It is a new year and many employees will ask for their salary increase. It was a good story for previous years to select several employees and giving them a nice salary increase in the beginning of the challenging year. Year 2010 will be extremely challenging and the employees can expect no salary increase, they can be lucky to receive some job from their manager.

The employees will have to continue in being patient and not expecting too much from their manager. The employees will have to live on the same personal budget as they did manage to live in 2009. The money is not that bad. They will survive.

The economy and we enjoyed several year of the unhealthy growths and we made a lot of debts. We are called to pay back those debts and the organizations have to focus on two main initiatives:

• Cutting the debts
• Innovate the product lines

The manager will have to motivate the employees to focus on the main two initiatives of the organization without giving any financial motivation (except the base salary). The manager will not be Santa Claus coming at the end of the month giving the extra money to employees.

The bad role of the manager will continue through 2010.

The salary negotiations were so easy. The employees expected to get a high salary increase, the Finance guys projected large salary increase in the budget projection and the Board of Directors agreed to pay a price for the success. It changed last year. We have to be cutting our costs, Guys. The message was pretty simple, but the solution was painful.

The salary negotiations for 2010 will not be easy. The employees expect to get at least some salary increase. The Finance guys expect to continue a nice trend of the cost cutting. All the players remain the same.

The employees believe they invested a lot into the future of the organization. They worked hard. They received no bonuses for 2008 and 2009. They did not receive any salary increase in 2009. The newspapers are optimistic about the future of the economy. They want to be recognized and they want to receive some salary increase in 2010. It is a starting point for the discussion about the salary increase in 2010.

The Finance guys believe the economy will not get better in 2010. They believe the recession is not over and the organization will have to cut the jobs and costs to keep competitive on the market. The Finance guys are usually right, when it comes to the decision of the top management.

The HR Management has to find the right compromise for the salary negotiations 2010. The employees have to be kept conservative about the idea of increasing the salaries quickly. They have to expect the salaries will be kept flat, but they should not be lowered.

The employees can be right and the economy can improve. But there is a competition running for the winner in the industry and the organization wants to be a successful participant. The organization has a chance to buy its its less lucky competitors.

The HR Management has to be careful in the salary negotiations 2010, as the job market is still full of people willing to be employed (at any price). The job market can change dramatically in 2010 again and the expectation of the high salary increase is completely wrong.

The bonus should motivate the employee to reach the challenging goals. The financial crisis and the recession showed, the bonus does not have to motivate automatically. It can pretty easily de-motivate the employee when there is a clear mismatch between the goals and the reality.

The progress of the recession was quick, that the goals did not reflect the reality, but they were constructed on the too optimistic expectations of the top management about the growth of the market and the organization. The employees felt happy for few months, but they discovered quickly the unreal targets.

The unreal targets do not motivate to work harder, to reach higher goals. They just motivate to not to work as the employee has no additional income from any effort, because everything stays below the target given.

The management has to encourage the managers to adjust the goals, but the management has to keep the goals financially secure, which is not an easy tasks. The organization has to secure its cashflow and too soft goals can be a real damage.

Many organization showed a lot of the creativity in the adjustments of the goals as the employees can feel the organization cares about their personal income. The creativity will be paid in the spring 2010.