The secret to discussing pay with employees

Universally speaking, money is an uncomfortable subject – be it with friends, family or in the workplace. In fact, the “pay” conversation that managers are required to have with their employees might be one of the most unanticipated talks of the year.

Pay is a sensitive subject

Pay is a highly sensitive subject as it is, so relaying the wrong information, or even expressing the right information in the wrong way can contribute to your employees losing trust.

When you discuss someone’s worth and value in whatever terms it’s not so cut and dry – there are feelings involved – so managers need to be able to give a proper, thorough explanation.

Harvard Business Review strongly agrees with the need for context:

Employers today should arm managers with accurate market data reflecting talent markets to base the conversation in fact. Finally, they need to remember that how their employees feel about compensation matters just as much as what they’re actually being paid. When it comes to having a more engaged workforce, you can’t assume that an employee’s perception about pay matches reality.

Top 3 things managers need to understand before communicating pay

It’s time to get the conversation flowing to bridge the gap between what HR understands about pay, and what employees don’t.

Managers, this is where you come in, and this is what you need to know.

1.         The Company’s Compensation Philosophy

Essentially, the compensation philosophy of your organization is tied to its core values and goals.

Managers need to be able to answer all questions employees might have about pay in line with this strategy so that there is cohesion across the board.

The more context employees get surrounding these questions, the more they will act as an ambassador for your company, rather than a detractor because where there is understanding, there is appreciation.

2.         Market Pricing Approach

Managers need to be trained to understand how the company is positioned in the market. Being able to explain this to existing employees acts a retention tool. Remember, context trumps everything.

3.         Company’s Approach To Salary Adjustments

HR needs to offer guidance for not only how to discuss pay with new candidates coming in, but internally as well. You may have attracted great talent, but now you need to keep them and one way to do this is to keep yourself and your team informed on how you compensate.

The truth about pay and employee engagement

This is really important to clarify.

We’ve come to understand through recent research that people (for the vast part millennials) don’t only care about salary when looking for a job. Money isn’t everything. They want to learn, grow, connect with their colleagues and be part of something big. They want purpose and meaning in their day-to-day.

But, this doesn’t mean that pay isn’t important, or that employees are willing to settle for less than what they deserve. It means that only once they are paid fairly and feel valued at the root, they tend to care more about growth than they do about money.

Compensation at the end of the day is the story of how much an organization values their employees, and unfair compensation, whether perceived or real, could drive employees to leave said company.

This article originally appeared on officevibe.

Officevibe

Tag: Employee Salary Employee Pay HR strategy HR Planning