Discussing pay with employees: Tips for training managers

Although compensation has always been key to attracting and retaining top talent, how that compensation was determined was a mystery to most. Managers were simply messengers, charged with telling their employees what their new salary was, all without knowing how those numbers were actually reached. They couldn’t answer employee questions, much less justify the decision.

Today, that scenario is starting to change.

As companies become more transparent with their compensation strategies, they’re also recognizing how important it is to have their managers, at all levels, aligned with and able to communicate those strategies to the members of their team.

“By enabling managers to have deeper conversations around compensation and how those numbers were determined, you enable those managers to have another trust-building moment with their employees,” explains Lexie Clarke, Director of Human Resources for Payscale. “I’m a big believer that downstream involvement leads to greater employee engagement and retention.”

But, how can organizations train managers in their various business units, and equip everyone who has a direct report to accurately discuss compensation?

We asked a group of HR leaders who have “been there and done that” to weigh in with their advice.

Start by examining your current state

Before developing your manager training, take some time to assess where you are today:

  1. How transparent is your compensation process?
  2. How deep is your manager knowledge of that process? Is it limited to VPs? VPs and director level? Are your mid-level and first-line managers in or out of the loop?

“Understand your current state and use that as the foundation, then build your strategy and approach from there,” Clarke says.

Make sure you cover the basics

The world of compensation may be foreign to many of your managers. So, it makes sense to start your training with a “Compensation 101.” Make sure you cover:

  1. What is compensation and what does it include?
  2. What is the company’s approach to compensation?
  3. Why do we do it this way, and how does this approach benefit our employees?

These are the fundamentals.

Include a strong employee value proposition

“It’s important to include a strong employee value proposition that accompanies your compensation philosophy, so your managers can talk about all that you offer as a company,” says Kate Clausen, Human Resources Manager for Wizards of the Coast, a subsidiary of Hasbro. “This enables them to attract, motivate and retain talent for their teams.”

That employee value proposition should include:

  • Financial rewards, like salary and incentives
  • Benefits
  • Perks
  • Work environment
  • Opportunities for growth and advancement

“Think about the relationship you want your employees to have with your brand identity and what you bring to the table,” Clausen says.

The story should be accurate, authentic and consistently told across your organization.

Train at all levels of management

Our experts recommend extending compensation communication and strategy training to anyone who has a direct report.

The idea is to ensure that anyone who has a performance discussion with an employee can also explain where that person landed in a range, what their salary increase is,  and all of the factors that led up to that decision.

It’s not just about explaining the compensation program, but also about training managers on how to have these types of conversations with their employees—and feel comfortable doing it.

Get continual feedback

When you’re developing your program and training, don’t do it in a vacuum. Get feedback from managers in different functional areas.

“There is something so powerful in making sure you have collaboration and buy-in from your managers,” Clarke says. “When they feel like they are an active part and co-owners of the process, you’ll really compound the benefits downstream.”

Then, keep that conversation and collaboration going.

Your front-line managers are excellent resources on what’s happening in the market, and how compensation is changing in different industries or specialties of work. That input enables you to adapt your program to keep it relevant over time.

“People are typically your biggest expense, and  managers owning that and understanding the decisions that impact the people they manage makes them better business leaders,” Clausen says. “All of that makes your company stronger.”

All of that keeps everyone working together toward a common goal.

Watch the full video here.