FromSpencer Pallone Helm · Legatis
ReA non-arbitrary standard for raises, and a transparent path for the person asking.
Date02 SEP 2026
GradesA meta-analysis · B single study · C practitioner

The rule of three.

A non-arbitrary standard for raises, and a transparent path for the person asking.


An owner asked for a raise has two bad options: say yes and hope, or say no and lose someone. The rule of three gives a third: show the arithmetic.

A revenue-producing person should generate roughly three times their total compensation. One third pays them. One third covers the overhead that lets them work: the truck, the office, the software, the person who answers the phone. One third is profit, which is what funds the next hire, the next truck, and a bad winter.

It is a practitioner rule, not a law, so it gets a C. But it does something no leadership book does. It turns "do I deserve more?" into "what would I have to produce?" and both sides can read the answer off the same page.

Worked example. A technician on $72,000 all-in needs to be attached to about $216,000 of revenue a year, or $18,000 a month. If the jobs they run bill $14,000 a month, the raise conversation is not about attitude. It is about utilisation, pricing, or the kind of work they are given, and all three of those are conditions, not character.

What the rule does not do: it does not fix pay that points the wrong way. If the bonus rewards individual output and the goals are shared, the goals lose. Hybrid pay beats either pure schemeA: a base, an individual component on one clear number, and a team component on the season's result. Paid monthly or quarterly, formula published in advance. Hazy formulas measured annually are the least motivating and the first abandoned.C

And money is not why people stay. In the large-N data it ranks last as a motivator; impact, learning and family rank top.C Pay design's job is to stop being the problem. Recognition, specific and within days, is a separate system, and it is nearly free.


If this describes your business, the analysis is where I would start. Or score your own company in ten minutes.

Signed02 SEP 2026 Signed by Spencer Pallone Helm, 02 SEP 2026

All notes.


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