Written by John McGill on March 5th, 2018
This article was published in the March Issue of NZ Management Magazine.
When was the last time you got a pay rise? For many Kiwis, the answer to this question will be either 'never' or 'I can't remember' - not the best from a country that claims to be one of the most progressive on the planet.
However, if we're all going to operate in a booming economy where employees can continue to add value, pay rises must be part of the conversation. While lifting the minimum wage is in the government's long-term pipeline, employees themselves can take on the challenge of getting that pay rise they deserve.
How? Well, there are a number of elements to think about in the world of pay rises.
Understand the system (if there is one)
One of the first things to remember about pay rises is that most organisations with over 30 employees have a remuneration structure in place. In large businesses with over 100 staff, these can be quite sophisticated.
As a result, employees will need to understand how these work, what metrics are used and how it all fits into their performance. Pay reviews can be complex and use various pieces of data, so working within the system can often be a good plan.
In theory, employees have their salaries reviewed every 9-12 months. Of course, this doesn't mean that you can't utilise existing meetings or make notes before your performance review comes up.
As such, the key to this approach is understanding how your business deals with the concept of pay rises and apply best practice. Let your employer know that this is on your mind and the discussion will hopefully be framed around performance data and insight rather than feelings or observations.
Consider your current position
While pay rises are the metric that many of us use to assess our success in a particular career, it's easy to overlook everything else that is happening in your workplace that's also important.
Potential promotions (that come with a payrise), training opportunities and industry experience should all be vital considerations when it comes to wanting a pay rise.
Just getting the mortgage paid may be a more pressing priority than nudging another 2-3 per cent out of your employer. As a result, it might be good to look beyond each pay period and think about your long-term goals and career ambitions. Some employers can't provide regular pay rises, but may value other factors such as loyalty, performance and development.
Remember what's happening in the market
For the past five years or so, New Zealand has experienced a period of low wage inflation - the main exceptions being construction and building. This rise hasn't been applied to the broader labour market, until now.
At present, entry level admin/secretarial roles, hospitality, cleaning, care workers are all likely to move more rapidly over the next three years. As well as anyone paid under approximately $42,000 with the increase to the minimum wage. This means that we're about to move into higher wage inflation that we haven't seen for a long time - and data around salary movements from both the public and private sectors will soon be out of date.
Employers are now buying real-time data on pay trends that are influencing their remuneration decisions. For employees, it could be important to consider the state of your given market and whether a pay rise would fit into the current state of the industry.
Negotiating a pay rise
Once you understand the remuneration system, are comfortable in your position and have considered the market trends, you could be ready to put your cards on the table and negotiate your way to a pay rise.
This certainly isn't the easiest approach to take, but according to Hays' data, 54 per cent of skilled professionals intend to ask for a pay rise in their next review.
I've done it in my career and I have had it done to me as an employer on a number of occasions. It can work very well, you just have to know what you are doing and have thought it through. Done well it works but like a good backhand in tennis, don't try it unless you are good at it.
The most important factor to think about when negotiating is to not overestimate your worth - you're negotiating, not demanding.
In most cases, your employer won't be able to simply grant a pay rise, so don't back them into a corner with an ultimatum. Listen to their thoughts and be able to readjust your expectations based on the conversation.
Pay rises - what can we learn?
Pay rises are part and parcel of almost every occupation on the planet. While you might not get one every time, the more accurate the available data and your information into its merits, the better.