need to keep an eye on costs and make sure the business remains strong.

It's okay to say things like that.

That way they understand it's not just about them, but it's really about the whole team and the whole business.

I want to just share a couple of real life reflections with you.

I've touched on these already, but the first one is in the past.

I'm definitely guilty of giving a pay rise without thinking it through.

And then I've had to cut back on my own wage and my lesson learned there was generosity without planning hurts.

And the only one I was hurting was myself.

Self sabotage.

The next one was a staff member who continually asked for a pay rise.

It was like on call, like it felt like it was nearly every quarter of the year and in the end were quite shocked when I showed them what they were being paid above the award and why I wasn't going to keep going up.

And the lesson learned for me there was to communicate everything earlier on because had that staff member have known they were already on a pretty good wicket, I don't think I would have had as many requests for wage increase.

Okay, so there are a couple of real life reflections that have gone on.

Of course, I always have many, many more.

But to wrap up before you put your wages up, remember to know where the money is coming from.

Balance fair work obligations with your own values and affordability.

Number three is to put your business hat on, not just your nice boss hat on, you can still be a nice boss with your business hat on.

The fourth one is to be really clear around whether this is a thank you or whether it's a stepping stone to more responsibility or more expectations.

Number five is to check the wage to income ratio.

And number six is to communicate clearly with your staff about the award levels and sustainability going forward.

Because at the end of the day, pay rises can be a wonderful way to value your staff, but they can also sink your business down into this financial stress if you're not thinking it through.

So the goal is to find that sweet spot right looking after your people and looking after your business.

Thank you so much for hanging out with me today.

If you found this episode helpful, I'd love you to share it with another practice owner who might be wrestling with wages right now.

And as always, remember that running a good practice is about bringing smart and heart together.

If this episode has you thinking about wages and what a pay rise might mean for your practice, or perhaps you're thinking, oh, I need to know more about that wage to income ratio, then I've got a free fact sheet for you and I'm going to walk you through the wage to income ratio, how to calculate it and what it might mean for your team.

So you can grab that over on my website@theconnectionco.com and head to our podcast page and you'll find it listed under this podcast episode.

Thank you so much for being here and I look forward to you joining me in the next episode.

Thank you for being here.

I am incredibly grateful.

If you have a friend that would find this helpful, please go ahead and share it with them too.

You can learn more about me and how to be part of my Allied Health Connection community over@theconnectionco.com.