Perspectives on remuneration in times of high inflation

You have probably seen it pass by in a job posting. Perhaps your organisation also uses the term 'a competitive salary'. When you read this, do you know what the amount is? No. Well, neither do we. Recruiter Jesse Geul¹ writes in a column for Intermediair that this is not crazy. After all, most applicants and employers themselves do not know either. His advice, therefore, is for employers to be transparent in job ads and include a clear salary indication. This is easier said than done. Because how do you determine such a salary indication? And how do you deal with challenges such as high inflation? In this blog, we take a closer look at this by sharing different perspectives.

Getting the basics right

Salary is an important part of the total remuneration package and an essential part of any employment relationship. It provides employees with a (fixed) income with which to earn a living. Employers it provides an important means of recruitment and retention. That this should be in order needs no further explanation. Whether the salary is in order depends on internal and external factors. Thus, you can ask yourself the following questions: Does the current remuneration policy fit with our mission and vision? Does it fit our corporate culture and its values? Does it comply with laws and regulations? And how do we reward relative to other organisations?

Market conformity: high, low or average pay

Testing where your organisation's salaries are compared to other organisations can be done with a benchmark. This looks at various variables, such as function, industry, customer value, region and company size. The data from the benchmark shows whether salaries within your organisation are high, low or average compared to other organisations. Do you always have to pay in line with the market or higher? No, in our client base we regularly come across organisations that deliberately pay below market wages. They compensate for this, for example, with a good package of fringe benefits or an appealing purpose.

Rewarding in 2023

Current inflation, which has been above 10 per cent for several months now², makes the topic of 'salary' a hot topic. Research by Visma | Raet shows that more than a quarter of respondents are concerned about their salary. They wonder whether their salary will allow them to make a permanent living³. These concerns can run so high that they eventually lead to (long-term) absenteeism.
There are also respondents who indicated that without a pay rise, they would not be able to stay with their current employer.

You would almost think the solution is simple. However, compensating for inflation by letting wages rise just as fast creates new problems. According to employers' association AWVN⁴ current wage increases are already historically high. While employers do want to give extra pay, they are also cautious as they face higher raw material costs, higher energy bills and a tight labour market. A structural wage increase is not always the right solution for that.

Want to know more?

Does your organisation use the Baarda model and would you like to know more about rewarding in times of high inflation? An online meeting is scheduled on 11 November from 14.00 to 15.00 in the Baarda Community. During this meeting, we will present our own benchmark report, the Baarda Salary Standard 2023, and discuss various solutions.

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