Magazine article New Zealand Management

REMUNERATION: Redundancy and Your Next Remuneration Package - Making It Work for You

Magazine article New Zealand Management

REMUNERATION: Redundancy and Your Next Remuneration Package - Making It Work for You

Article excerpt

Byline: Janet Ison

Economic downturn forces everyone to take stock, to review both their current situation and future plans. You may be doing exactly that sort of re-assessment for your company given current conditions Co but now is also a good time to do it for yourself. If you have been made redundant, this is a potential opportunity to re-orient your career. At the very least you need to be prepared to face the usual round of recruitment agencies and interviews.

Even if your own position is fairly secure with your current employer, you may well be called upon to take up new responsibilities or re-focus your role. It will do no harm to think ahead, beyond the next year or so, and the key element in preparing your package negotiation stance is basic research.

Here is a checklist to start you off:

Getting the Facts

Your first reaction to an impending change will be to scan the newspaper ads and browse the internet in order to get an idea of what jobs are out there and how much they might pay. My advice is to postpone that sort of research until you have an accurate idea of your current situation.

The initial question is the most obvious, but one you will probably not be able to answer straight away: what is the value of your most recent remuneration deal? No, not what you are paid, but the total cost to your employer of the whole package? Unless you are paid totally in cash, you need to know the full value of the benefits and perks you have received.

Your employer may provide a Total Remuneration Statement, but check how the items have been calculated. Does it reflect the actual cost to the employer of the benefit Co including a hefty discount on the retail price which you may not be able to negotiate as an individual customer? For instance, how much will it cost to keep up your health insurance, or your car? Remember also that you have to allow for the income tax you will pay if the FBT component has not been computed.

Secondly, examine your remuneration history over the past few years.

Co How did your salary progress, and what benefits did you add during that period? What percentage of the increment was related to cost-of-living adjustments, and what amount was attributable to changes in your job or increases in your personal accountability (budgets, staff etc)?

Co How much did you receive in variable pay, both short-term and long-term.

Co What was your average annual bonus or incentive payment over the past few years, and on what basis was it calculated? Do you know how much, for instance, was related to the companyCOs overall profitability and how much to your individual performance rating (or your target earnings if you were in sales)? How much variation was there, year on year?

Co What long-term incentive schemes were in place? What was the annualised value to you, and the average payout after however many years? Did the scheme involve share ownership Co either a distribution of shares or share options? What was the risk involved? Co that includes not only within the scheme itself (eg, options being much more risky than a distribution of actual shares) but also the environment in your industry. In other words, were long-term incentive payments realistically achievable on a fairly consistent basis, or was the distribution likely to be irregular as a result of volatile profitability?

Co Is it likely that your total remuneration package was higher than the market median (your companyCOs policy, or you have been with the same employer for a long time)? If so, do you need to revise your expectations regarding what is achievable in the current market?

Analyse Your Situation

Once you have gone through these questions, you can establish your own C[pounds sterling]value statementC[yen] with both the fixed and variable remuneration components.

Fixed remuneration covers not only the salary-in-the-bank but the cost of the benefits you need to continue your lifestyle (car, health insurance, etc). …

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