According to recruitment company Robert Half, 89 per cent of New Zealand CFOs say a promotion is no longer a guarantee of a pay rise.
The reason? A huge 41 per cent say it’s because an employee’s performance in the new role needs to be assessed first.
“I think a fair way to approach it is that you ask for a pay rise negotiation after six months in the new role, rather than blankly accepting the new role with no pay rise on the horizon,” advises Megan Alexander, Robert Half’s General Manager.
“People want career progression and a long-term view but, on the other hand, sometimes you have to prove yourself,” says Alexander.
“Just because you take a promotion without a pay rise, doesn’t mean you can’t ask for a review if you hit certain KPIs in the new role. That’s win-win for everyone.”
Pre-recession, pay-rise discussions were expected annually in many companies. However, employers have learnt that pay might not necessarily be the number one driver for motivating and retaining staff.
“It’s about looking at the drivers of each individual worker to identify what they want out of the job – it could be that more flexibility in work hours is as important as a pay rise to some employees,” says Alexander.
Even if you can’t negotiate a pay-rise with a promotion, you could ask for other non-cash benefits – things that are valuable to you, but that don’t cost the company.
Alexander suggests thinking more laterally about the benefits and asking yourself: “What would make me happier to stay if I remain on the same wage?”
Gender comes into play around pay rises and the earnings gap between men and women has been the worst in 10 years.
Statistics New Zealand figures show finance is the industry with the largest difference, where women earn 30.2 per cent less than men.
“Women ask for less, that’s my opinion,” says Alexander. “They tend to undersell themselves a lot more than men do. It’s not intentional, but they don’t sell themselves enough.”
Generation also affects pay-rise expectations. In a report by the Resolution Foundation, it was found the intergenerational pay divide is growing, with millennials earning less in their 20s than Generation X did. “The younger generation are more likely to expect pay rises and promotion, but they also value career progression and are more inclined to accept a promotion without the pay-rise,” says Alexander.
“More mature people often just want the job security. It’s the ones in the middle who are asking for pay rises the most. I think that’s just the dynamics of life – they’re also the ones with the mortgage and kids to raise.”
For freelance contractors, Alexander says project fees rather than hourly fees will be the future and fixed-term contracts will become more the norm with negotiations focused on a bonus for delivering the project deliverables.
It’s good news, though, for people working in larger companies, because research shows bigger firms are more likely to still give a pay rise with a promotion. “Larger companies are generally more likely to have a bit more money, but in New Zealand, we’re a culture made up of around 80 per cent small-medium enterprises, rather than large corporates,” says Alexander. “Sometimes, because of longevity and loyalty, workers get paid very well at SME’s if they stay with the company.”
Changing jobs is another way to get a pay rise, as well as a promotion, but Alexander warns employers: “You get what you pay for – I wouldn’t waste a candidate’s time to put a $100k person into an $80k role.”
There are ways to ask for a pay rise at your current job, even without the promotion, and it’s all about doing your market research. “Do your research and gather external information that can help your case. Think about what you would be worth in the job market,” says Alexander.
“Make sure to add that you like your job and want to raise the pay issue to see if something can be done so you can stay.”
On the plus side, business confidence is rising.
The question is whether businesses who blamed a lack of pay rises on “tightening of the belt” in the lean times will start to “loosen the belt” with long-awaited pay rises when the good times return.
Source: The New Zealand Herald