Starting Small: Communicating Compensation Doesn’t Have to be All or Nothing

Convinced that communicating comp means exposing every employee salary to the masses? Think you can’t communicate comp until you have a fully detailed, flawlessly executed Compensation Constitution in place? Rest assured, there is a middle ground between a comp plan that is shrouded in secrecy and one that is published on the internet.Communicating comp is a huge culture shift for many companies, so soften the shock by wading into the transparency pool gradually—it doesn’t have to be a full cannonball! Here is how to take the first steps toward communicating comp, using some common scenarios where conversing about compensation is key.

In a recent study –referenced in this SHRM article – LinkedIn surveyed more than 10,000 of its members globally to find out their reasons for changing jobs and found the following as the top reasons why people leave:

  • Dissatisfaction with comp & rewards
  • Lack of career advancement
  • Wanting more challenging work
  • Dissatisfaction with leadership
  • Unhappiness with work environment or culture

These top reasons often stem from a lack of communication between the employee and the employer. These miscommunications, as we can see, can have large impacts on past, current and future employees. To help you begin conversations about pay and improve employee satisfaction, here are 3 common scenarios to communicating comp and the ammo to shape these conversations.

Communicating Comp Scenario 1: Dissatisfaction with compensation and rewards

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While many employees cite underpayment as their reason for leaving a job, a recent PayScale study found that only 45% of those who indicated they were underpaid were actually earning less than their peers in similar roles.

What this data highlights is that perception of compensation is just as, if not more, important than the actual figures on a paycheck. Communication is crucial here—telling your employees how their current pay actually compares to the market is the simplest way to combat misconceptions about pay equity

This doesn’t mean you have to present pages of compensation information and market data to each of your employees in order to shed some light on comp practices. Simply letting your employees know that your organization is doing a 3rd party market study, or even sharing a summary of the market value for their job (and how internal pay practices align with the market), is a great start.

While there are a few options for the type of transparency you may want to employ in your organization – one thing’s for sure: if you’re not talking to your employees about how you determine their pay, chances are they are—giving them permission to use their imagination—not a good thing.

Communicating Comp Scenario 2: Lack of career advancement and wanting more challenging work:

If an employee can’t see their career path, it’s no wonder that they would assume there is no opportunity for growth.

A well-organized comp plan should include clear distinctions of job levels and pay ranges, and will serve as a blueprint for career paths in your organization. Using this information to communicate to your employees what opportunities are available to them is a surefire way to keep employees from feeling like they are stuck in a dead-end job.

  • If you’re a growing company without clear job levels and career paths defined, that’s okay – tell your employees what being a ‘top performer’ means at your organization & how they can achieve success, even if it doesn’t mean a formal promotion.
  • If you are a scrappy, budget conscious org, where promotions typically come with a title bump instead of a pay increase, that information will go a long way to setting expectations.
  • If this is a new or underperforming employee clamoring for a promotion that you don’t feel they’ve earned yet – it’s definitely time to have a conversation. People can’t fix issues they don’t know about, and if worse comes to worst, don’t forget good turnover exists too.

Communicating Comp Scenario 3: Dissatisfaction with leadership and unhappiness with work environment or culture:

Lack of open communication, especially about an item like employee pay, is often a factor that leads employees to feel that they can’t trust the people that they work for creating an unlikeable work environment. A market based pay strategy, that is supported by executives, well managed by HR, and compassionately communicated by managers, goes a really long way in making employees feel valued and opens up a door for communication about other issues that may be lingering.

When starting a dialogue with a potentially dissatisfied employee, one of the most impactful things an employer can do is get curious. Opening the conversation with some questions for the employee is key in understanding the problems to be solved:

  • What preconceived notions does this employee have about their current role, salary, and standing at your company?
  • What communication, or lack thereof, has contributed to that perception?
  • What information would be helpful to that individual to give them a better understanding of how their role is valued and compensated in your organization?

While formulating a communication plan about your compensation plan may seem like a lot to take on, don’t forget that good communication doesn’t have to be complicated. Start small by telling your employees what your organization’s approach to compensation decision making is, and watch the benefits of open communication unfold before you.

As you can see, while you don’t have to bare it all right out of the gate, beginning the compensation conversation is the answer to many major HR dilemmas. We know how hard it can be, but just take one of the small steps above, and ease into it.

Are you ready to take the pay transparency challenge?



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