Why 'inflation compensation' is a nonsensical argument for salary negotiation ??
In the current economic situation, with a double-digit inflation rate to be feared, employers and job seekers alike are asking themselves the legitimate question of how companies and workforces should deal with the issue of 'flat-rate inflation compensation'.?
First of all, it must be explained that the word 'inflation' is one of the trauma terms in the collective memory of Germans. Even though nearly no contemporary witnesses of the hyperinflation of 1923 are likely to be alive, the handed-down experience of the 'billion for the kilo of bread' is still in our bones.?I remember the first time I was shown the banknotes with the insane numbers on them and how reverently I held this paper memorial in my hands. And now thinking about it: I did the same thing with my children from primary school age onwards. According to the motto: beware of inflation! Still a true statement.
So it is understandable that hidden emotions are at play. For inflation is associated with the non-functioning of the financial system, mismanagement, lack of planning and anarchy - all conditions that have not been particularly popular so far, at least in Germany.
Nevertheless, or precisely because of this, I think it is time to remind people of a few principles of economic interaction between employees and employers. In this context, the prevailing inflation is a completely different issue, while salary negotiations should rather be about services rendered and their remuneration.??
?Performance pays
Basically, a high inflation rate naturally puts pressure on all those involved in the economic process. Companies pay higher prices for raw materials, goods and and services they buy on the market. Employees also pay higher prices for for everything they consume. This is bitter and fraught with anxiety for all parties involved.
However, companies remunerate their teams and workforces because they profit from their services. Marx called this profiting - in simplified terms - 'surplus value'. An apt?term. After all, what else should entrepreneurs pay their workers than the added value that the individual's performance has for the company?
A flat-rate compensation for inflation, on the other hand, has nothing to do with the relationship between company and employee. It is merely a measure that will be followed by driving a further price spiral. In short: a misguided economic policy.
Performance is rewarded
Since the relationship between company and employee or applicant is a barter transaction - here the work and the added value of that work, there the remuneration for performance and?added value - and inflation compensation has to do with inability - on the macroeconomic side, the policy side - but nothing to do with the actual performance under discussion, it cannot be considered as an argument for a performance-related salary increase.?
What can then be used as an argument? Well, should be one's own performance only.
The only argument for a certain salary level in entry-level negotiations or a salary increase in internal salary negotiations is the added value of the candidate for the company.?A salary demand must therefore always include questions about the productivity or innovative strength of the team member. The productivity or innovative strength of the team member, loyalty towards the company's company's goals and values.
Or in short: What went better in the?better during the assessment period? What can be expected in terms of 'more performance'? So what justifies more money?
Earning what you deserve
Not relying on one's performance and instead using more distant arguments is a very double-edged sword. In times of higher inflation it may be?tempting and seem advantageous. But what if the index falls or settles at half a per cent or one per cent, as many years have had? Do salary cuts then have to follow again? The introduction of a graduated salary analogous to some models in rental contracts? That can't be it either.
Moreover, inflation compensation caps the opportunities of high-performers in particular. What if certain groups of experts were entitled to performance-related increases of 15, 20 or 25 per cent?but the inflation rate was 8 per cent? A waiver in favour of a lower inflation rate? That can't be it either.
Ultimately, flat-rate inflation compensation undermines the performance principle on which market economies are built and which high-performers in particular not only appreciate but actually need in order to be able to perform at their best.
In the current economic situation, with a double-digit inflation rate to be feared, employers and job seekers alike are asking themselves the legitimate question of how companies and workforces should deal with the issue of 'flat-rate inflation compensation'.?
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Performance pays
Basically, a high inflation rate naturally puts pressure on all those involved in the economic process. Companies pay higher prices for raw materials, goods and and services they buy on the market. Employees also pay higher prices for for everything they consume. This is bitter and fraught with anxiety for all parties involved.
However, companies remunerate their teams and workforces because they profit from their services.?Marx called this profiting - in simplified terms - 'surplus value'. ?An apt?term. After all, what else should entrepreneurs pay their workers than the added value that the individual's performance has for the company?
A flat-rate compensation for inflation, on the other hand, has nothing to do with the relationship between company and employee. It is merely a measure that will be followed by driving a further price spiral. In short: a misguided economic policy.
Performance is rewarded
Since the relationship between company and employee or applicant is a barter transaction - here the work and the added value of that work, there the remuneration for performance and?added value - and inflation compensation has to do with inability - on the macroeconomic side, the policy side - but nothing to do with the actual performance under discussion, it cannot be considered as an argument for a performance-related salary increase.?
What can then be used as an argument? Well, one's own performance.
The only argument for a certain salary level in entry-level negotiations or a salary increase in internal salary negotiations is the added value of the candidate for the company.?A salary demand must therefore always include questions about the productivity or innovative strength of the team member.
The productivity or innovative strength of the team member, loyalty towards the company's company's goals and values. Or in short: What went better in the?better during the assessment period? What can be expected in terms of 'more performance'? So what justifies more money?
Earning what you deserve
Not relying on one's performance and instead using more distant arguments is a very double-edged sword. In times of higher inflation it may be?tempting and seem advantageous. But what if the index falls or settles at half a per cent or one per cent, as many years have had? Do salary cuts then have to follow again? The introduction of a graduated salary analogous to some models in rental contracts? That can't be it either.
Moreover, inflation compensation caps the opportunities of high-performers in particular. What if certain groups of experts were entitled to performance-related increases of 15, 20 or 25 per cent?but the inflation rate was 8 per cent? A waiver in favour of a lower inflation rate? That can't be it either.
Ultimately, flat-rate inflation compensation undermines the performance principle on which market economies are built and which high-performers in particular not only appreciate but actually need in order to be able to perform at their best.
My conclusion
With these three arguments, candidates score points in salary negotiations without having to whine about the overall situation and position themselves as confident employees with self-worth :
1. achievements should be described in as much detail as possible: Successes, added value, additional income and efforts above and beyond the usual level.?
2. your expertise must be consciously presented: what can you do better than others, what experience and know-how do you bring to the company??
3. you should present your personality in a holistic way: what makes you an ambassador for your company, how do you build internal and external networks and help your company to be better positioned through your loyalty and identification?
If you succeed in presenting these three factors - performance, expertise and personality - in the salary interview, superiors will perceive your counterpart as an added value for the company.?
Without being forced by any law or asking for compensating of any macroeconomic development:
You will be valued because you are worth it - doesn't this make you also feel differently?
(Sign saying: Patients are asked to bring a briquette with them to every visit due to the coal shortage for heating the waiting room)