In the majority of cases employees are expecting somewhere between a seven to nine per cent pay increase at their next pay review, according to a recent nationwide salary and benefits survey of the UK finance and accounting industry conducted by Robert Half. In addition, over 90% of respondents are not only looking for a good basic salary but substantial cash incentives relating to individual performance on top.
But is this realistic in the economic climate we find ourselves in today?
It could be argued that in a downturn it is very important that you have good financial control over your business but organisations are prepared to pay for this?
Just as you would carry an umbrella on an overcast day, you should prepare for a stormy economic forecast. The market through 2002 is likely to remain fairly flat and some industry sectors are definitely experiencing a downturn.
In the Robert Half survey, the top three most desirable industry sectors to work in are banking, technology and manufacturing. All three have been hit quite hard by the downturn in both the US and European markets.
A good indicator when reviewing salaries, for both employees and employers, is to look at the current rate of inflation. And employees should not expect a pay rise that far exceeds the current rate of inflation unless you can provide a solid business case, which outlines specific accomplishments that have a measurable impact on the company’s bottom line.
So before you sail headlong into a potential disaster, take a step back and consider your options. And don’t demand that 9% increase before you have thoroughly researched your market value and current business conditions, especially within your own organisation.
It is important to know the salary that people with your background and skills currently earn in jobs that are comparable to yours. Your perceived ‘value’ internally and externally is generally the basis of most companies’ compensation decisions. Timing is also critical in these situations.
Understandably, the worst time to request an increase would be when your company is facing business challenges, unless you can present a compelling case to help the organisation ride the wave and overcome these hurdles.
The problem we all face today is that our generation of workers – whose average age is 35 – has never really experienced the ‘bad times’. In the UK, the economy has been very healthy for the past ten years and during that time expecting a pay rise above the prevailing rate of inflation has traditionally been the norm.
Being realistic, if you stay in your current position, you are more than likely to see a rise somewhere between 3% and 5%. In some markets such as technology and manufacturing, you might even experience a pay freeze as well as seeing some rationalisation of the business.
Those individuals who are looking to switch companies could potentially boost their annual income by 9% and above.
But this is quite a radical move and obviously there are many other considerations when deciding to change jobs, especially in today’s volatile job market.
Our advice is to talk to those people who have experienced a downturn or recession before and from this learn to take a longer-term view.
The market is tough out there and recent events – including the collapse of energy giant Enron – have not helped the general perception of the financial profession. So in 2002 sit tight, and look at ways that you can grow your career internally – professional satisfaction can often compensate a mediocre salary rise.
Work doesn’t have to be your number one passion, but it should be meaningful.
By taking concrete steps to enhance your day-to-day experience and advance professionally, you can turn your job into a richly satisfying career.
It is also worth investigating other forms of compensation that employers might feel more predisposed to offer such as stock options, extra holiday, and flexible working hours and social activities to help team building.
Rest assured the present economy won’t last forever. The current predictions are that things will be tight until the end of 2002 but by 2003 we should start to see a recovery and this is the time to make those demands having carried your company through the storm.
Most employers are employees themselves and understand the salary sacrifices and pay rise cuts that their staff has had to take.
So if you have remained a loyal employee in 2002 we believe that you will reap the rewards in 2003.
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