Manager Talking Points for Compensation Conversations: Part I


This is an excerpt from our recent ebook collaboration with BambooHR entitled Everything You Need to Know About Communicating Pay. Download the full ebook here.

When Employee Pay Is Low

So the employee is near the bottom of their range for pay. The first step in compensation conversations is to consider the following:

  • Should the employee pay be low? There are valid reasons for being near the bottom of the range (little experience, missing skills, etc.).
  • Is budget available? If their pay should be higher, are you able to do something about it?
The first thing to consider when employee pay is low: should it be?Click To Tweet

Gather your answers, then have the manager use one of the following sets of talking points as a road map for the conversation:

Scenario A: pay is low, market has moved up, the employee is proficient in the role and there is budget to do an increase

  • Start with appreciation – Thank you for all your contributions this past year
  • Mention market movement – Your position is gaining in market value
  • Explain position in range – You are below last year’s competitive range
  • Provide context – Last year you earned an increase of 3%, which was the organizational average
  • Share this year’s increase amount – I’m going to give you a bump of 5%, which is above this year’s organizational average increase of 2.5%
  • Open the door – Keep doing what you’ve been doing and if the market holds you’ll be in good shape next year (that is opening the door, giving them a way to move forward or progress in some way)

Scenario B: pay is low, market has moved up, their proficiency level isn’t quite up to par, budget is available but irrelevant due to proficiency issue

  • Start with appreciation – Thank you for your contributions this past year
  • Mention market movement – Your position is gaining in market value, however we don’t feel that your skill set is current to what we’re seeing for similar positions in the market
  • Explain position in range – You are currently below range, but I think that’s fair given your current skillset/proficiency
  • Don’t bother saying what they got last year…
  • Share this year’s increase amount – I’m giving you a small increase this year of 2%. In order to earn a larger increase next year, I’d like to see….
  • Open the door – Let’s check in in another quarter to see how you’re progressing so we can keep you on track for next year

Learn More About Our Compensation Software


 

When Employee Pay Is High

Now let’s talk about when employee pay is high. Things to consider:

  • Is this really another job/a higher level? – Does the organization need the work performed at another level? Can the organization pay for it? Does the employee qualify? If the answer to all of these is yes, that’s a promotion! And a different conversation. If no, carry on.
  • Does the organization need it?
  • Is the employee qualified?

And here are some talking points for a couple different sub-scenarios:

Scenario A: pay is high market is steady, performance is stellar and budget is available

  • Start with appreciation – Thank you for all your contributions this past year
  • Mention market movement – Your position is holding steady in the market
  • Explain position in range – You are above the maximum of your pay range. The pay range is determined by the market value of the job
  • Provide context – Last year you earned an increase of 4%, which was above the organizational average
  • Share this year’s situation – Instead of giving you an increase on your base pay, I’m instead going to give you a lump sum payout of 3% to acknowledge your contributions toward XYZ organizational goals
  • Open the door – If the market shifts, you will be eligible for an increase again next year if you continue to perform at this high level, otherwise we may be able to discuss another lump sum bonus at that time

Scenario B: pay is high, market is steady, performance is just okay and budget is less relevant here

  • Start with appreciation – Thank you for your contributions this past year
  • Mention market movement – Your position is holding steady in the market
  • Explain position in range – You are above the maximum of your pay range. The pay range is determined by the market value of your job
  • Provide context – Last year you earned an increase of 3%, which was the organizational average
  • Share this year’s situation – Because you are above the maximum of your pay range, we will be unable to give you an increase to your base pay
  • Open the door – If the market shifts, you will be eligible for an increase next year if you perform at a high level. Let’s set some goals for you and if you achieve those next year, you will be eligible for a lump sum bonus. Let’s check in in another quarter to see how you are progressing.

Tomorrow: talking points when pay is low and performance isn’t there.

Want more tips and tricks for effective compensation communications? Download the ebook Everything You Need to Know About Communicating Compensation today!

Tell Us What You Think

Tell us about your toughest compensation conversation in the comments. We want to hear from you!

Image: Pixabay

Leave a Reply

Be the First to Comment!

Notify of
avatar
wpDiscuz