It's an increasingly common situation – a manager sits down for a salary review with an employee, only to discover a major gap between what the employee expects and what the company is offering.
Aside from any awkwardness the manager and employee might feel, there’s quite a bit at stake in salary reviews. If a manager doesn't handle the conversation well, they risk losing their employee to a competitor in the short or medium-term.
The upheavals of recent years have placed salary considerations firmly back on the table, with engineers more likely to look elsewhere if they perceive an employer's unwillingness to offer a pay rise. About 40% of automotive engineers are not content with their pay, while 46% are considering a change of job, according to a recent national survey. The Great Resignation is a real risk for many employers and salary expectations are playing a central part.
While the number of tech-related automotive engineering job is on a strong upswing, UK data shows median salaries have recently dipped. The need for honest but sensitive conversations about salary expectations will likely increase during this time.
Armed with the right information and talking points, a manager can turn an challenging conversation into a compelling list of reasons outlining how employees benefit from working with the organisation. Managing salary expectations, after all, is a delicate mix of diplomacy and presentation of hard facts.
We'll explore how employers can prepare for productive conversations about salary reviews and how to manage expectations without disappointing employees.
It's crucial to give employees an explanation for decisions made about salary. An engineer who has put in their hard work in the past year is certain to feel slighted when told 'no' without any supporting details. If in doubt, put yourself in their shoes – would you be satisfied with the response, in terms of its clarity and fairness?
Demonstrate to employees the prevailing factors that determine salary budgets, including the company's financial performance, market conditions and economic influences.
If the employee's performance is a core factor in the salary decision, think about how you can motivate them by outlining what it takes to get the pay rise they're after. This could include finishing a project, taking on work that is above and beyond their job description, smashing KPI targets, or adding significant value to the team and organisation in some other way.
Elaborating on these details shows the organisation is serious about transparency and that decisions on salaries aren't made arbitrarily.
A final word on transparency: don't forget to summarise the discussion in writing for everyone involved. Not only does this ensure all parties are on the same page, but it can also be a critical safeguard in case a dispute arises in the future.
Explore Other Benefits and Career Development Opportunities
While there is no escaping the reality that competitive salaries are the core elements of talent attraction and retention, money isn't everything for engineers. Where a pay rise isn't possible, salary reviews can include other types of benefits and rewards that make for a compelling offer.
Higher company pensions, performance bonuses, schedule flexibility, health insurance and remote working options are examples of non-salary benefits that are increasingly desired by European workers.
Ask each employee about the types of non-salary perks that would appeal to them. Some people might want regular flexible hours, remote working options, additional annual leave or some form of monthly allowance. Tailor the offer to each employee and note in writing that you've undergone the process in consultation with them.
Professional development opportunities are another important way to make employees feel valued when salary budgets are tight. What are your workers' professional goals and aspirations? For some engineers, it might be time to start working towards gaining either incorporated (IEng) or chartered (CEng) engineer status, so an employer could offer a professional membership to set them up for this goal. Offering time off for upskilling, leadership coaching and mentoring can be a real motivator as well.
Remember, offering a clear career progression pathway can set up a good employee for a lucrative promotion further down the track, so don't forget to highlight this potential to employees as part of the salary conversation.
The subject of salary makes for one of the trickiest conversations between employers and employees. To reduce the risk of creating discontent, commit to a principle of transparency and always explain what has influenced your decision.
Remember to keep in mind the non-salary options available that can make your best workers feel valued. The best engineers want to keep their skills up-to-date so they can remain competitive and relevant. Show them how they can grow and thrive in their career, beyond just extra pounds in the bank.
Do you need more expert advice on how to create a compelling offer or win the best talent for your business? Get in touch with our Automotive Engineering recruitment specialists for a tailored solution to meet your needs.