Why is it that the opportunity for a raise is never yours?
It's the end of the year, and it's been a hard year. It's time to raise your salary, right?
As an employee, your reasons for raising your salary often look like this:
I have done a big project this year, and the leaders are very satisfied with my performance. Should I raise my salary?
In the second half of the year, one person left, and the workload increased by at least 50%. It would be unreasonable to not get a salary increase at the end of the year.
If that's all, I'm very sorry to tell you that you may still be out of luck with this year's year-end raise.
Because of the decision-making department managers and directors, the situation they encounter may be as follows:
At the end of the year, he applied for a salary increase for four subordinates. Around the Spring Festival, the company's salary increase target was approved, but unfortunately, no! enough! use!
The salary increase budget for the department can only satisfy two people completely.
We usually think of salary increases as a "fair deal" issue, but unfortunately, as an economic phenomenon, salary increases are actually a matter of allocation of scarce resources.
Scarcity must be the origin of economic thinking: money is always scarce, and giving employees a little more salary means less investment in other resources, so the total amount of year-end salary increases is usually not enough. Without you, there will be fewer others.
Whether you can get a raise is not entirely dependent on "whether your reasons for a raise are sufficient", but on "whether giving you a raise is more valuable than giving someone else a raise".
Let’s take a look at the reasons for the salary increase for these four people:
Employee A: Growth is fast, and the salary level is significantly lower than the market conditions of the position
Employee B: I did a big project this year and it was very hard
Employee C: Work efficiency and contribution are the highest in the department
Employee D: The salary is the highest and the performance is average, but the market for his position is too big this year, and the market is soaring
How should I add it?
In the third part of this series, I will use "economic thinking" to analyze the question of "how should the opportunity for a year-end salary increase be distributed".
2/6, salary increase depends on strong logic
The distribution standard that is generally easy to think of is "distribution according to work, more work, more pay". Employee C contributes the most and should of course get a raise. Employee B is the hardest and should of course get a raise.
Regrettably, this is not the case.
From the perspective of economics, the so-called work means that employees, as the supplier, treat labor as a commodity and sell it to the demander of the company, and the employee's salary is the price of labor.
We know that prices are determined by market supply and demand, and so is the labor market. In theory, the salary of a position depends on how many people like you are in the market, and how many companies offer the right position for you.
However, I don’t know if you have ever thought that the number of people and positions in the market is changing every day, but why is your salary basically fixed and only change once a year or two?
The price of vegetables on the market changes every day. Because agricultural products are standardized commodities, the prices are very transparent and easy to transmit. Therefore, the price information is a reflection of the current supply and demand relationship.
Talents are just the opposite. In many cases, you only know the market situation by interviewing a few more companies after you decide to change jobs.
The negotiating cost of salary is too high, and the salary can only be set once a year, and it cannot be changed again after at least one year. Everyone knows this.
This leads to a problem. The focus of the year-end salary increase evaluation is not how much you have contributed to the company in the past year, but the company's estimate of your value in the next year.
This may be difficult for many people to accept, but think about it calmly, your contribution to the company is actually mainly reflected in the salary slips in the past. Even if you think the price set at that time is unreasonable, the difference has become a "sunk cost", and "sunk cost" should not affect future decisions.
But then again, past contributions are still very important. Because how does the company estimate your future value? The most important criterion is your past performance.
From past performance to future expectations, I call it "salary raise logic". Logic is a way of forecasting, not a reason.
Everyone has reasons for a raise, but the logic behind these reasons is some strong and some weak.
What is strong logic?
such as "certainty". Employee A's reason for a salary increase "the current salary level is lower than the true value" is certain in the next year; while employee B's reason for "doing a big project" may not be able to extend into the future.
In terms of "certainty" alone, Employee A's reason for a raise is stronger than Employee B's.
In addition, the growth of employee A's ability is also based on the strong logic of growth ; the position of employee D has a serious imbalance of supply and demand, which is based on the strong logic of enterprise operation security .
So, don't they have a strong salary increase logic for employee B who has done a big project and employee C with the best performance?
3/6, exogenous salary increase logic
I estimate that most people are dissatisfied with the logic of employee D's salary increase. Why is his performance average, but the water is lifted because of the market conditions?
It's useless if you don't accept it. This is the "exogenous factor" of the salary increase. When the wind comes, pigs can fly to the sky.
For example, majors related to big data and artificial intelligence, which used to be in average demand, are now a must for giants such as BAT. They often spend their money to “sweep” the talent market, and the training of a professional requires at least four undergraduate degrees. In the past four years, the imbalance between supply and demand in the past four years will become a strong logic for the salary increase of related majors.
"Exogenous factors" also include growth expectations for the segment's business.
If the business is very busy next year, it means that the manpower of the front-line business department will be greatly increased. However, after two months of recruiting and two months of getting started, one-third of the year has passed . Therefore, the focus of the salary increase at this time is to stabilize the existing personnel in the front-line business department next year and reduce the recruitment pressure.
Conversely, if next year's business is expected to be difficult, that often means shrinking staff in front-line business units, but not a drop in actual workload. At this time, the value of high-efficiency and top-notch employee C is highlighted, which is the "strong logic of salary increase" in the "business contraction period".
In the same way, when talking about salary increases, the company strategy for the new year has been introduced. Departments that are in line with the company's strategic direction mean that resources will be heavily skewed. If we don't talk about salary increases at this time, when will we wait? It was a strategic focus in the past, but its position will be weakened in the future, so it is better to be safe.
The logic of the salary increase mentioned above is caused by changes in the supply and demand relationship. They all have a weakness. Once the supply and demand relationship is restored to balance, the strong logic will become a negative logic, and it will become "one plus four years, and then Four years without a pay raise".
Therefore, the logic of salary increase that is more acceptable to the company must be the "endogenous factors" of employees.
4/6, endogenous salary increase logic
As I said before, when you ask or suggest "I want a raise" to the leader, the leader's first thought is not "how much is this guy worth", but "If I don't agree, will he go?".
If the answer is "probably", then the next question naturally is "if he leaves, can I immediately (these two words are very important) find someone similar to him with his current salary?"
This question is actually the equivalent of "how much is this guy worth", but it provides a way to judge based on economic thinking - your value is equal to the cost of "finding an alternative".
There are two keywords: "substitute" and "find".
The most obvious logic is that you are doing a "senior" job and you get the salary of an "assistant", which is the strongest salary increase logic.
If your current responsibilities are composed of two different majors, the so-called "composite talents", then replacing you means requiring two people, which is also a strong logic for a salary increase. Of course, there is a premise that you are doing both well.
In addition, your familiarity with the company culture, your influence among colleagues, whether you are in a leadership circle, your client resources, ongoing projects, etc. all drive up your replacement costs.
The word "immediately" is also very important. Some positions are unpopular, but they are very important. If the leader is not sure to recruit people in two or three months, he will also agree to your request.
But there is a flaw in this logic. Once the boss meets the right person, the salary you add at the beginning of the year will make your situation even more dangerous.
The "endogenous logic" of salary increases has a common feature - you today are not you a year ago, and you will naturally have to re-price in the coming year.
But there is a premise, it must be that the leader thinks so, what you "think" doesn't count.
People's understanding often lags behind, just like you lose 20 pounds in a year, but people who see you every day will not have such strong feelings.
There used to be a colleague who, in the second half of each year, always "accidentally sent the wrong document" of his previous work, and only then took out the current work results. , and its "growth" impressed the leaders.
A re-evaluation of you will usually bring you a 10-40% pay rise, and if you want to exceed this range, you can only achieve it by changing jobs. That's another big topic, and we'll talk about it when we get a chance.
5/6, three ways to raise salary
Now let's take a look at how these four employees have a more reasonable salary increase. Let's review the reasons for the salary increase of the four people:
Employee A: Growth is fast, and the salary level is significantly lower than the market conditions of the position
Employee B: I did a big project this year and it was very hard
Employee C: Work efficiency and contribution are the highest in the department
Employee D: The salary is the highest and the performance is average, but the market for his position is too big this year, and the market is soaring
The first idea: give A and C a salary increase, which is a salary increase logic focusing on "endogenous growth".
What if employee D leaves? The answer is to use the existing budget and recruit people with lower ability. The reason is that long-term pain is worse than short-term pain, and there should not be "indispensable" employees in the development of enterprises.
The second idea: give A and D a salary increase, which is a salary increase logic that focuses on "certainty".
The growth of C is questionable: to be the best, also means that the room for improvement becomes smaller. And A has a strong growth potential, and there is still room in the future. It is better to add to him and cultivate it, which is the next C.
The third idea is to raise wages for parts D and C (the cost of these two people is high), which is a salary increase logic that focuses on "stability".
The reason is very simple. A has the lowest replacement cost and has the least impact on the department.
There is no B in the three ideas, because hard work is never a reason for a raise.
In any case, there is no answer to everyone's satisfaction because resources are scarce.
6/6. Future-oriented economic thinking
Finally, let's assume an extreme case:
After a year of hard work, an employee's ability has changed from "assistant" to "senior", but before the salary increase at the end of the year, he made a mistake and caused a certain loss to the company. Then, do you think the company should give him more Opportunity for a raise?
From the previous content, the answer is obvious . A salary increase is a reassessment of the employee's future value, and past mistakes should not affect future decisions. And a reasonable penalty for making mistakes is a deduction of wages, that is, first and then deduction.
A characteristic of economic thinking is that it is "future-oriented" and solves the problem of "how to choose more effective".
It also sometimes takes you to look at the past, but not for remembrance, but to sum up experience, it will not leave a trace of nostalgia for the "sunk costs" paid.
Sometimes you think it's cold and sometimes you think it's too snobby.
No way, because human reason is also scarce.