5/1/13

Why Won’t Your Company Give You More Money? Your HR Knows But Can’t Always Tell



One all of the most important concerns for all employees is money. Let’s face it – that’s why you are working, right? The number of people that have other income sources and work only for the pleasure of it is very low. Most of us work for the money: to support our families, to buy a house, a car, to buy nice stuff, to go on vacations, to prove our social status, to feel important…

I am also sure that you must have tried at least once to get some more money at some point in your career – and you did this by going to discuss with your manager, by quitting your job and by getting a new one or by applying for a promotion. A lot of times you have been told NO when you asked for more money. Ever wondered why?  I’m sure you have… the reasons are multiple, but I will deal here with those that have proven background. So, let’s begin…

1.       Huge social taxes that companies pay to the state. Besides your base salary (out of which you pay some income taxes), the company is overwhelmed by other taxes on salaries as well. Sometimes, just for you to get 1 USD or 1 Euro, or whatever, your company needs to pay 2 more to the state. This is overwhelming and sometimes companies pay money to the employees on the black payroll just to avoid those taxes. It’s not nice because those taxes go to the Retirement Office, to the Health Office or to Unemployment Fund for unemployed people, but sometimes companies have to in order to survive.  Here are some examples of taxes paid in Europe: UK and France – 26% (it means that for each 100 pounds or Euros in the employee’s contract, the company pays 26 more to the state), Germany and Austria – 30%, Italy – 32%, Norway – 36%, Denmark – 41%, Belgium – 43%; all these are huge amounts for a company to handle;

2.       Global Company Policy to lower costs – it’s no longer surprising to anybody that companies exist for profit – not for charity, not to make employees happy, not to make the world a better place – profit is king. So, don’t be surprised when a huge corporation announces that it closes a 2000-employees plant in Western Europe to move it to India. Imagine you work in France, you have asked for a salary raise but they just won’t give it to you? Still wondering why? Well, think that employees in India accept salaries 10 times lower than yours and are happy. Don’t be surprised if in a year your job will be transferred there. Eastern Europe and India and now hot locations due to the low level of salaries that people accept. Sometimes, it goes even further. Renault – Dacia in Romania has unofficially started thinking about moving their plant to Morocco because Romanian workers have asked for more money and costs in Morocco are even lower than Romania – workers in Romania earn around 300 Euro/month. Guys in France, what do you say? 300 Euro started to be considered too high for the company to be profitable. Sad, isn’t it? But let’s face it – the group doesn’t care about any of you in France, Romania or Morocco. They just strive for profit. If Mars will turn more profitable, they will find a way to move there;

3.       Global Company Policy to lower the number of older employees – this is sad and disturbing but it happens. I must admit that this measure is currently closer to me than you may think – this is the target of our HR department for this year. The idea is to accept a certain rate of attrition/turnover just because this means older, more experience employees with higher salaries will be replaced by young people that are just learning and who obviously earn less. Nobody cares that all these people need to be recruited and trained. It’s not the job of VPs or top management – it’s the job of local HR and local managers and as long as profit and money keep coming, which VP do you think cares? If they are on their yacht somewhere in the Caribbean, they don’t care. Do you get it now why you are not receiving more money? Keep asking and asking and you will be welcome to leave. They will replace you with someone who accepts less money.

4.       Top managers get annual bonuses as percentage of company savings – this is disturbing but true. I have faced it in one of my former companies where management used to cut a lot of the sales guys’ bonuses just to make annual savings higher. Everything in the company was very carefully monitored – even office supplies. This is a fact and it happens around you more than you think. And since your manager may get a higher bonus if he saves more, do you think he’s motivated to give you a pay raise? Stop dreaming…

So, guys, sorry about this bitter article – this is just a dose of reality for those who still dream of a pink corporate world. Wake up! It doesn’t exist. Nobody (except those who work around you - your colleagues, your direct manager sometimes, your local HR) cares. You are just a small gear in the corporate mechanism that produces profit. You are replaceable if you break down…

Be back soon hopefully with a more optimistic article.
Take care,
Geo