As an employer of more than 100 people, I find dealing with the question of raises a constant challenge, one fraught with more negatives than positives. And yet, it’s an inevitable issue that crosses my desk constantly. While I can understand why employees would like to make more money, I also have other issues to consider. The challenge I face is reconciling the objective value a job creates for the organization with the subjective value of the individual filling that job. At TerraCycle, in 2012, we allocated $250,000 for raises on a total payroll of $5 million. In the hope of creating a coherent policy, we formed a compensation committee, consisting of five senior employees, to help figure out how to divide up the money we allocated. The group decided to give about half of the money to cover the rising cost of living, basically to adjust for inflation. As a guideline, we turned to the Bureau of Labor Statistics, which releases (typically in September) annual inflation numbers to calculate each year’s cost-of-living adjustment. In 2012, it was 3.6 percent, and this year it is projected to be around 1.5 percent. The committee decided to give everyone who had been with TerraCycle for more than 12 months a 5 percent raise, which is of course greater than the cost of living adjustment. The rest of the money was used for “adjustment raises,” for those whose jobs had grown beyond the roles originally envisioned. Even though we believed we had a well thought out and fair process, no one came to me to thank me for a raise. Instead, about half a dozen people complained that they thought they should have gotten more. I empathize with my team, even those who complained, because it’s not easy to grapple with one’s own value to an organization. Here are some excerpts from a letter I wrote to one such person in an effort to explain how raises work at our organization and how employees can elevate their roles to command higher salaries.