About indexation of wages - a harsh, almost cruel reality

[DARPA]

Employees of any company like indexing wages. Nothing else is doing, and again - and salary increases. Not much, but if every year, in a few years it turns out well. As a rule, indexing wages somehow correlated with inflation, with the growth rate of staff to life, so employees have a feeling that it strongly interconnected. But in fact it is not. Generally not.
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The level of payment of your work does not depend on the dynamics of prices for food, how much you have in the care of family members and their relatives. It does not depend on whether you have taken a mortgage and what interest you are paying on your mortgage. Does not depend on whether you need to pay for rising in price of fuel and service for your car. This can humanly worry your head, but the decisions it takes a completely different logic.

It sounds harsh, and even is tough, but it's better to face the truth, than to feed the extra illusions that will break the harsh reality.

How harsh reality is harsh can be determined by a few simple lines.

Five signs that indexation BE
They are so obvious that they always forget about. But it is precisely these attributes affect the logic of the head of any company when he makes a decision - to index wages to all employees or not. This logic can not agree, it denied or, moreover, to hate, but it is precisely this logic allows companies to maintain stability and ensure long-term business development. Which ultimately leads to economic growth, employment and thus wages. But in the moment, this logic may conflict with the expectations and needs of employees. This is our life!

And So,

The first sign: the economy is not all right
The current state of the economy and the expectation of where the situation will develop, greatly affects the mood of business executives. If the trend in the economy is negative, then the assessment of business prospects, which is responsible for the head to be likely to be negative. This means that he knows (it seems so and, as a rule, he was right) that will be worse. And in the company and around. This means that many companies will reduce their activity, to fire people on the labor market and everything will be different. Indexing wages and raise the inevitable and does not depend on the income level of the company's expenses (salaries - is mostly this cost item) due to the fact that the downside risks to the financial situation seriously increased - stupid, pointless and dangerous.

The second sign: income and margin businesses do not grow
Companies pay a salary of income. This is the harsh reality. And, in addition to salary, oddly enough - you certainly guessed, but somehow did not want to think about it - you have to pay whatnot. These costs are often no less vital to the company than the salary of its own employees. And if revenues do not grow on any significant value, then take the money to increase wages in general nowhere. They simply do not. You can, of course, reduce the cost of sale or investment, but it is tantamount to suicide. And CEOs little resemblance to suicide. With rare exceptions, and then, only in situations where the features of the third act.

The third sign: the precarious financial situation the company
Pay close attention to how the financial position of the company where you work. Because then you better understand the logic of the head and the decisions that it takes. If the company is heavily in debt, then afford to increase wages and reduce profitability, and worse - to increase the losses can not afford not that leader. He lenders do not give. And if it is imposed on the crisis, during which more and interest rates and, consequently, the cost of servicing loans rise sharply, then there is not something that indexation should not expect, here it is easy enough comes to real wage cuts. How Come? Yes, because in such cases there is a question of life and death, and during these periods tend to forget about everything else. The main thing - to survive. And the head of the sacrifice will bring much, only that the company has experienced and survived in difficult times for her. Well, who does not like - he has the right to decide and leave the ship, which seems to him drowning.
That's the harsh hopelessness your head. But where to go - if you give up the slack now and raise salaries to all employees, then a not very long period of time, these employees are left without salaries. As the chief executive.

The fourth sign: competitors in the same position
Companies in one form or another are fighting for quality staff working with them. The most dangerous thing for us - is when a competitor in that situation can not afford to raise wages and attract more high-quality professionals. Long delay will lead to the fact that the level of staff in the company will degrade, and it is dangerous.
However, if the competitors of the company's staff are in the same situation, do not plan any breakthroughs and revolutions that require fast attracting a large number of people, the head of the company where you work, you can sleep peacefully. He knows that no one anywhere in droves not run - because the flea change makes no sense.

Fifth sign: dress really normal
Salary is always in the perception of employees is not enough. Needs, as a rule, exceeds the capacity. But if you work in a company that pays good money, comparable with the money paid by other companies, then expect that happiness in the form of wages will be more than a little naive. It's like advertising washing powder, which defines one of the most important philosophical questions in business: Why pay more if all the same? Executives usually enough information by how he underpaid or overpaid its employees. This question he asks himself regularly. And if the answer is in his head, "I pay the same amount", the answer to the question "Should I raise the salary (pay more), when you pay on the market (all the same)?" Is also quite obvious. Such is the nature of life and efficient business. And the more often the head asks himself the question - if he does not overpay for what he "buys" for business - the more efficient, more dynamic and more, this is the business. Well, you also do constant monitoring of what is happening with salaries. Fortunately, we have in Russia poobsuzhdat who gets how much, and where, is not nonsense, or something offensive. In the culture of Americans, it is considered bad form, and we have - please. Filters only bragging to your friends, who are often to be positioned, wishful thinking. And do not believe the rumors - just the facts. Salaries and indexing - a very sensitive thing, so around them much more fiction than truth.

But after you've spent a reconnaissance of your company and the situation around, it is necessary to draw conclusions from this.

How to determine the probability of wage indexation
So, how to use these attributes to determine the fate of indexation of your salary in the company.
If true:
All five - what indexing? Are you crazy? Wait for hard cuts in real wages and harsh cuts. No options. A matter of time. Even if they were, these cuts, but now only a pause before the next step.

Four out of five - the likelihood of indexation is negative. That is in any will pay cut. A little easier than if fulfilled all five signs, but the head will be forced to choose either a strong reduction in salary or a strong reduction of staff. A combination - but if hard layoffs, the pay cut will not be much. Not bad, but dangerous for the individual employee. And vice versa.

Three out of five - are no longer so sad. But indexing will not train rather salary reductions will not, as well as deep and hard to staff reductions. Everything will not be so sad if only three features are not features of the third hit. If your company is experiencing financial difficulties, then the situation will develop according to the scenario four out of five, or if things really bad, then the scenario all five.

Two of the five - here you can relax. Reduce wages and the number is unlikely. The probability of indexing still vanishingly small. Vanishingly small - it means "zero."

One of the five - you are not currently working in Russia. Or simply unable to soberly assess the situation in which you were and the company where you work. In any case, you're just far from the life of a happy man.

That's the harsh truth, but that is no reason to give up, because any employee of any company there is a serious chance to increase their income in the foreseeable future.
I will write about it soon.


I wish you all to be himself architect of his own well-being, rather than wait for the mercy in the form of indexation of the employer.

Your Mikhail Slobodin

P.S. For those who believe that regular wage increases raise the productivity of employees, I want to upset that this is not supported by long-term practice. Moreover, overpaid employees relative to the level prevailing in the labor market, creates a lot of side issues for a company that overcharged. Such is human psychology. And from it will not go away.