'We know there is a temptation in an economy like this… please don't do this': whitepaper
Employers across New Zealand are being advised against implementing an across-the-board pay increase amid tighter remuneration budget projections this year.
Strategic Pay's latest whitepaper said it would seem "inevitable" that the downward trend in remuneration market forecast movements would become a reality.
"Budgets are likely to be more tightly managed, with remuneration practices being more controlled due to it being one area that has a significant impact on any organisation's financial management and budgeting," the paper said.
Implementing a flat, across-the-board pay increase may be an easier way to distribute budget percentage, but this is "not the way to do it" if employers want to play fairly, according to the paper.
"In paying everyone the same increase, what will happen is that this will not be perceived as fair, and applying a flat % to everyone will give the more highly paid, a greater dollar increase than your lower-paid workers, who may well be those top contributors that you really want to keep," the paper said.
"We know there is a temptation in an economy like this to decide to pay a flat, across-the-board pay increase, such as two per cent for all employees. Please don't do this."
According to the paper, some strategies that employers can take in the wake of tighter remuneration budgets include:
"It is possible to both manage your tight budget and meet the fairness and equity needs of your employees," the paper read.
Find out more about the remuneration projections and the factors driving them in this whitepaper from Strategic Pay.
