The Secret Rules of the Salary Game

August 28, 2023

Time of budget planning is salary negotiation time

In late summer and fall, salary budgets for the next fiscal year are planned. At the latest at this time, you should make an appointment with your manager if you think there should be a change in salary at the latest in the upcoming year - in addition to the collective bargaining agreement. Perhaps your own area of responsibility has grown significantly since the last individual salary adjustment? Perhaps you are in charge of an important project or have taken over the support of larger customers? Or maybe you are now even responsible for other colleagues? All good reasons for an increased market value, which should also be rewarded internally.

Man and woman arm wrestle for a salary increase
Budget planning time is upon us, and with it, salary negotiation time. Image: shutterstock, IR Stone

Additionally, potential bonus pools, which are paid out in the following year, are also specified. If your area of responsibility has been unchanged, then you need to take a look at your own performance and that of your team and remind your superiors of the added value you have contributed to the company so far, because companies that pay out bonuses at the end of the fiscal year often tie the payment to the performance of their teams or individual contributors. Perhaps quality standards have improved significantly, a tedious process has been simplified for everyone, important customers have been acquired?

Do My Superiors Know about My Commitment?

Why should employees go to the trouble of reminding their superiors of their increased area of responsibility or the added value they have achieved? Why bother? After all, it's a manager's job to challenge and encourage employees - and that means recognizing their performance and paying them what the market pays. And who likes to "sell themselves"?

Unfortunately, reality all too often paints a different picture: the employee who took maternity leave in the middle of the year is simply forgotten when it comes to bonus payments the following year - as if they had never worked for the company. The employees who shout the loudest often do better - and in many cases, those who are also private friends with the manager or have an important higher-ranking sponsor in the company are most favorably rewarded. Those who quietly and diligently just do their part are often simply overlooked.

In an employee market with an acute shortage of labor, will companies still be able to afford this approach in the future?

Woman sits in front of the computer, being exhausted
If, despite diligence, the rewards fail to materialize, this can quickly lead to frustration - in times of an employee market, this should not happen. Image: shutterstock, fizkes

My Salary - Hanging on for Better or Worse?

Surveys about corporate remuneration processes show all too often: while some teams are highly satisfied and able to develop professionally and in terms of salary, others are highly frustrated, willing to change or are on the verge of quitting. How can this be, when both teams work in the same company and the same corporate culture is being promoted for the entire company?

Quite simply, many companies do develop their managers - but do not conduct 'peer evaluations', i.e., testing their managers' assessment capabilities across 'silos' by comparing these evaluations with peers across the company. Such a process would easily reveal that there are stars in one team and only average performers in another comparable team. At the latest it then becomes clear: this is not due to the unfavorable distribution of employees, but to the judgment of the superiors.

Transparency for the Taboo Topic of Salary?

Although the new EU directive on salary transparency and equal pay from May 2023 will not come into effect for another three years, the direction is clear: equal salary for the same function with comparable performance can be enforced and, in the future, the burden of proof will lie with the employer. And if you as a company take this transparency seriously, then it is advisable to talk with your teams about factors that influence compensation - or ideally even define them together.

What's so bad about employees understanding which salaries are paid for specific roles in the marketplace, how salary increases or bonus processes take place and how the company plans to deal with paying new hires maybe significantly more than existing employees. A gradual salary adjustment of the committed workforce is certainly much more favorable than the search for and on-boarding of new employees - not to mention the loss of know-how in the event of high fluctuation.

Coins stacked aside of each other, each stack getting bigger
Transparency in salaries should be a given - the more nebulous the structures, the more likely unequal treatment arises. Image: shutterstock, Number1411

I'd Love to Raise Your Salary, but HR Won't Let Me

An absolute classic of many managers - not only in Austria - when it comes to rejecting the request for a salary increase. But beware: in most cases, HR is the one responsible for the general, company-wide framework in terms of remuneration processes, but who actually gets more or less is de facto almost always decided by the direct manager.

Cooperation based on a Healthy Feedback Culture is also Beneficial for Remuneration

And this leads us to a very sensitive topic that is often overlooked when it comes to the subject of compensation: As a manager, showing your cards and conducting a clear feedback discussion means first and foremost: taking your time as a manager, defining comprehensible, transparent goals together with the teams, recognizing the commitment of your employees as a whole team and as individuals, appreciating it and discussing it together. And there is nothing to be said against shaping this process as far as possible within the team, because the time is long gone when managers had to take all the decisions alone, like 'lone wolves'. Many start-ups and smaller companies have long since exemplified partnership-based collaboration when it comes to remuneration issues - and this topic is certainly not a reason for their economic success or failure - on the contrary, it promotes cooperation at eye level and is much more likely to facilitate dialogue about economically necessary measures in the company.

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