2023 : challenging salary negotiations
In Belgium and France, but probably in more European countries, once every couple of years the media speak about a hot social spring or autumn: on one occasion it is about retirement age, on another occasion it is about people working in health care, their workload and subsequent stress of the job.
It looks like 2023 will be a hot social year irrespective of the season, the driver being the loss of purchasing power by almost every employee in the Western world.
Fact 1: Average wage increases have not kept up with inflation in 2022.
Fact 2 : Scarcity on the labor market is here to stay (blame the baby boomers who exchange work for retirement or the quiet quitting movement).
So, considering these developments, how to negotiate with employees, employee representatives, workers councils and trade unions in the 2023 environment ?
Some suggestions:
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(a)?Acknowledge that employees will most probably have lost purchasing power. Pretending otherwise will make you lose credibility, an essential prerequisite for every discussion/negotiation with employees or their representatives. “Alternative facts” have no place in negotiations.
(b) Explain the impact on the company of salary increases. Do not fall into the trap of referring to margin or profitability. Use practical measures the employer might need to take to manage the financial impact of the salary increases : delaying investments, ?redesign the office to do more with less square meters, cutting in employee events such as the impressive Christmas parties of previous years. Essential is that all messages should be done in a language that is close to the day-by-day reality of the employee. Do not make the mistake to communicate with your employees the same way your CFO would talk with Wall Street analysts.
(c) Understand what is important for your employees – beyond the purely financial aspects - and to which extent you can accommodate that: work partially from home, have flexible working hours, flexibility to have a sabbatical, a more flexible company pension scheme, etc. These are typical items you can trade in to obtain in return a more moderate increase of the salaries. Understanding the other party’s priorities is the rule number 1 in negotiation to get the buy-in of everyone around the negotiation table.
(d) Respect the legal framework in most European countries how you can communicate with employees and their representatives but use informal talks and chats to pass on critical messages. Consider preconditioning early because it can help to create a positive and productive atmosphere for the negotiation. By setting expectations and establishing a positive tone before the actual negotiation takes place, the parties involved are more likely to approach the negotiation with a mindset of cooperation and compromise rather than confrontation. This can lead to better outcomes for both parties, as they are more likely to reach a mutually beneficial agreement.
?For more information, contact us at www.impactnegotiationgroup.com or reach out to me directly.