Dave Ramsey, the personal finance personality known for his no-nonsense approach to money, admitted he once made a big mistake as a business owner: he simply forgot to give raises.
“I was just busy and never thought anything about it,” Ramsey said in a recent episode of the EntreLeadership podcast.
“I didn’t have any kind of file tickler or anything to wake me up. So we started doing annual reviews.”
Raises Weren’t Happening, and People Quit
Ramsey explained that early in his career as a business owner, he avoided formal reviews because they felt too corporate. But that informal approach backfired.
“I would look up and it had been two years since somebody got a raise, and then they would quit,” he said. “Well, you never gave me a raise. And I’m like, ‘Oh, that’s not cool.'”
Today, Ramsey’s team does performance check-ins every week or every other week, but they also schedule yearly reviews tied to what he calls an employee’s “Ramsey birthday.”
Raises now happen during those annual reviews, after promotions, or if market rates for a position spike.
“During COVID, everything went from $10 an hour for entry level people to $20 an hour,” he noted. “You needed to do that or you’re going to lose them.”
Raises Are About Market Value, Not Emotion
On the same podcast episode, a first-generation farmer named Stuart called in, explaining that he gives over 7% annual raises, $1,000 Christmas bonuses, 4% 401(k) matching, and paid vacation.
Still, he said his employees don’t seem to appreciate it.
Ramsey responded, “Unless you are doing something that is an outrageous amount of money, you’re not going to get an outrageous reaction.”
He explained that even generous raises may not feel exciting to employees if local competitors are paying more.
“Okay, let’s say you got to somebody and they were at $20, and you’ve gotten them to $25, and you look up and most people around you are paying 30. Then your 7%’s irrelevant all of a sudden.”
Ramsey added that a low-key reaction to a raise doesn’t mean employees are ungrateful.
“They don’t hate us, but they also aren’t doing double backflips and crying and calling their wife and screaming down the elevator.”
Profit Comes First
In a separate episode of “The Ramsey Show,” Ramsey spoke to a 30-year-old woman named Brooke who helps run her parents’ small-town business. She often doesn’t get paid, while 15 employees do.
“A business that doesn’t make money is called a hobby,” Ramsey told her.
“If I have to cut payroll to stay open, I will. Before I sit around and make no money.”
He stressed that staying in business requires profit, not emotional decisions.
“Socialism doesn’t fix it. Your theory about capitalism from your communist college professor won’t fix it. The only thing that fixes it is: You have to make money.”
For Ramsey, keeping up with raises is now just part of running a healthy business. Forgetting them, he learned the hard way, can result in losing good people.
It’s a reminder that even well-meaning leaders need systems in place to ensure their teams feel valued and fairly compensated.
Ramsey’s advice to Brooke, that profit must come before emotional decisions, connects back to his own experience.
Without structure and accountability, even good intentions can result in financial missteps that hurt both employees and the business.
Whether it’s forgetting raises or refusing to adjust pay to meet market realities, both can result in people walking away.
IMAGE CREDIT: ”Dave Ramsey” by Gage Skidmore, via Flickr. Licensed under CC BY-SA 2.0. Image adjusted for layout.