If you’ve been inside a supermarket lately, or to a petrol station, you’ll know that the cost of living is rising rapidly. The pandemic, supply chain issues, interest rate rises, and the war in Ukraine are all contributing to price increases that are hitting us where it hurts; in the pocket!
Consumer confidence is at a record low, falling sharply in the June quarter, as Kiwi households face mounting financial pressure. Couple that with the labour shortage and the balance of power shifting towards workers, and it should come as no surprise that expectations of hefty pay increases are on the rise.
Businesses are responding. A recent survey by Hays shows that nearly 90% of businesses intend to raise salaries in the coming year, but whether they’ll meet worker expectations is unknown. TradeMe just gave all staff an out-of-cycle $3500 base salary increase to cover cost of living, and while that’s laudable, many firms are increasingly pessimistic about their future profitability and don’t have an open chequebook for remuneration.
The challenge for business owners and leaders: How to prepare for this year’s remuneration discussions?
While it is a tricky time, organisations should prepare the same way they always do. It’s common practice to separate performance appraisal from the remuneration round. Although there are links; it’s not a one: one relationship.
Don’t wait until the end of the year to have these kinds of discussions. It’s important to know what your team is thinking during the year, so that if things get out of step, they’re not left to fester.
Our top tips for remuneration discussions:
- Do your homework – know what the market rates are
- Explain the organisation’s approach to salary setting
- Keep it real – if performance isn’t up standard, say so and offer tips to improve
- Could it be more annual leave, more sick leave etc?
- Could you offer a four day week?
- Can you offer a performance or project bonus?
- Can you offer development, training, or mentoring?
- Can you offer a secondment?
- Can you offer study support?
- Could you increase Kiwisaver contributions?Get creative. If you don’t have much money to play with, remember that the conversation is about remuneration and benefits, so see what you can offer to sweeten things and close the gap.
- Can you agree to revisit remuneration in a set period of time?
If you’re not in a position to meet expectations, be clear about why. If you can’t “pull the remuneration lever” be prepared to pull others, or run the risk that your organisation will experience its very own “great resignation” as employees leave to get their needs met elsewhere.
Don’t wait until the end of the year to have these kinds of discussions. It’s important to know what your team is thinking during the year, so that if things get out of step, they’re not left to fester. Knowing how satisfied your people are with their remuneration and benefits package, and whether they intend to stay, arms you with valuable information and paves the way for conversations about the things that would make a difference. Forewarned is forearmed, after all.
If you’d like to get the inside track on employee sentiment in your organisation, contact us for a chat. We’d love to help.