Why is talking about compensation so hard?
By Hebba Youssef
Have you ever had an employee completely bypass their manager and come straight to HR to ask about a compensation adjustment?
🙋🏾♀️ I’ve been there more times than I can count.
Most of the time it’s because the manager has fumbled the conversation and the employee decided to go directly to the source of all things compensation: HR.
Before we jump to blame managers for everything (lol), conversations about compensation are one of the toughest to have in the workplace!
Why? Because compensation convos can be tricky on both sides, for the employee AND manager.
Conversations about compensation can be tough because of:
- Power dynamics: Managers are seen as having the power over ALL things like compensation leaving employees forced to feel like they have to advocate and potentially risk the relationship to get what they believe they deserve.
- Taboos: Compensation has been historically viewed as taboo to discuss leaving employees feeling uncomfortable even bringing up the topic.
- Emotions: 32% of workers feel like they are paid fairly. The second someone feels like they are being taken advantage of or their achievements aren’t recognized, the conversation can become emotional.
- Lack of info: A lot of organizations keep compensation a mystery but that often backfires. Employees then don’t have a clear understanding of compensation and feel unable to properly advocate for themselves. Managers then also struggle to defend certain compensation decisions.
Sometimes all 4 of these can be at play in one convo! 🤯
There are steps HR and managers can take to better set up systems and therefore conversations for success.
What can HR do:
Employees will probably always come to HR with compensation questions and concerns. You’ll never be able to fully eliminate that because compensation is the foundation of the employee <> employer relationship.
People come to work to get paid.
But, here are 3 things HR can do to set up the organization and managers for success when it comes to compensation conversations.
1. Develop a transparent compensation philosophy. Explain how pay is determined including what factors are being taken into consideration like:
- Job level
- Market benchmarks
- Internal equity
2. Have clear guidelines for moments when pay may change. What happens when an employee takes a new role, receives a promotion, or requests an adjustment? Having guidelines around these moments will alleviate the tension around the compensation conversations.
Bonus points if you include: ranges for the average adjustment/promotions.
3. Train your managers. As you’ve seen, managers need a lot of help and hand-holding around compensation. They are scared of having the conversation! By training them and making them practice you will alleviate a lot of stress.
Your managers should be the experts on how compensation is determined in your organization.
If at any point your managers are directly sending people to HR to talk about their compensation, they are skirting a major responsibility of their job.
One last thing…
If your employees are going out and securing other offers and throwing them on the table to negotiate a raise or promotion, you are failing as an HR team.
BTW: I’ve been there and there is a 50% chance the employee will leave within the next 12 months regardless of any adjustment you make to their compensation.
A pep talk for managers:
Managers, save this section for a rainy day when your employee comes to you and asks for a raise.
If you are scared to talk about compensation with your employees here’s what you can do:
Understand the policies and how compensation is determined. If this is a mystery at your organization, go to HR and ask the following questions:
- How is compensation determined?
- What factors were considered?
- What are the policies around raises, promotions, and bonuses?
Discover your employees’ motivations. Some people are focused on securing the bag and are motivated by money. You should know which of your employees are driven by compensation. As their manager, you should also know their target compensation range.
Start by asking: What are your compensation goals?
If their current compensation is far from their goal compensation you can say: thank you for letting me know your goals, let’s work towards that down the line.
Now, at least you know their goal and have nothing to be surprised or scared by!
Focus on your team’s growth and development. The more skills your employees learn the greater their value/impact on the organization which can lead to an increase in compensation. Win-win. 💰
Advocate for your employees. If you feel anyone on your team is paid unfairly, put together a plan and go to HR and ask how this will be remedied.
The bottom line: when employees feel like they are paid fairly their engagement and satisfaction increases, it also improves your ability to retain your team.
One last note…
Women will not achieve pay equity for another 132 years.
The year will be 2154. 🤯
However, for Black women, the gap will not close for another 346 years.
Why does this matter?
Pay equity will continue being an issue unless HR teams and managers can advocate to pay their employees equitably.
Transparent compensation policies will help us close that gap quicker.
Don’t be afraid of compensation conversations instead know that you can play a part in leveling the playing field for underrepresented groups.
Next week, I talk about another tough conversation at work: performance.
How to prepare to look someone in the eye and tell them they aren’t meeting your expectations…