How to communicate better about pay – part 1

Conversations about pay are still difficult for many employees and their managers. But transparency is vital to ensure your pay strategy is fair

Today’s employees demand transparency when it comes to pay and have greater expectations of fairness and equity.

Yet talking about pay is still taboo for many. Employees are not confident in how to approach their employer, and many employers are not prepared to have pay conversations, so discussions are often discouraged.

But pay conversations are a vital driving force in creating fair pay for everyone. As we near end-of-year performance and compensation reviews, here are some tips to help you formulate a more effective pay communication strategy.

1. Don’t assume managers have the training

It’s common to assume that managers know how to have conversations about pay with employees. The truth is many managers don’t get much training on how to be managers, which includes how to handle conversations about compensation.

Also, they may not know about pay ranges or how to talk about benefits and employee programmes that make your company a great place to work. The degree to which managers are informed will, of course, depend on your level of pay transparency.

Managers should learn when to have pay conversations, what to cover as part of those conversations, how much they are allowed to say about how compensation is determined, and which questions to pass to HR.

2. Answer the most important questions

Whether it’s managers or HR leading pay communications, you need to be able to answer the two most important questions that employees tend to have:

What does my position get paid?
How do you determine that?

The answer to the first question is really about pay ranges. Whether you reveal this range to the employee depends on your level of pay transparency. The employee also wants to know how you decided that this range is appropriate and how you determined where the employee falls in the range.

If you don’t have a sophisticated, data-backed compensation rationale, these questions can be difficult to answer and might seem unclear to the employee.

For example, there might be a pay equity problem with that employee’s position. Maybe one employee on the same team is paid well above everybody else and also above market. The complaining employee heard about it and now they feel underpaid. That kind of thing happens when you don’t have a compensation strategy. If the underpaid employee is also in a protected class, such a minority or a woman, this can end up sparking a legal challenge.

3. Review pay history, discuss career growth

Don’t assume that employees who ask you to explain their compensation or ask for raises are greedy, ungrateful or delusional. It takes a lot of bravery for employees to bring up the subject. They’ve probably thought about it a lot before doing so.

That being said, it’s common for employees to ask for too much or to have inaccurate information about what their position is worth.

The proper thing to do is first review that employee’s salary history since they joined the company. This is respectful as it shows that you are familiar with this employee’s career and in a position to coach them on the next steps. You can review the amount of time that has passed since the employee last received a raise and discuss how they have grown in that time.

Even if you can’t give the employee a raise or a promotion, this is a positive conversation, especially if you are able to instruct the employee on what they have to do to get to the next level in their career path.

This is especially critical for individual contributors who are not asking to become managers but would like to grow their compensation as they learn more and become more effective at their jobs. For example, how does an entry level marketer become a mid-level marketer? Are there tiers for certain roles, like software developer 1, software developer 2, etc, and, if so, how do they get from tier to tier? If not, what are the options for growth?

Often, this is the information that employees actually want most when they ask about compensation or a pay rise. If the answers they get are rational, honest and offer a path upward they feel they can achieve, the employee is more likely to feel valued and stay with your organisation. This is an easy thing most organisations can do to improve pay communications.