i was recently promoted to the top position in my department.  one of
my upcoming challenges is to find a way to increase the hourly wages
of the employees who work in the department.  a while back our
employer (the owner of this privately held firm) instituted a "wage
freeze" policy.  given the policy, without promoting an employee, it's
extremely difficult to raise anyone's salary.  before my recent
promotion, i was one of those employees who was "held back" by the
policy.  but now i am expected to champion my employees' cause for
more money, and fast.  do you have any suggestions for arming me with
the proper ammunition to accomplish this task?

How significant/important is the dept to the company?
What is the market wage for the jobs?
Is the company profitable, increasingly profitable?

You need objective reasons, and a good deal of self-confidence in your
own new position.  The owner/boss could think that he made a mistake
by promoting you.
As dept head, he probably expects you to take a management,
company-oriented  - HIS -  stand on the matter.  It would be nice, if
you can prove to your staff that you have their interests in mind,
justifying to them your promotion, but they did not promote you, and
that is not why you were promoted.

I thoroughly agree with Myoarin.

You need to revize your outlook - and fast.
To put it in other terms, you have just been commissioned from the ranks.
- You are now expected to behave and think like an officer.

If you do not /appear/ to make the transition, then your boss will
regard you as a traitor - or at best as stupid.
That could be very unpleasant.

It is not unknown to promote a trouble maker on the basis that they
are smart enough to recognize which side their bread is buttered, and
also natural, self selected leaders - who can control the rabble.

I doubt that this is true in your case, as the company is tightly
owned and sounds tightly run.

It would be a good idea to get a true picture of the company finances,
but be wary of being seen as 'snooping' - also don't talk about what
you find out.
You might find that the company is skating on thin ice.

On the plus side, there are many non-monetary benefits, such as
changes in working practises that can often be regarded as more
valuable than cash.
Often such things can appear trivial from the outside, but from the
inside (which you know well) they can make a substantial difference.

One thing that springs to mind, is to identify potential skill
bottlenecks and implement cross skill training. It is very likely, if
you are in a manufacturing environment, that one or two people being
sick can really reduce productivity.

If you can demonstrably increase productivity (or more accurately
eradicate troughs) then you've got a very good reason for paying the
multi-skilled people more.

There is also a strong case for having a very rigid pay scale, known
to everybody, where 'grades' are based on skills, length of service,
sadly lack of sick days - but not on arbitrary 'because I like
him/her' decisions.
- it needs to be mechanical.

One other thing, and not something to talk about yet with your boss,
is that really well run companies have a policy of paying approx 10%
/above/ the going rate.

That is not altruism or generousity, it is simply a way of creaming
off the top of the available labour.

To recap:
- You need to learn to think like the guy who owns and runs the company
- You need to remove 'burrs' from /your/ subordinates in-work life
- You need to establish a 'mechanical' pay ladder that benefits the company

On the plus side, you were smart enough to yell for help, so maybe
your boss made the right decision.
- Best wishes

One of my friends found herself in the same position several years
ago, and this is what she did:

1: She researched what other companies of the same type in our area
were paying for the same type of work.
2: She researched how much the people in her department were able to
produce in a given amount of time, as compared to people who had held
those positions previously.
3: She researched the cost of living in our area, and how much it had
increased since the wages had been frozen.
4: She looked at her department and found places where money was being
wasted. For instance, the company habitually had pens custom made to
be given to clients, but these same pens were also being used by
office staff who had no contact with the public. She found they could
save money by simply buying regular pens in bulk for the office staff
to use--that way they cut down on the amount of money being spent on
custom-made pens. She also asked her staff to help her find all the
small places where money was being wasted.
5: She made small notes on each member of her staff, showing how and
where they were doing an excellent job for the company. These weren't
time or labor intensive, just 3x5 cards with information such as "Jane
often volunteers to stay late when there is extra work to catch up
on."
6: She kept in mind that even though her boss had promoted her because
he thought she would support his point of view, he also promoted her
because she was a person who had an excellent relationship with the
others in her department, and would be a person who could encourage
her department to "produce".
7. She went to the meeting with her boss armed with all her research,
and was able to show him why it was in his best interest to give
raises to the people in her department. She also pointed out to him
that the jobs they were doing take some time to learn, and that if
people were unhappy, they might leave, causing problems for the
company while they tried to interview, hire, and train replacements.
8. She made sure that the company was turning a profit and that the
wage freeze was not an attempt to keep the company from going under,
but rather an attempt by the owner to maximize or increase is personal
profits.
9. She was willing to negotiate with her boss. If he was not willing
to give permanent pay raises, would he consider incentive bonuses for
excellent performance? This was her fall-back position.

She was able to get raises for everyone in her department. As morale
went up with her staff, so did productivity. She pointed this out to
the boss, and he ended up creating an incentive bonus program as well.