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Research has revealed that 58 per cent of businesses base remuneration decisions on individual or company performance. Here’s why that might need to change.
According to Robert Half, this approach is outdated, and for organisations to stay ahead amid tight labour markets, remuneration needs to be viewed as a form of attraction and retention.
Robert Half director Nicole Gorton commented: “2022 was an eventful year for employment in Australia as high business confidence saw mass hiring across the nation and skyrocketing salaries.”
“As the market is shifting and businesses are ‘rightsizing’ themselves, companies are taking a more cautious approach to their remuneration policy by predominantly rewarding salary increases based on the performance of their business.”
Another 22 per cent base their remuneration decisions on a mix of performance and tenure, and 20 per cent base it solely on of tenure.
Robert Half said this approach is not fit for the current workforce, and adopting a more proactive approach is necessary to stay ahead of the competition. By offering salaries that are reflective of the tight talent market, businesses are better able to bring in skilled talent.
“Even with the rising cost of living in the spotlight, there is no guarantee who will receive a pay rise this year, and how much. Salaries cannot and will not continue to rise at the rate they did in the previous two years,” explained Ms Gorton.
“Pay-related decisions have become a balancing act. Businesses need to ensure they are keeping pace with the market rate of roles they are recruiting for and roles that their staff currently hold to avoid losing the skill sets they need to stay ahead of their competitors. But at the same time, they are increasingly scrutinising who receives how much extra pay given the changes in the market.”
Keeping up with remuneration trends is especially important, as 70 per cent of companies said they were planning to offer more benefits this year. Meanwhile, 67 per cent said they allow employees to swap a proportion of their salary in return for more perks.
The most common benefits offered are:
- Flexible work schedules (60 per cent)
- Mental health programs (55 per cent)
- Remote work options (52 per cent)
Ms Gorton continued: “With businesses putting careful thought and consideration into who will receive a financial incentive in 2023, many employers are turning to benefits as a substitute when a monetary increase cannot be offered.”
“Companies would benefit from looking beyond salary and considering the overall employee experience that differentiates them from their competitors and offsets the absence of a higher salary or pay increase. Benefits that support employees’ work/life harmony, such as flexible work hours, and hybrid or remote work arrangements are likely to be some of the lasting workplace legacies of the upcoming jobs landscape,” she concluded.
When the time comes to ask for a salary increase, Robert Half said employees should:
1. Record your achievements.
2. Set a timeline for a meeting.
3. Practice your pitch and state your case.
4. Stay up to date with market rates.
5. Know when it is time to move on.
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