In August 2016, I posed the question “Are the days of 3% over?”. At the time, I was hearing through the members of the New Zealand Remuneration Network that some organisations were considering reducing their remuneration review budgets from the standard 3%. In that post, I encouraged our membership to think about how they were setting their budgets and consider blazing their own trail rather than following the heard.
Recent market insight from Strategic Pay, who surveyed 512 New Zealand organisations in March 2017, suggests that many of you put a lot of thought and energy into your decisions this year. The Strategic Pay report highlighted that on average, employees in New Zealand can expect to receive a base salary increase of around 2.2% in the coming year.
But here is the conundrum of this downward trend, how best to allocate meaningful salary increases with a smaller pot of funds?
One option is to give everyone the same amount, say 2%. By taking this course of action you might be seen as being ‘fair’. But, in doing so, you risk demotivating your high performers who feel they are due much more than ‘Mr Average’ sitting next to them.
On the other hand, you could focus your efforts and limited cash on high performers or identified retention risks. But, in doing so, you risk disheartening ‘Mr Average’ who is essential to keeping your business ticking along.
Perhaps you should focus on correcting past wrongs such as increasing salaries for those below market, or perhaps ‘catching up’ your gender pay gap?
As with setting your remuneration budget, to solve the allocation conundrum you will need to forge your own way.
Please share in the comments your suggestions for solving this puzzle.