“I want to discuss my salary package”
“Can I have a raise?”
These two phrases can cause a lot of frustration and uncertainty in the workplace if not handled sensitively.
First of all, it isn’t easy to ask your boss for a pay rise. A lot of anguish, thought and hopefully research has probably occurred before the employee has come to you. So, if you know an employee is due for a pay review take the initiative and raise the discussion before they feel they must. But if they beat you to it, give each request a lot of respect. Listen to the case presented and take time to consider. This will usually mean not giving an immediate answer so agree on a time and date to meet to discuss your decision.
From an employee’s perspective getting a pay rise is pretty simple, have I performed well enough in my job to deserve it? From the employer’s side things appear bit more complex. Apart from performance, employers need to consider how the salary compares to the market generally, how the salary compares to others in the team, whether the company is in a position to give a pay rise and does the requested pay rise fit within the companies’ policies?
If you’ve decided not to give an employee a salary increase how you communicate it is pretty important. Of course, every scenario will be different but usually the outcome you are looking for is similar; although you are not going to reward the employee with more money you want them to stay focused on their job and maintain or improve their performance.
This isn’t a comfortable situation for the employer or the employee. The answer though is to be tactful and honest. If the employee’s performance wasn’t where you wanted it to be, carefully explain where they were below expectations and, if possible, use data to illustrate. Then try and plan a clear performance path to the point where you would be able to give a pay rise. This should be as transparent as possible so the employee can easily understand if they are on track or not. If the employee’s performance has been adequate but the businesses situation does not allow you to give a pay rise or the employee is already well paid in market terms again, be open about why you can’t pass on a pay rise at the moment, but also look for alternatives that will be seen as a reward. These alternatives may include training, flexible working arrangements and additional holiday days.
Salary negotiations are sometimes tough to handle, but it is pivotal that employers plan for this process, as it is inevitable. The more proactive you are now, the less reactive you will need to be later.
By Lauren Eardley
As a Specialist Recruitment Consultant in the Finance and Credit space, I am always looking for opportunities to become more immersed in the industry. Recently I attended the AB+F Retail Credit Panel Discussion which was held in light of the changes to Credit Reporting introduced in Australia in March 2014.
If you are unaware, this legislative change means that more credit information can now be shared by lenders for the purpose of assessing credit. Before now the information that could be shared was limited to credit applications and defaults (i.e. negative credit reporting), however the change in legislation means additional information will be available on accounts that customers currently have and how well they meet their repayments (i.e. positive/ comprehensive credit reporting). This brings Australia in line with the majority of other OECD countries including the US, UK and New Zealand.
The AB&F Discussion Panel was made up of 4 key players in the Global Credit Space: David Grafton (Credit Risk & Advisory Services, Veda), Bart Hellemans (Chief Risk Officer, ING Direct), Adam McAnalen (Head of Retail Credit, BOQ) and Cln Murthy (Country Risk Director – Consumer, Citi). Questions came from Andrew Stabback, Publisher & Managing Director of AB+F and the audience.
There was undeniable agreement that this is a busy time for Credit and Risk Managers and this period of transition is an opportunity for organisations to really switch on to data sharing and make the best of it.
The Credit Industry is buoyant and is growing for both secured and unsecured products however it still remains a relatively flat portion of Australian GDP. The panellists analysed the contribution of the buoyant housing market on (secured) credit growth. It was concluded that the current housing market is making the mortgage space highly competitive; lenders are having to differentiate themselves in the market place whilst not impacting their risk appetite. This means below average interest rates therefore people are paying off their mortgages much faster. Murthy of Citi confirmed that this translated into unsecured products as well; credit cards and personal loans are being snapped up, however consumers are paying them off quicker which means the growth is not being reflected on the balance sheet.
Hellemans and Murthy representing banks with global coverage agreed that we are not quite clear of the GFC yet but we are certainly in a stronger position now than in 2007. The regulations which instigated in the last 2 years have subdued credit growth. The increase in data available due to CCR means that institutions can delve into more niche markets and develop new products to differentiate themselves in the market place.
One example from the UK was raised; a Credit/Debit combination card with which you deposit a small amount of cash then the credit portion increases in line with how well you make repayments.
Sitting in a room full of Senior Credit and Risk Managers, they were all pretty much on the ball with the changes and how it affected their organisations. However, to really see the positive effects of CCR implementation, consumers (i.e. the general public) also need to understand what information is available on them, how it will be used and how it affects them. David Grafton, Executive General Manager, Credit Risk and Advisory Services at Veda, said it was frustrating to see consumers left largely unaware of their important new rights in the credit reporting system, that will ultimately help them take better control of their credit history.
“I think the government has really abdicated an important responsibility in that this is the most important change in privacy law in 25 years and it affects each and every one of us, it really does,” Grafton said.
This could potentially ensue a shift in purchasing power to consumers within 3-5 years. If customers have a positive credit file and are aware of it, it allows them greater negotiation power when obtaining credit. It will also allow consumers who have a made a genuine mistake in their payment history to accumulate a positive credit score more quickly and borrow successfully again in the future.
The changes following the implementation are in their very early days and we are not likely to see major changes for several years. The credit industry is encouraged to embrace data sharing sooner rather than later to avoid risk of irresponsible lending. While experience in application of CCR overseas can be drawn upon, Australia has different dynamics and is untested so beyond speculation the future of the Credit Industry has a long way to go and remains to be seen.