Source: Radio New Zealand
About 37 percent of employers cite company performance or profitability as a driver of salaries. 123rf
Have you ever wondered how your boss decides what you will be paid?
Sometimes, salary-setting can seem like a bit of a mysterious dark art.
New research from recruitment firm Robert Half has found that, for familiar roles, New Zealand employers lean heavily on online salary guides.
More than 40 percent of employers said they would use them to help determine what staff would be paid. Next were industry benchmarking tools and recommendations from direct managers.
For unfamiliar roles, such as new positions, they were less reliant on external sources. Four in 10 would turn to fixed-salary scales for these, just ahead of recommendations from direct managers, or guidance from HR and internal salary benchmarks.
Robert Half managing director Megan Alexander said recruitment firms that frequently placed people in roles could provide information that allowed companies to benchmark their salaries in the market.
“Where the challenge also lies, though, is there’s always that internal business knowledge that an employee has and how much value that becomes.” she said. “That’s where sometimes you see salaries become a little bit subjective.”
What can you do if you’re not happy with what you’re offered?
Alexander said much would depend on the economic climate.
About 37 percent of employers cited company performance or profitability as a driver of salaries.
“We’re in a climate where there’s a lot of restructuring and unemployment around, so there’s been less room to negotiate in the last couple of years than previously.
“We’re seeing less ability, because companies are under great cost control and it’s a real balancing act. They don’t want to lose good people, but at the moment, the same people aren’t able to go out and just command a big pay increase across the market, because it doesn’t exist.”
She said employees could use many of the same tools to get a sense of where their salary would sit.
“Where the disconnect can often lie is the conversations around someone’s soft skills – you know, their initiative, their drive – versus the actual skills that they’re using on a day-to-day basis. If you look at a job spec, yes, this is my job and this is my job title etc, but how well on the spectrum is that person able to execute?
“There may be differences in perception between the hiring manager and the employee.”
Alexander said employers must look at salaries carefully and not opt for an across-the-board increase.
“That’s what happened last year in a lot of places.”
She said an employer could get out of step with the market quickly.
BNZ chief economist Mike Jones said conditions in the labour market were still weak.
“I think we’ll see overall wage growth remain pretty low and slow in a 2-3 percent area this year. That’s potentially problematic for inflation-adjusted incomes, given headline inflation is still around 3 percent.
“Real growth in labour incomes will be modest at best. As we move through the year, though, some improvement in real wage growth is anticipated, as the spike up in inflation starts to unwind.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
