We have just started the annual review process and the whole reward team has to get stuck in. Each of us has a part of the business to partner through the process. To me that means chivvying each management level along to complete their planning, so the next level up can start messing about and changing everything. To be honest, I am slightly resentful of having to do this on top of my usual benefits activity. I mean, can’t the folks responsible for compensation just get on with the job without help from the rest of us during our busy time?
Then, to make matters worse, things suddenly kick off in Hungary. Its annual review budget is just 4%, but inflation there is running at over 20%. Because the compensation team are so ‘overwhelmed’, Big Bad Boss asks me to step in and sort them out. Basically, I get to do a bunch of extra work so someone else does not have to. Great. Who helps me when I’m overwhelmed?
Dealing with inflation in Hungary
Big Bad Boss suggests I speak with Tamas, the operations manager in Hungary, to understand the issue. Tamas looks terrible. He tells me several of his team have had competitive offers and because the cost of living is up by one fifth, they have to look at moving just to feed their families. It is a familiar cry. Inflation is biting on a global basis, but there are a few countries where it has hit worse than others. I was dragged into a flurry of activity around hyperinflation in Turkey last year, and I guess that is why I’m on the hook again now. Sometimes, it really does not pay to do well at a task; you just get asked to do more of it.
I cannot decide whether the Hungary issue is just the usual bleating about poor pay budgets, or if it is more serious. I decide to check the attrition figures. That helps me to build a case: theyha ve lost 20% of employees in the last six months. Ouch.
My problem is the annual review budgets are set in stone at this point. I would put it more strongly than that; they are buried in a locked box, set in stone, under a giant pile of more stone. There is absolutely no chance of getting a higher budget for Hungary. None.
Market data
But that does not mean we cannot do something. The first thing I do is take a look at market data for the employees remaining. Budgets have been tight for several years, and the Higher Beings tend to focus their attention on the bigger populations such as the US and UK. Our Hungary market is tiny in the scheme of things, so it has slipped further and further behind market. I have enough data to justify a market review for almost half of them.
Still, Tamas is not happy. One of his key managers has just handed in his notice. Tamas reminds me that there is a new customer project being launched in Hungary to make the most of this low-cost location. I can see the importance of a stable team to the commercial project, but at the same time if we inflate everyone’s salaries above market it will not stay a low-cost location for long. Tamas embarks on the usual conversation about market data. Clearly our market data must be wrong, out of date, or just plain stupid if people can paid get more elsewhere. I trot out my usual answer that organisations rarely link pay directly to inflation, and there will always be organisations paying more and others paying less. We target our pay at the median. We both know I am just spouting corporate excuses.
Following the approach we took in Turkey, I propose a one-off inflation support payment to show the team that we are listening. This is going to take a lot of negotiation with the finance team because it does not have anywhere creative to book such expenses. I have a call with the finance team for the new customer project. Do we have any budget for extraordinary costs associated with setup? We do. Excellent. Where better to stuff some extra costs to keep a happy management team in place?
It is not enough, it never is. Tamas has had calls from recruiters himself. I cannot tell if that is true, but I do not want it on my conscience if he leaves us in the lurch. I propose an additional retention plan for Tamas and a couple of other key players. That should stem the tide of attrition for a while.
Seeking sign off
All of this will need approval from the Higher Beings. I put together a nice little presentation for Big Bad Boss to take to their next meeting, but he insists on getting me to present to them directly. Some might see this as great exposure. I know Big Bad Boss too well; if he thinks it is something they will like, he will take it. If he thinks it will get a roasting, he delegates it to me.
And a roasting I get, but I fight them off valiantly, quoting Smarmy Consulting pulse survey on company actions in Hungary and inside information from a direct peer organisation. By splitting the payments into three small, targeted chunks, the costs seem smaller. Indeed, they are small; compared to other European countries, even the senior managers in Hungary are relatively cheap. I come out of the meeting with approval to go ahead.
Uncharacteristically, Big Bad Boss messages to say well done. Even one of the Higher Beings emails to say what a great presentation it was. I am in shock. Positive feedback just is not typical practice.
I do not get to feel pleased with myself for long. Big Bad Boss messages me to say as that was such a success, perhaps I can take a look at the continuing inflation situation in Egypt. Sigh.
Next time…Candid helps with data audit