Unless you’re about to drop a load of cash on someone, money talks can be tense.
What’s more, according to PayScale’s 2015 Compensation Best Practices Report (CBPR), nearly a third of companies don’t regularly perform market and compensation analysis, and most (57.1 percent) don’t train managers to have tough conversations with employees about compensation. The end result? Too many managers have neither the data nor the skills to handle difficult conversations about money.
Fortunately, real-time compensation data is available, and skills can be learned. In the meantime, follow these tips for less drama-filled pay conversations.
Employee compensation talks: Taking the Switzerland approach
Switzerland was deemed a neutral country in 1815, and hasn’t fought a foreign war since. Many have criticized the Swiss for their stance, but they have their reasons.
As an employer or employer agent, you have good reasons to maintain your neutrality, too, especially during discussions about pay.
For example, if an employee’s asks for more money there’s no cause to take it personally (“How dare he! He should be grateful to have a job!”), regardless of how the employee frames it. Instead, ask questions and document the answers.
These four are key:
- How much does the employee want?
- How did he/she come by that figure?
- When is the employee hoping the increase will take effect?
- Why does the employee believe he/she deserves more pay?
And while it might be tempting, don’t respond (read: refuse) the employee’s request on the spot. Give yourself time to research any pertinent information.
Neutrality also works when you’re making a case for an employee or delivering bad news. In the latter situation, whatever the rationale for the decision, state it calmly and matter-of-factly. If declining company performance makes raises infeasible, say so. If an individual’s performance doesn’t warrant more pay, let him/her know while providing hope where you can. What conditions would support a wage increase? The trick is to be transparent and tell the truth about the real reason for the compensation decision.
Related E-Book: COMMUNICATING COMPENSATION
Have your compensation data on hand
Good compensation data is essential to meaningful yet non-emotional discussions about pay. Imagine telling an employee she’s not getting a raise because she “already makes too much money” when you have no idea what other companies similar to yours are paying. Sure, you could do it, but why in the world would you want to? Not only will your position lack authority, it’s bound to raise the employee’s ire, and that’s exactly the reaction you’re not seeking.
Let’s say an employee asks for a raise, and you promise to follow up with him or her in two weeks. Please do. Even if you haven’t gotten the information you need, let the employee know where things stand. When you don’t, you cause your employee to begin thinking you just don’t care, and those negative thoughts will lead to negative feelings and perhaps even negative behavior.
Money is an emotional topic, but your workplace conversations about money don’t have to be. Don’t take it personally, gather good compensation data, follow through, and say whatever you have to say in a calm and professional manner. You might be amazed at just how well the conversation goes!
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