It’s pay rise season! How should you approach it?

Thursday May 25, 2017

It’s December, the shortest month of the year. Not in terms of days, but in terms of cash in the pocket! That space under the Christmas tree needs filling, and doing so is certain to squeeze the bank accounts of your staff. Many firms pay staff early in December to help with this, but goodness, that does make the January pay day a long way off. And the credit card bills still arrive on time.

January is still, for many companies, the pay review time when cost of living increases are awarded. A salary increase is meant to serve two purposes: to motivate workers and to keep employees from leaving for a better-paying job. But truthfully the traditional raise does neither of those things very well at the moment. Before the 2008 financial crisis, pay increased by about 3% per year. The current Brexit uncertainty which has implications for Ireland – so will a 1.7 or 2% rise really excite staff?

The Department of Social Protection has launched initiatives for those who are “just about managing”. They have launched a consultation to look at ways to lower the disparity in many companies between the chief executive’s pay and the workforce. The green paper will have three sections: one on remuneration, one on stakeholder engagement and a third that asks what elements of these should apply to private companies.

This is all very well, but does not address next year’s wages. Pay isn’t the only way you could be rewarding your staff. Make them aware of the other employment benefits you already offer, especially if they’re under-utilising ones that they really should be taking advantage of. Be creative; would an additional days’ holiday be appreciated. Or how about a health cash plan as a cost-effective way to show you care?

If you’re in a position where you can’t offer a wage rise, make sure you approach this in the proper manner with your staff. Failure to do so may end up costing more money than you save e.g. recruiting and training replacement staff (the total cost of replacing a member of staff is reported to be €30k)!

The best approach is to be open and honest during a one to one meeting. Explain the situation that the business is in. This lets them know that they are valued and respected enough to be individually given the low down. Tell them about the sacrifices the business is trying to make in other areas, and that wage increases were the last option on the list.  A good idea is to give your team a timeframe of when you hope to be able to review the situation (mid-year for example), leaving people on the long finger is never a good idea!

The one thing you absolutely DO need to do is make sure you’re paying your staff legally. There is a raft of legislation that covers pay; the National Minimum Wage, the Equality Act and the Terms of Employment Act, as well as Joint Labour Committee Employment Regulation Orders for the Security and Cleaning industries, and Registered Employment Agreements for some other sectors, they all have an impact on pay rates. We would be sorry to see your company named and shamed or fined for noncompliance.

Impeccable record keeping is needed here and if you have any doubts just give us a ring.

Preventing People Problems

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