Slides used in lecture with managers from Icelandic Employer\'s Federation on application of bargaining agreement requirements.

1. Manager’s Guide to Planning
a Salary Review
Randy Fleckenstein / Icelandic Federation of Trade / Oct. 2007

2. Salary Reviews – Do I have to?
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3. The Contract Says So
Objectives of the market-based wage contract
• To make employment terms and
changes more transparent
• To insure that employment
terms are competitive
• To retain and support the best
employees
• To encourage employees to
improve their performance
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4. Emphasis in the New Contract
1. Review required once a year.
2. The employer should initiate the discussion.
3. Salaries shall reflect employee
performance, competence, accomplishments, fl
exibility in assuming new tasks, special work
hours, the nature of the job, level of
accountability and educational level if
appropriate.
4. Employer must adhere to the conditions of the
equal rights law.
5. It is permitted to agree upon a fixed total
salary if maximum overtime hours are given. 4
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5. Market-Based Wages Consider
• Salary changes on the job market
• Performance and “value” of
individual employees
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6. Preparing and Organizing the
Salary Review
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7. What Do We Have to Work With?
• Salary surveys
• Salary structure within organization
• Length of service/tenure and job
history
• Goals attained
• Current wages and benefits
• Level of education, training records
• Attendance figures
• Other data?
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8. Market-based Salary Comparisons
Heimild: www.hagstofa.is
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9. Data from VR Trade Union
• Salary reviews result in 5% higher wages – 3rd year in a row.
• ISK 368,000 per month in total salary vs. ISK 351,000 per
month for those who don’t participate.
• 60% of union members participated in a salary or performance
review in 2006.
• Men participated more than women in 2005 and 2006.
• Those with higher education are more likely to participate.
• Younger employees more likely to participate than older.
• Women are more likely to use salary survey information.
• More education – more likely to use salary survey data.
• 77% of those who participated received a raise – a dramatic
change over the past few years.
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10. Information from the VR Trade Union
Highest wages are in financial, computer and other specialized
services sectors
Average total wages – change from 2006
• Wages rose between 9% - 13% over all sectors.
Larger companies – higher wages
• Salaries were 11% lower at firms with less than 20 employees vs.
firms with 100 employees or more.
• The biggest difference was among managers or 18%.
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11. Retail services salaries went up
the most (VR)
Avg. Total Change
Wages from 2006
CEO’s and other Senior
565.000 15%
Managers
Directors, managers 545.000 8%
Lawyers 511.000 5%
CFO’s 489.000 8%
Business grads 486.000 15%
Cafeteria workers and
242.000 12%
journeymen chefs
Receptionists 238.000 10%
Retail workers 233.000 29%
Grocery store clerks 225.000 1%
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12. VR salary survey results (example)
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13. How Do You Determine
Wages?
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14. Performance Factors
(according to the bargaining contract)
• Work during special hours
• Job tasks and demands
• Accountibility
• Education
• Work completed
• Competence
• Personal drive
• Flexibility/ability to deal with
other tasks
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15. Are you a valued employee?
• Positive toward changes
• Deals with weaknesses – exhibits confidence
• Goes beyond the job description
• Uses the company to develop own competence
• Makes the job a constant opportunity to learn
• Is a risk taker
• Knows and understands the firm’s needs and values
• Takes on as much responsibility as possible
• Positive and contagious attitude
• Follows up on ideas and suggestions – shows initiative
• Works hard and doesn’t waste time
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16. How Big Will the Pot Be? –
consider...
• Inflation and wage index hikes over
the previous 12 months
• Other bargaining agreements
• Costs and earnings of the company
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17. Price and wage developments
(Statistics Iceland)
Wage index for major employee groups 2005-2007
Employees in general labour force
Change from the previous year(%)
2007 2nd quarter 11.7
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18. Employee Review Worksheet
Employee:____________________________________________________ ID #:__________________________
Position:______________________________________________________________________________________
Current salary:_________________________ Other arrangement/perqs:_____________________________
Goals/accomplishments over the past year – contribution to results:
a. ___________________________________________________________________________
b. ___________________________________________________________________________
c. ___________________________________________________________________________
d. ___________________________________________________________________________
Other factors to consider:
a. Wages in comparison to others & the market e. Market demand for his/her skills
b. Competence – special or high value f. Special hours of work
c. Wage hikes in past g. Level of responsibility
d. Ability to assume more responsibility, promotion h. Education
Recommendation:
Monthly salary to: ____________________________________________________________________________
Perquisites/work arrangements: _______________________________________________________________
Signed: _______________________________________________________________
Position: ____________________________________Date: _____________________ App. HR _____________
Decision communicated to employee (date): ___________________________
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19. What Can We Offer?
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20. Total Rewards
The importance and value of these factors vary by sector,
company, employee life styles and ages
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21. Wage Composition
•Base pay
•Contractual obligations -
vacation, tenure, raises stipulated
in bargaining agreement, pension
•Performance-based pay
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22. Examples of Perquisites
• Vacation days • Business credit card
• Employee cafeteria, coffee • Entertainment budget
bar, snacks • Personal use of
• Raises tied to cost of living corporate facilities
index • Sign-up bonus
• Lump sum upon reaching • Grants for
certain years of service education, wellness
fees
• Store discounts
• Car, cell
• Work clothes, cleaning
phone, computer, VP
services
N, etc.
• Interest-free loans
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23. Popular Perquisites
- VR findings -
Cell phone 35%
Fitness centre grant 35%
Phone subscription 32%
Store discounts 20%
Net services subscription 19%
Automobile costs 15%
Education grant 13%
Home computer from employer 11%
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24. Work Culture/Environment
– Recognition – Cultural factors
• Service awards, praise, in- • Management
house newsletter, etc. style, diversity, level of
formality, communications,
– Work-Life Balance
empowerment, trust, etc.
• Flexible schedules, sports
facilities, massage, financi – Environmental factors
al • The job –
advice, childcare, various challenging, resources, vari
services through employee ation, co-workers.
association. • Work facilities & conditions
– Personal Growth • The firm –
• Training, succession products, image, market
track, mentoring, feedback position, drive, strategy
, problem solving group
participation, etc.
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25. Total Rewards List (example)
Benefits to Employees
Benefit Value
Note: Employees pay a lunch
Lunch and snacks (savings) 15.602 perq tax of 480 kr. per meal
Clothing allowance* 3.750
Life insurance 1.500
Debit card transaction fee (savings) 650
Transportation stipend* 1.500
Gym and sports stipend 2.500
Sickness insurance 1.500
Yearly eye examination 500
Summer cottage rental (savings) 1.000
Education and training 6.250
Performance bonus (variable)* 8.333
Total Benefits 43.086
*upon permanent hire
Employees receive discounts at a variety of stores, stipend for purchase of prescription
glasses*, special terms at banks, interest-free computer purchase loan, etc. that individual
employees use in varying ways between months and years.
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26. Negotiations
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27. Key Points
• Be positive, have conviction
• Communicate clearly: What!
• Explain: Therefore!
• Discuss any matters that remain
unclear
• Get acceptance: Can I count on you?
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28. Concluding the Discussion
• Summarize the final points and
confirm that you both are in
agreement.
• Sign the document – send to HR
• End on a positive note
• Revise the employment contract?
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