The Most Expensive Money
Browsing the statistics and forecasts, it is clear that the most of the businesses are ready to make general salary increase this year. Naturally the percentage of the increase will be different by sectors. Up until 2020 there were a significant number of salary freezes and almost nobody is expected this turn of events in 2021.
Money is expensive. More expensive if it’s not only a one-off expense, but salary is the most expensive of all the costs if it isn’t treated like a reasonable investment.
Although the aims seem to be obvious but it is worth reviewing all of them in the very beginning. Our salary system is expected to have competitive and retaining power, adjusted to the market, to be eligible to mitigate tensions among the wages inside, and to acknowledge individual performances. Having management consensus about the main principles, with adequate benchmark data in our pocket HR preparation of the implementation can get started.
Starting with a basic differentiation is inevitable. The budgeted source of increase requires weighting among branches by the scale of their labour market exposition.
After the definition of administrative frames like personal scope, coming into force etc. HR is ready to assemble charts of the ‘new salary offer’ broken down to every single employee. The outcome calculates total cash including all the income elements e.g. bonus, allowance. It also keeps the related benchmark datum in mind and eventually shows the proposed new salary by individuals. Stepping towards the bigger picture, crucial differences between similar jobs’ salaries should be considered carefully to equalization. Now that we can see the big picture only the last step of the preparation remains to be done. Making a reserve for all the unpredictable corrections is necessary. As our last task we have to consult with the authorized managers for the final result, if it is acceptable for his/her colleagues or some modifications are required.
From this moment on, managers have freehand in rearranging any figures within the available frames. In the case of significant difference between the original HR offer and the manager’s intention a discourse is required in order to make the final decision. At the end of the day the final decisions about the new salary will be made exclusively by the authorized manager.
Based on all these I am absolutely convinced that a consequent HR control on the entire annual salary increase process brings the strongest and the most objective guarantee to make a reasonable investment in favour of the company’s best interest.