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Don’t Wait for an Increase Cycle to Talk Pay

It’s almost the most wonderful time of the year: increase time!

That’s right! After the winter holidays have passed, many organizations — organizations that operate on the calendar year — have restocked coffers and fresh budget. And that means managers and HR teams are ready to spend that money on salary increases.

January is increase cycle time, and though some organizations start and end their fiscal year in June, the New Year is when most employees will expect some sort of annual salary increase.

But if you’ve been waiting to talk compensation with your employees until this specific time of year, even if you’re planning a healthy increase, you might have lost their confidence. The trick is not to wait for an increase cycle, but to be transparent about salary and communicate compensation plans continuously throughout the year.

PayScale’s research has shown that keeping your employees informed through “open and honest” discussions around pay is “more important than typical measures of employee engagement, such as career advancement opportunities, employer appreciation and future enthusiasm for the company.” In other words, “if you don’t communicate to your employees that they are being paid fairly compared to their talent market, they may leave.”

The simple act of regularly talking about compensation outside of just increase cycle time — even if it has little to do with a promotion or pay increase — is well-received by employees. So much so, in fact, that communicating compensation can mitigate the effects of low pay; PayScale’s data show that even when an organization pays under market rate, but openly and honestly communicates the reasons behind that lower compensation, 82 percent of employees report job satisfaction.

If you’ve been waiting to talk comp w/ employees until a specific time of year, you might have lost their confidence.Click To Tweet

Want to learn more about how to have fair, modern and transparent conversations around pay? Check out our budgeting how-to whitepaper.

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When do you talk about compensation with your direct reports? We want to hear from you. Share your thoughts in the comments.

Image: Morgan Sessions/Unsplash


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JenmmDoug FriesenSusan ChuddTina Bryant Recent comment authors
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Criston Menz
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Criston Menz

Hands down, the best system available and easiest to navigate.

Edwin Carlson
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Edwin Carlson

At my company, we encourage our managers to have open discussions throughout the year on pay and performance and not wait till January. It is up to the manager though to make sure they are communicating pay well.

Jason Magill
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Jason Magill

Employees may like to hear about it more often, but it’s difficult to get managers to talk about it more often. It’s even more difficult to get managers to properly communicate about compensation. To most, it’s often left at “here’s you range, and here you are.” The HOW we got to that point and WHY they are at their current rate is often left out, or lost in translation.

Chris Thorpe
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Chris Thorpe

We are striving to have more conversations about pay with leadership and looking for ways to open the door so they can provide feedback.

Carla Williams
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Carla Williams

I also think it provides a great path for employee development and goal setting conversations. Employees value honesty and a great environment as well to work in.

Robert Shade
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Robert Shade

Our managers are required to do a least 4 quarterly check-ins regarding performance, project status, goals/objective, development, etc. This process is new and we are working with managers to ensure that they are complying with the minimum quarterly discussions and are encouraging more frequent discussions. As to conversations on compensation we know that this is not something our managers are comfortable in doing. Other than a conversation with the employee about their annual award (base salary increase/lump sum) there is limited or no communication on compensation. In 2018 we are developing manager training/communications on compensation and will follow up with… Read more »

Julie Pinto
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Julie Pinto

Managers often have a difficult time communicating compensation issues with employees. To help with this, we partner our managers with our Employee Relations group. Our ER reps will coach the manager on the proper way to handle these discussion.

Julie Mathis
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Julie Mathis

We do our increase cycle in March with an effective date of April 1. We strive to have open communication about comp with all of our employees however what it really turns into is individual employees asking questions about their own salary and then I and/or the manager have a sit down with them and explain the how and why behind their pay. I would love to be able to schedule these conversations with everyone several times a year but it is hard to find that much time. While the other managers and I have good intentions on more communication… Read more »

Mike
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Mike

We recently implemented a year round performance management system. The idea is that we can also discuss things like compensation more than once a year!

Guest
Guest
Guest

Training managers to talk comp is so difficult. It’s like their kryptonite.

Brody Brinkerhoff
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Brody Brinkerhoff

Good article. We make it a point to have these conversations with managers, and to encourage them to do the same with their employees.

HR Virtuoso Company
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HR Virtuoso Company

It’s always important to talk compensation, but it’s equally important to put it in terms of total compensation. Employees often undervalue their employer’s health insurance, PTO, etc.

Debra
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Debra

Compensation should be an all year discussion, but it is so hard to do with daily demands.

Christina
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Christina

We discuss comp with our employees throughout the year since we fill postings quite frequently with internal staff.

Jenny Schmidt
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Jenny Schmidt

We encourage and expect managers to have frequent communications with employees regarding their performance. It should never be a surprise to the employee when they do or do not receive a raise because we base pay off of employee’s performance.

Tina Bryant
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Tina Bryant

PayScale has really helped put structure and validity around our market benchmark process.

Susan Chudd
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Susan Chudd

I think this is a good practice in theory, but hard to get to, particularly for non-profits who don’t tie performance to financial results (more qualitative assessment). That’s where we are. Our first step is to get managers comfortable talking about pay – then we’ll encourage more frequent conversations.

Doug Friesen
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Doug Friesen

While we’re striving as a company to get to the point where employee compensation is more transparent and less uncomfortable of a subject to bring up to mangers, we continue to struggle in this area. We’ve made progress here recently with more transparent market pricing data (thank you PayScale!)

mm
Admin

Thank you Doug!

Jen
Guest
Jen

WE find that a lot of our teams do talk pay among themselves. We are always striving to have the best pay and benefits out there.

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