I have yet to meet a manager who likes to talk about compensation with their employees. It’s a challenging and complex topic that directly impacts employees’ livelihood – kind of a big deal.
Much of our business success is built on effective communication. For employee compensation, this is especially important.
Our communication must not only inform employees of how compensation works, but also send the message that they are equitably valued.
Year-end often brings about an opportunity to talk about compensation. Go into that next discussion feeling confident and ready, reducing the urge to skim over it or avoid it altogether.
Tips for Effective Employee Compensation Communication
- Prepare, prepare, and then prepare some more. These are emotionally charged conversations — come prepared! Compensation conversations are an opportunity to communicate to an employee how we perceive their value, and there’s nothing more personal than that. Make sure you have the data, training, practices, etc. needed to clearly and confidently talk about pay.
- Paint the Big Picture. Compensation is a term that can cover many things – base pay, bonus, rewards, benefits, and perks to name a few. Start at the highest level, then break it down to each of those components, explaining how each one factors into the total compensation equation.
- Make the path forward clear. Everyone wants to make more money, so after they understand how they are paid today, share how they can impact their future earning potential (higher level job, more or different responsibilities, etc.). The moment someone feels like they have no future path, or the path is ambiguous, they begin to feel helpless.
- Be direct and also empathetic. Compensation is personal. It can impact whether people are able to move into a larger home, buy a new car or go out for date night more often. That said, if you’ve done your homework (i.e. compare pay levels to the market), then you don’t need to be apologetic.
Be empathetic, but also direct, in any compensation related discussion. Own the discussion and resist the temptation to blame others in positions above you for the compensation decisions made.
- Communicate early and often. If it’s not already in place, create an active feedback loop so that communication doors stay open. Communication makes a difference between an employee fully understanding how their pay is set and one who creates their own story in the absence of facts (9 times out of 10 the story they developed about their pay is inaccurate). Don’t leave gaps in the story – communicate needed information to fill them.
Like death and politics, talking about employee compensation is unavoidable, so we need to get it right. Putting our employees first and prioritizing a communication strategy that is sensitive and empathetic will reinforce the message.
Go forth with confidence into your next discussion around pay. You’ve got this!