How to bring up compensation in a discussion with your employees


Sometimes it may feel rather uncomfortable to discuss about money, whether you’re an employer or an employee. A key aspect on your path to become a great leader that others aspire to become is to talk with your employees about salary. This may prove tricky at times especially if you don’t really feel comfortable discussing figures. It’s like you are putting a price tag with a dollar figure on the employee and letting him know how you value him. Whether you want it or not, this aspect cannot really be avoided. Still, you should know that you’re not the only one facing this problem.

According to a survey conducted by the research firm PayScale, 73% of company leaders feel uncomfortable when talking with their employees about compensations. So, if you’re facing a similar problem, don’t panic because we have some advice that may help prepare you for these types of conversations.

Try and discuss early and often. Explain at the beginning of each year the way compensations, raises and bonuses are given. Never leave your employees in the dark or to be surprised when it comes to the company’s procedure. Explain to your employees on which basis they should expect raises or how they can achieve bonuses. Also, talk to them from the get-go about what happens if the goals are not met. Talking to them more often will facilitate the conversations. Avoid surprising them in a negative manner and thus having a bad reaction by conducting regular check-ins. Explain every decision that concerns them at the end of each year.

Performance reviews should always be made separately. Performance goes hand in hand with compensation, but they are almost always discussed separately. First, make a performance review that focuses on the growth of the employee and in a few weeks time, decide whether they should or shouldn’t receive a bonus.

It’s a well-known fact that every leader has his or her favourite employees and others that are not really all that likable. This may prove tricky especially in conversations about salary. In this type of situation, remove the appearance of bias. Your employees will not appreciate if they see that you are biased towards a certain group. To avoid claims of bias, you should protect yourself from it by always having two or three other executives present during these types of meetings so that the employee knows it’s a fair and consistent process.

Make sure you have your words with you. Whether you’re great at compensation talks or doing it for the first time, be sure you know what you’re going to say and how you are going to say it. Try and avoid being robotic and use empathy as a tool. It will certainly pay off in the long run. Come up with arguments as to why you are giving them a raise (or not) and try to explain to them it was fair and commensurate with their hard work. They will make sure to appreciate it if you present them the facts in an honest manner.

A bonus can go a long way for an employee, but letting him or her know their value to the company may sometimes mean even more. Although at a first glance this may not mean much, this aspect doesn’t take much of your time and it offers them validation. Consider your relationship with your employees is something like a partnership where you need to let them know how much their work contribution means to you and your company. Money motivates employees to work hard, but adding a kind word and letting them know how much you value them should determine them to be even more efficient.

Base all your topics of discussion on solid facts. Let’s say an employee isn’t satisfied with their obtained bonus or maybe he or she didn’t get one at all. From the bat, be clear and explain the reasons behind your decision. Facts are facts and cannot be disputed. Make it clear to them what it means to be paid fairly. Do not offer other employees as an example but rather present the facts that have led you to take this course of action. Make your employees understand the reasons behind a decision rather than letting them feel like the decision was arbitrary.

Money has a funny way of making people feel emotional. That is why you should prepare yourself for a strong reaction from your employees, whether they feel upset or start crying. Acknowledge their feelings and listen to them but don’t give in. It would only put a dent in your authority and be seen as a weakness. Despite the fact that you may agree with their arguments, make them aware you are not going to change the decision you already took. Never give a raise or a bonus to an employee that has a bad behaviour because this may alter your compensation discussions with your other employees.

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