WHAT PAY RISE SHOULD YOU EX­PECT NEXT YEAR?

Qatar Today - - BUSINESS > BOTTOM LINE -

For many or­gan­i­sa­tions, it's time to start think­ing about 2015 bud­gets and, for HR, this means rec­om­mend­ing next year's salary in­creases, which will hope­fully re­sult

in a bumper pay rise!

But do you re­ally know what fac­tors hu­man re­sources (HR) con­sid­ers for the bud­get? Is the process shrouded in se­crecy as the HR depart­ment works their dark magic be­hind closed doors, with zero trans­parency in the process? If this sounds all too fa­mil­iar, then read on.

The fact is that those of us work­ing in the fast mov­ing Mid­dle East­ern job mar­ket can be­come a lit­tle un­re­al­is­tic about what to ex­pect. With gov­ern­ments in the re­gion some­times putting for­ward pay ad­just­ments of up to 80% for na­tion­als in the pub­lic sec­tor, the stan­dard pay rise of­fered to ex­pats can seem a lit­tle miserly. How­ever, if you of­fer a 4% rise to a worker in other parts of the world, for ex­am­ple, the Euro­pean Union, chances are they will snatch your hand off hav­ing been frozen out of pay rises in pre­vi­ous years. It is also worth re­mem­ber­ing that pay rises are not an en­ti­tle­ment and your company will only pro­vide them if the business can af­ford to do so. With this in mind, what bud­gets are to be ex­pected and what fac­tors are con­sid­ered?

Align­ing to mar­ket

Firstly, your salary in­crease is meant to be aligned to the mar­ket. The the­ory is that good HR func­tions reg­u­larly test this by reach­ing out to pro­fes­sional firms for bench­mark stud­ies, which re­flect “the mar­ket” (in essence, what other com­pa­nies will do).

This data is based on pulse sur­veys which will col­lect salary in­crease bud­gets of all par­tic­i­pat­ing or­gan­i­sa­tions pro­vided by HR. For ex­am­ple, in Qatar, the con­sult­ing in­dus­try es­ti­mates an av­er­age pay in­crease of 5.2%.

Se­condly, ex­ter­nal eco­nomic fac­tors such as the rate of in­fla­tion will in­flu­ence salary in­creases. In Egypt for ex­am­ple, in­fla­tion is around 10% which is re­flected in the salary in­creases, as th­ese are meant to cope with the in­creased cost of liv­ing. Another in­flu­en­tial fac­tor is the over­all econ­omy mea­sured by GDP growth. A pos­i­tive num­ber sug­gests that the over­all econ­omy is do­ing well. So will every­body in Qatar re­ceive a 5.2% pay rise? Pos­si­bly, but more likely the an­swer is ‘no', as there are other fac­tors that in­flu­ence the fi­nal dis­tri­bu­tion of salary in­creases.

Fi­nal word

The CEO and board mem­bers will have the fi­nal word on salary in­creases. The task for HR is to come up with a rea­son­able rec­om­men­da­tion but it's not un­typ­i­cal that th­ese rec­om­men­da­tions will be re­vised due to changes in the or­gan­i­sa­tion. The 2014 bud­gets pro­jected this time last year were around 5.6% over­all, how­ever, the ac­tual in­creases were only 5%. This year, the pro­jec­tions of 5.2% seem to be a bit more con­ser­va­tive, but more in line with the ac­tual 2014 in­creases.

How­ever, even if the CEO and the board sign off on the HR rec­om­men­da­tions, it is still pos­si­ble that you'll re­ceive a lower pay rise. This could be be­cause the pay rise pool was di­verted away to more de­serv­ing cases who trumped your needs! Typ­i­cally, those who are new in a role will get paid less than those who have ex­pe­ri­ence; how­ever, as con­tri­bu­tion lev­els in­crease, salaries should be­come com­pa­ra­ble over time which is achieved via big­ger pay rises – or your company re­wards the best per­form­ers ex­cep­tion­ally well, which would be taken out of your bonus pool.

Over­all, it is im­por­tant to be pre­pared for your salary in­crease dis­cus­sions by keep­ing in touch with the lat­est eco­nomic fig­ures and num­bers pub­lished in the news­pa­per from cred­i­ble sources. Stated facts are a much bet­ter source of in­for­ma­tion than anec­do­tal ref­er­ences of what your friends at other com­pa­nies may or may not have got­ten

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