The start of a new financial year is typically the opportunity for employees and managers to conduct mid-year reviews, performance appraisals, and salary negotiations. But with unavoidable cost-saving measures in place amidst economic uncertainty, most employers will be tightening the purse strings this financial year, even if things start looking more positive than the first half of 2020.

Between headcount cuts, reduced hours and an unpredictable business outlook, businesses will need to navigate salary negotiation with extra sensitivity and care this year.

In this post, we explore 4 key considerations for how to negotiate salary with your employees during a downturn.

1. Arrange for a ‘face-to-face’ meeting

The workforce is currently operating with a mixture of face-to-face hours and WFH hours. While remote management is suitable for most tasks, it’s imperative to have these important discussions ‘in person’ whenever possible, rather than resorting to less formal or less secure channels like sending a salary negotiation email.

If the majority of your team is back on deck in the office in some way, arrange to have the salary discussion face-to-face. If this isn’t possible, opt for a video call. This means there’s less room for misinterpretation. Video meetings also allow you to demonstrate a greater sense of empathy towards your team, and respond to their verbal and non-verbal cues.

2. Revisit KPIs and performance criteria

Most annual reviews and salary negotiation discussions are conducted off the back of fixed KPIs. However, in these changed work conditions, there’s a good chance that many of these objectives may be outdated or even obsolete.

It’s unfair to hold employees to the same standards and output as you would have had pre-pandemic. Instead,

•    Focus on how they have adapted to the changed environment, 
•    Acknowledge their contribution and resilience,
•    Check in on how they are feeling, and
•    Ask them where they need support.

These types of conversations allow you to get a better gage on how individual members are feeling, while also showing that their contribution is valued and appreciated.

RELATED: Why employee resilience is crucial to business continuity

3. Be honest and transparent

The reality is that many businesses have been forced to keep employees on with JobKeeper, or ask employees to reduce their hours. While the JobKeeper extension is welcome news, the reduced payment rate means that many people on JobKeeper will be earning even less than they are now, in addition to tightened eligibility criteria.

The most important thing is to be clear and transparent with your team members on what to expect. If they need to remain on JobKeeper, then tell them exactly what that entails and how long they will be on JobKeeper for. If there is a freeze on salary increases or if you need to request a voluntary pay cut, let them know. Honesty is the best approach.

At the same time, demonstrate that the business is making every effort to keep team members on board and weather the storm together. Explain what other measures have been put in place to preserve cash flow, such as the executive committee continuing to taking a pay cut, or maintaining the pause on all non-essential spending. 

4. Offer opportunities for upskilling

While you may not be able to offer employees a pay rise, it is possible to provide value and motivate staff in other ways. Have an open and honest discussion with your team on their goals for the short to mid-term and the areas they would like to upskill in. 

RELATED: Why upskilling and learning during disruption is crucial

Look for ways to help them achieve this, or to provide employee benefits that can support them in the later half of this year. For example, it could be pairing them up with a mentor, or giving them the opportunity to lead a new company project in the field they are passionate about. 

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