Is it time for a pay rise?


Pay rise?

Staff who held off asking for pay rises because of a 'weak economy' should think again.

Hands up if your pay has stayed mostly flat since 2007 or longer. Keep them up if your employer expected you to do more with fewer resources during and after the global financial crisis.

Did your stress go up, while pay stayed the same?

Quick question: will you ask for a pay rise this year? What are your chances? What has been your company’s mindset on pay rises since the GFC? Have they played the GFC card – and discouraged staff pay requests – even though the business is performing well?

Do you have any tips when it comes to asking for pay rises?

The timing for pay rises is improving, with the Australian economy growing faster than expected. Corporate profits are rising. Unemployment fell to 5.1 per cent in August, and is heading below 5 per cent. Skill shortages will become a bigger problem sooner.

That’s not to downplay serious global economic threats. But Australia’s economy is leading the developed world out of recession and should accelerate next year, thanks to the mining boom.

Staff who held off asking for pay rises because of a perceived weak economy should think again.

And small enterprises that had fewer pay rise requests in the past two years should factor the possibility for more wage pressure into planning and budgets. It will be harder to keep the best people in the next few years.

I’m not suggesting big pay rises – or even lots of small performance-based pay rises - are imminent. It’s still too early for that.

But consider the outlook: interest rates will rise again next year, possibly sooner. Utility costs are rising. Food costs could rise as soft commodity prices rises. Inflation could become a bigger problem next year.

Employees who took on more work and responsibility, without more pay, to help their company during and after the GFC may feel its payback time as the economy strengthens.

A few interest rate rises in the first half of 2011 could see them pushing harder for pay rises, and taking action when pay rises are denied by moving to companies offering higher wages.

I suspect many chief executives will push their boards for higher pay after generally receiving lower bonuses and watching the value of their options fall since the 2007 market high.

We’ll know more in the next few months when companies release their remuneration reports, but it’s hard to see CEOs who steered their companies through the GFC not pushing for a bigger slice of the pie. They’re obviously doing it tough, earning millions each year.

Strange, isn’t it, how CEOs ask for pay restraint in the organisation, yet are usually first to push a rise themselves!

It always amazed me as a manager how few employees put serious effort into building a case for a pay rise. Usually, their argument was, “I haven’t had a pay rise for a few years, so I’m due.” Or, “I’ve worked really hard this year so it’s only fair I get a pay rise. Joe Blogs got one, so I should too.”

Only a handful of employees took time to compare their current job responsibilities against their job description, kept a record of their best work that year, or had data on what employees in similar roles in the industry earned. Facts are more powerful than emotion when asking for pay rises.

Obviously remuneration arrangements vary greatly across industry. What matters most is ensuring your venture has an appropriate remuneration system for its size.

Once the venture is established, consider implementing a performance system if you haven’t already. This might be as simple as paying certain staff an annual bonus capped to a percentage of their wage.

That way, you reward (or punish) staff for annual performance, and only lift fixed base salary as responsibility increases. This is nothing new – but too many small enterprises only think fixed salary, which limits flexibility as they grow.

The danger with increasing fixed pay is obvious: once you lift base pay, you can’t change it. And average workers who stay with an organisation for years can become overpaid simply because they received pay rises due to longevity. A flat fixed salary can also demotivate staff over time.

At the other extreme, some small enterprises mistakenly spread equity too far. It’s a noble aim: give workers a stake in the venture to boost motivation.

My advice: only issue equity when you know your “inner circle”. Use options or share plans to lock the core team in when performance warrants it and when it gets to a point where the enterprise’s long-term success relies on keeping the team together.

Don’t issue equity too far down lower management ranks to staff who have less influence over company performance and value. You’re wasting a finite pool of equity that will be worth a lot more in coming years when the business is bigger.

Some business owners I know let staff buy equity in the company, rather than give it away. For example, they issue an option that lets employees buy equity at a lower price in the future.

This approach separates staff who believe in the business, and are willing to take risk with real dollars, from those happy to get equity but not put any “skin in the game”.

A final point: always ensure job descriptions and performance management systems are up-to-date, for they form a vital frame of reference when pay disputes emerge.

mellie wrote on Sep 13^th, 2010 at 12:22pm:


You cant even get this right , the minimal award was lifted about 2 months ago, why do you write so much bullsh1t? is it beyond you not to lie?.

If our economy is in such fine shape, then tell me, why are we sill scraping the barrel, penny-pinching, this and being told to hold back and not increase the rate of pay just yet?

===========================


Could it be largely due to not being sure if the People have the money to spend back into the economy. Remember the Rudd government stepped in to keep our economy strong.

The people need to take the responsibility back , as far as I can see as our economy built up on credit debt. Under the ir-responsible quote"we have never had it so good". Trouble is I think people have max themselves out .  many individuals blew out their budgets. And this has not been rectified  or addressed as yet. Even though it seems  many are now trying hard to learn-  and save again.
And this creates  that domino effect ....

Quote:



Not much chance of that, they think they're the only ones entitled to pay-rises.

You would think the Smart Thing is- if companies gave the employee a wage rise- it is usually guareented that it is spent back into the economy- which results in them having a business or product to market...
and then everyone is happy !! And after all - what WAS an economy created for ?


'Imagine a world where the measure of just how well a nation was going included a lot more than figures like the GDP or national accounts.
What if the wellbeing and even satisfaction or happiness of the people were also included?
It's an idea that has engaged some of the brightest economic minds since the financial crisis took hold in many parts of the world.
Now economics writer Ross Gittins is adding his voice to the call for a shake-up in how we report on things.
His ideas are fleshed out in a new book called[i] The Happy Economist: Happiness for the hard-headed.

Ross Gittins argues that happiness is our most important measure of economic success. A different approach by governments - with less emphasis on economic growth and efficiency, and more on preserving the planet and the social fabric - could add to 'national happiness'.[/i]

the question you have to ask is how many and how much were the award rises under Howard.. very few and very minimal... the last award rise we had about 2 - 3 mths ago i think was the largest in quiet a while

Not just utility bills, I am talking about price rises in general.  The low income workers got a $26 a week pay rise.  Of course quite a lot of that, probably would have gone straight to taxes.  So in reality, it really was not all that much.  So let us say, they would have got probably around $17, $18 a week in the pocket.  Fair and reasonable, but I don't think it is anything for the low income workers to get to excited by it all the same.

So let us look at the others.  Now what about liberal for an example, what would they do?.  Remember the cost of doing nothing about climate change, is far greater than doing something about it.  Also we should remember their shocking industrial relations.