Finance: Making the most of your annual review

By Teuila Fuatai


Bargaining for better pay and improved working conditions is a key part of the worker's annual review.

And for many employees, it's the only chance for meaningful feedback or to make their case for more money.

But employees reluctant to raise these topics will likely miss out, as will those who are too demanding over negotiations.

Teuila Fuatai reports on how workers can make the most of their yearly catch-up with the boss - and the best way to approach tentative topics such as a pay rise.

Do your prep


Before tabling their dream pay packet or promotion desires, workers need to understand what a review meeting is about.

John McGill, managing director of remuneration and performance solution company Strategic Pay, advises workers to familiarise themselves with their company review process.

"The annual wrap-up would review your performance for the year just gone, but it may also look at setting the targets for next year and the bit in between."

All employees should know what the company targets and personal performance measures are before coming armed with a list of their achievements and approaching topics such as pay rises and further training, McGill says.

Make a to-do list


Human resources management expert Dr Keith Macky says too many employees rely on their bosses to run review meetings.

Often, employers are unsure of requirements in a review meeting, the Auckland University of Technology associate professor warns.

If both parties are unprepared, the meeting is more likely to deteriorate into a "defensive" conversation.

"However, if the employee goes in prepared with their own agenda, it sets a positive and constructive tone to the meeting," he says.

"Basically, you will help your boss by thinking these things through and being clear in what you want."

Be realistic about pay rises


Pay rises are a big topic at review meetings and workers should consider several things at the negotiating table, McGill says.

Labour market activity, average salary and wage rates, as well as personal achievement all relate to potential pay rises.

Those in high-demand jobs will inevitably be better placed to ask for a pay rise.

For example, building firms in Christchurch are probably paying builders more than in previous years due to the rebuild, McGill says.

Pay relativity with colleagues is also important. People working in similar jobs should be on similar pay packets, McGill says.

"Even if you're paid relatively low and that's comparable to your colleagues, it's probably not an issue. But if you're paid relatively low and you believe your colleagues are paid more, you're not going to be happy."

Macky says worker contribution is also important.

"It's about showing how much you've contributed to the company and justifying why you deserve a rise or how ongoing training would help."

Company positionWhen negotiating a pay review, an important underlying factor will be the financial situation of the business.

McGill warns that not all employers are in a position to offer pay increases at the levels workers expect, particularly given the global downturn.

Many have had pay freezes, while others have been offering rises only in line with inflation.

"Some organisations, particularly in the public sector, don't have a lot of cash at the moment."

Workers need to consider current company performance and future expectations when negotiating for a pay rise.

The role of inflationMany people use changes in the consumer price index (CPI) as a benchmark for pay rises.

"But that's the broader basket of goods and services, and it may not be reflecting what's happening in the labour market," McGill says.

Sometimes, CPI movements and changes in wages and salaries track at similar levels.

"At the moment, with the CPI being fairly low, pay movements are generally higher than that."

In the 12 months to December, the CPI increased 0.9 per cent, according to Statistics New Zealand.

However, a Strategic Pay survey found wages and salaries increased at an average rate of 2 to 3 per cent for the year.

"We predict similar movements for the next year," McGill says.

- Hamilton News

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