Ellen Warden, SPHR, SHRM-SCP
WorkPlace Synergy, LLC
Compensation tells the story to your employees about how you value them. That makes it uncomfortable talking with employees about their pay because there are so many ways those conversations can go sideways. It’s awkward for everybody, but avoidance is not an option.
Talking about money is a challenge because pay isn’t just a number to your employees. They see that paycheck is a direct reflection of what you think they’re worth. Even when you have good news – a generous bonus or well-deserved promotion – discussions can be tough if your staffer’s expectations don’t match reality.
There’s no getting around having those conversations. Here’s how to get the most bang for your buck when you do:
- Discuss early and often. Start the year by discussing compensation. Share your firm’s philosophy—how you make salary, incentive, and bonus decisions—and your total rewards package. Include value drivers like benefits, flexibility, culture and environment, and career advancement opportunities. Talk about goals and what to expect in bonuses or raises when they meet goals—or not. If you check in throughout the year, there shouldn’t be any surprises when you do sit down to talk about comp. Even better, the more frequently you have these conversations, the easier they become.
- Talk about performance separate from compensation. Compensation and performance are closely related but are topics for separate discussions. Any time money enters the discussion; it consumes the process. The employee hears nothing else. Use the performance evaluation for constructive feedback, development, and career growth. Wait several weeks to deliver news about raises or bonuses.
- Prepare. Think through what you’re going to say AND what your employee’s reaction may be. How will he hear your message? What complaints might she have? Even if you think you’re delivering good news, it might be less than she expected. Please write down your main points and rehearse them.
- Express your appreciation. Tell employees how important they are to the firm. Make it clear you appreciate their work and value their contributions. Don’t assume the bonus or raise speaks for itself.
- Share the big picture. How is the firm performing compared with target? With competitors? Explain how raises or bonuses were determined, so your employees understand you’re fair. There can be many reasons a salary increase or bonus isn’t in the cards (or isn’t as much as they expected): the budget won’t stretch that far, their performance doesn’t justify giving them more, they’ve maxed out of the salary range for the position.
- Listen. Let your employee make his case. Does he think you’ve treated him unfairly? Has he heard from peers what others make? Is there something he wants besides pay? Show that you’ve listened, you understand what she’s requesting, and have taken time to consider her request. This approach shows respect, encourages open communication and builds a culture of transparency. Then point the way forward: performance goals to work on, professional development, career growth opportunities, or low-cost employee perks like flex days.
Do you need help designing development plans for employees? Ellen Warden works with BV/LS practices around the country to help them align their HR solutions with long-term objectives. You can reach Ellen at WorkPlace Synergy.