Pay bargaining: how to fight for a pay rise
Companies are announcing their wage increase agreements for this year, but what about those places where there is no automatic increase or union to push for more pay. We spoke to Aniko Pethő, professional manager at headhunting firm Aarenson, about the potential for a pay deal. How is it worth asking? What kind of arguments should we put together? Should we say how much, or wait and see what the employer offers?
For the lucky ones, the pay rise is automatic. But how is that?
Anikó Pethő: This is more typical of the big multinationals, which have a policy on how inflation-linked the increase is. They set the targets, define the set of rules, what the increase depends on and how much. Does it depend on the previous year's result or is it more inflation-tracking? What we have seen in companies is that they raise the levels of managers and second-tier managers differently. Often, the pay increase for managers is lower than for team members and subordinates. So, for example, a 5 to 7 per cent increase for managers, while a 13 to 15 to 17 per cent increase for subordinates. If the increase is automatic, then, as soon as the KSH data is received, the salaries will be increased by the amount of the increase.
For what percentage of firms does this exist?
P.A.: In the order of 25-30% of them automatically raise wages. But there are also some that don't do them at the beginning of the year, but for example, in a US company where the economic year-end is in April, there are pay rises at the end of the quarter.
How can the remaining three quarters of companies negotiate wage increases, what can workers think about?
P.A.: If there is no such centralized measure, there is a well-established strategy for how to go to the employer to go over this year's plans, what to prepare for, what to adjust to. Obviously, if they tell us what's going on with new projects: are they coming, are they not coming, will there be an expansion or have we laid off employees, and if so, but they are not being replaced, so the workload is increasing, what happens etc. (In fact, there have been a lot of downsizing in the last 1-2 years, which has affected a lot of organizations, teams, and many have not replaced people, but have spread the workload around.)
We need to see how and in what ways the quantity and quality of tasks in our own positions are changing. In other words, we must first "look in the mirror" to see what tools we have at our disposal and what we can do to fight for our interests. First we need to get on a clear platform, if there is a possibility to have such a discussion with the manager, so that we can see how we personally are affected by the situation of the company. Secondly, we should ask for feedback on our work, how they see that our results so far are correct, in what areas they suggest directions for improvement. Where do they see additional potential and how can we build on our existing capacity? This could be a subconscious feedback that they are counting on us and see a reserve that can be channelled into the benefits. This could make it easier for us to get a recognition package such as a pay rise in proportion to our income, or some kind of bonus. So it is not a good idea to go to the manager and say that you want a 15% pay rise because your friend in the same job in another company earns that much, but rather to justify what is linked to your person, your skills, your knowledge, your network of contacts, and what the company stands to lose if you leave.
How should we go to our manager, alone or in groups? What are the advantages and disadvantages of each?
P.A.: If we go alone, it has a much more personal message, we can tell them what area I'm going to go into, where I'm going to study, we can discuss if there are any areas they want me to get involved in. Group input can only lead to results if it's because of something that affects the community: a new technology, an innovation that the company is introducing that affects everyone on the same level. For example, when introducing a new ERP system or automation. So it's not lucky, but it's also not typical, that's what trade unions are for, to represent us. It is also unfortunate because if an employer has a negative opinion of someone, it will be obvious to others if it comes out there in a wage negotiation. It's been raised in several places how to come out of this in a positive way, but I don't think you can.
If you've only been with the company for six months and it's the start of the new year, is it still worth trying to negotiate a salary?
P.A.: Anything is worth trying, it is simply a question of whether the need for a pay rise is due to his personal dissatisfaction or whether he really came in with too low a wage and the compromise was to just put his foot in - like the wolf in the door in the fairy tale - and then you can improve his wage afterwards if it is proven. Here, we always start the conversation on the basis of whether there is a professional basis behind that claim.
How do we even introduce the fact that we want to talk to our boss about this? Do we state that we are going to go into this specifically, or do we "fog the issue" by talking about our performance last year and just bring it up there?
P.A.: I definitely think it's good to have a context for this, so it should be a discussion of future plans, or even professional goals, professional vision, and obviously part of that is the salary. We are not being vague with this, because we can make it a bit more personal. Making an appointment is no problem either, many places have these one-on-ones every month anyway, or you can ask for a meeting with our managers. In my opinion, this conversation will be valuable if we don't just talk about the salary, because the salary in itself doesn't say anything. It is useless to increase it if, for example, conditions do not improve or there is a very toxic person in the team and he stays. This has to be treated as one, so that we really get that extra information: do we want a pay rise at all. For example, if they say "we're going to double the workload because there are new products coming to market, but we're not increasing the staff", I might say I'd rather start looking for work, whatever I'm paid, I'm not staying. So you just have to put it in context.
If the worker sees that the context is right and there is a chance to come forward with a claim for a pay rise, what is the right set of arguments to put together, what are the good arguments? Should they focus on the circumstances, i.e. the hardship, inflation, petrol prices, or should they focus on their own performance and usefulness?
P.A.: I think it's worth preparing for this conversation, a little bit of a round-up of our projects from the previous year, if there were any really published, tangible objective KPIs, what we achieved, or any feedback, any kind of benchmarking; what I participated in, what courses I took, who I collaborated with, what skills I picked up over the last year. These should be tuned into and prepared from what I have achieved or where I have made mistakes, how I have corrected them. So not only collect the positives, but also the progress I have made, to be able to see where I have "built" within the company and where losing all this would be detrimental to the company and to try to keep me.
I have had clients who have quit but the employer would not let them quit. They repeatedly asked for time to think about it and started thinking not just about a pay rise but a package to keep that person. Some people they were able to bring back by promising them a pay rise, but there was no problem with the employee's employer, just a pay cut. The other had a problem with the employer, but there a negotiation started. Not all problems are always solved just by a pay rise. In fact, we've seen cases where the candidate didn't leave because he wanted to get a lot of home office from the company and he got it.
Wage is terribly important, we live on it, but if you can't fit in a 20 or 15% raise but give an extra day of home office or flexible hours, you can "widen the field" with that. In addition to these, a commuting allowance can be given as a discount, or a performance bonus or bonus at milestones, but again only in areas where there is a demonstrable result. The cafeteria is already a single supplementary element and cannot be tailored to the individual, just as it is tailored to whom the company car can be given.
Isn't there a fairness-based increase (due to aggravated circumstances)?
P.A.: On that basis, anyone can come in and say it's too expensive, let the company raise the salary. Rather, it is to confirm why I am happy here, why I would stay long term, and what is the minimum I can possibly achieve and what I need to do to achieve it. I don't say the expectation, I start with the question. What do I need to do to get a 10-15% wage increase? Is there a vision for this, are you open to talk about it?
You mentioned 10-15 percent. In light of the less than optimistic employer statements, isn't that a tall order?
P.A.: 10-15% is definitely worth thinking about, 15-20% is said to be almost a quarter of your salary, and 25% is what we usually say when we change positions to another company. Candidates coming from outside have experience of getting a higher salary offer, but inside that 10-15% is realistic, because if you end up with only 7-8%, that's a good bargaining position that he or she is giving in and the company is trying to be flexible.
If we get to that point in the negotiation, how do we charge those amounts? Do we say something or wait until the employer offers something, what is the right tactic?
P.A.: It's always good to start with the boss, but it's common to throw this ball to the other side. It's worth asking, "do you expect any kind of raise, so based on the feedback or the evaluation or our conversation and I was thinking a 10-15%, do you see any relevance in that"? So if we are asked, then feel free to give an amount. Courage is good, but I always say go in with professional humility, because ego can very easily backfire if you 'go in with a big vest' and you are quickly presented with some numbers that don't back it up. It's not good to go in unprepared, and our courage rather than our knowledge is greater. So if we have long-term plans with the company, then by all means, cooperation is the first thing to think about, how we can get to a win-win situation.
No, let's be realistic about ourselves though...
P.A.: That's the most important thing, because as headhunters we get executive resumes that have job seekers looking at around $3-4-5 million a month, while there are 700-800 people applying for a management position in the job market. This is not an exaggeration, I have just photographed that there are 706 applicants for one position and 822 for another. You can make a big mistake if you have been a senior manager for 10-15-20 years and have not had to look for a job, have not seen the market dynamics, are not in touch with the turbulence of what is happening, then you come out 'blind' into the labour market and are simply surprised that nobody needs you for a year or two. Let's look at who we are competing with, because it could easily be that if we quit because of a 5% wage increase - which could mean 50 or 100 thousand forints - then we will be out of work on the labour market for two years and lose 3 million euros a month.
So, if we don't get a good offer now, should we "roll over" or stay quiet and think for a while?
I would say that as a leader we should take a little hold of the chair we're sitting in and be glad that chair is there, because the job market is very slow. A lot of companies have said they're going to rethink in 2025 Q1. Now those same companies are talking about Q2, that the market is not strong, they are looking for a lot of people who are not managers, but rather in the purchasing, engineering, accounting, payroll positions that take three days to get in place anyway. There's no problem in the curricular professions, but I'd be cautious about managers at the moment.
Picture of Anikó Pethő
Our previous article on the subject is Salary rise: how much in 2025