Talking Compensation With Your Employees

Most organizations don’t trust their managers to have compensation conversations

 

This post originally appeared on Compensation Today by PayScale.
 
Whether you’re a business leader or an HR professional, you know that the employee experience relies heavily on managers. You can’t create a top-notch employee experience without having stellar managers who can effectively train and coach employees, share sensitive information about compensation and performance and recognize employees for their contributions.
 

Yet, most organizations don’t trust their managers are up to the task.

In PayScale’s latest Compensation Best Practices Report, we found that only 10 percent of surveyed organizations are very confident in their managers’ abilities to have tough conversations about pay.

What’s interesting here is that managers feel much more confident having pay conversations than their HR counterparts. While 86 percent of surveyed managers have confidence in their own ability to communicate pay decisions to employees, only 37 percent of organizations share that confidence in their managers.

Oddly, despite organizations’ lack of confidence in their managers, they do not typically provide managers with the training, resources and opportunities to develop into the kinds of managers who can successfully deliver the employee experience they hope to provide.

The most typical training is about basic communication styles (74 percent). In this year’s CPBR, we found that only 29 percent of organizations train their managers to have conversations about pay. And when they do train managers, they don’t often get to the level of detail that would be helpful:
 

Let’s be honest: some compensation conversations are hard. The very first time a new manager stumbles through that conversation shouldn’t be with the recipient of an unexpected low pay increase.

When a manager is having a compensation conversation with an employee, he or she has to understand and recognize where an employee feels there’s misalignment so that he or she is able to address it.

A useful resource HR can give managers when they’re having conversations with employees about comp is data, especially in the form of an Employee Compensation Report. An Employee Compensation Report provides the data that allows a manager to say, “This is our compensation philosophy, here’s where you line up, and here are the additional benefits/rewards the organization is providing.”

Giving employees this report communicates that their organization cares enough about their employees to get comp right and take the time document the compensation of each and every employee in the organization.

You’ll also want to teach managers to get comfortable with comp-versations. Get managers together in a group and practice these conversations. Have more experienced managers share what’s worked well with newer managers. Ask the group to share stories of uncomfortable pay conversations they’ve had – so you can collectively figure out how to improve communication.
Lastly, make sure you hold managers accountable. Communicate that they’re expected to have comp-versations with employees, provide them with the resources to do it well, and measure them on their ability to lead a team.

Want to know more about navigating difficult compensation conversations? Check out our free ebook here.