In one of my recent posts, I explained why employers should be careful how they use devaluation as a factor in setting changes to salaries. One reader sent me a long note describing her dilemma in managing the merit budget approval process for international locations in her company, specifically, how should she take inflation into account? I realized that my conversation with this reader would probably be of broader interest, so I decided to write this follow-up post.
The fundamental question is:
How should inflation be considered when determining salary increase budgets?