Your pay communications playbook

Handle pay communications with extra care.

HR practitioners should hang this sign over their desks.

When employees can easily find the market worth of their roles thanks to pay transparency, every pay conversation becomes high stakes.

Our recent Pay Confidence Gap Report revealed a startling disconnect around compensation. Armed with job postings data, only 69% of employees trust employers’ pay decisions.

Companies haven’t received the memo, with 93% reporting their workforce trusts compensation decisions. That’s a 24% gap.

How you communicate about pay is everything. You may not control the budget, but you can manage pay perceptions.

First, step into your employees' shoes and understand what matters. At the core of every pay conversation is one question: Do your people feel valued?

Salary reflects value, but it's just one piece of the puzzle. It's also about transparent pay practices that connect with employees' daily lives. That's what your workforce is looking for.

Pay conversations are really about well-being. Getting at this deeper truth means understanding the psychology of pay.

Employee pay biases

Two biases can sabotage how employees view their pay: confirmation bias and assimilation bias.

Confirmation bias means employees look for evidence that supports what they already believe. Think your company doesn't value you? Every average performance rating becomes proof of mistreatment.

Assimilation bias works in a similar way — employees twist new information to reinforce existing beliefs.

Here's what make these biases sticky: they're intrapersonal communications. Employees tell themselves stories about whether they're valued, and these stories drive motivation and job performance.

Once these stories take root, it's a downward spiral. Psychologists point to intrapersonal communication as a primary driver of

What’s the fix?

Show employees the complete pay picture. Do they know their healthcare benefits increased by 8 percent last year? Have they seen a total rewards statement that breaks down their full compensation package?

But don't stop there. Explain the "how" and "why" behind pay decisions. When employees understand comp calculations, they're less likely to create their own (sometimes negative) explanations.

Remember, you're not just sharing information. You're actively reshaping how employees think about the value they bring.

This brings us to critical compensation concept: the employer-employee value exchange.

Breathe new life into your employee value proposition

Pay isn't about money.

What?

Well, it isn't only about money. It's also about the exchange of value.

Before talking about pay, figure out what employees see as their biggest contribution.

When you acknowledge what employees bring to the table, you can have meaningful pay conversations. What we call "compensation" is swapping what employees bring for what you bring.

Your contribution to this exchange includes everything from salary to PTO. Even intangible things like workplace culture is part of your employee value proposition (EVP).

Employees prioritize different rewards depending on their career stage and personal goals. To win trust, employers should connect their total rewards offering to what matters most to each employee.

When companies offer the full compensation picture, employees understand the depth of their investment. Pay perceptions become more positive and trust flourishes.

HR’s role in compensation communications

Everyone at your organization chips in to make comp convos easier, although HR practitioners play a special role. They take the lead in preparing your pay communications program, keeping leadership informed, and training people managers.

Leadership approves your compensation plan and provides the big picture.

HR should create talking points to make executives' jobs easier. These may cover your compensation philosophy or any high-level changes.

You should also equip people managers to have pay conversations with team members.

A pay communications toolbox for managers might include:

• Talking points about your organization’s comp philosophy

• Information about your comp plan (job levels, pay grades, etc.)

• Details on each employee’s pay

• Tips for how to handle various types of pay conversations

Managers must understand your comp program. With the right resources and training, they'll feel more confident in pay conversations and become advocates for your program. They'll be less likely to default to responses like "Go ask HR" or "HR won't let me."

You want employees to see HR as a supportive partner, not a roadblock.

They should feel comfortable bringing compensation questions to HR or their managers.

When your people don’t see opportunities for open dialogue, they can quickly become demotivated. Keeping the door to communication open makes all the difference.

Remember: your employees compare how their pay stacks up with colleagues, friends, and increasingly online resources.

Pay perceptions have a significant impact on retention, which is especially important for top performers and business-critical talent. Our recent Fair Pay Impact Report found that 63% of employees paid at market believe they're underpaid.

These findings put pressure on managers and HR alike to get pay conversations right. To do so, managers need to be empowered and well-informed, especially with pay transparency laws raising the stakes.

How pay transparency laws are impacting pay conversations

While open pay communications were important before 14 states mandated the public disclosure of salary ranges, many are now unavoidable.

Compensation transparency exists on a spectrum, not an on-off switch.

The first step is deciding where you want to land on the transparency spectrum.

At Level One, you’re simply telling people their salary. It’s straightforward, but doesn't inspire much confidence in your workforce

Level Two brings more substance to the conversation. Here, you explain how someone's pay is determined, including how market research informs decisions. You might even share some of that data with employees.

At Level Three, you really start to open up. You don't just have a compensation plan — you're talking about it openly. Managers can show employees where they sit within their pay range and have meaningful discussions about advancement opportunities.

Level Four takes things deeper still by sharing the "why" behind your pay strategy. Employees see your compensation philosophy in action, and managers can draw clear connections between your strategy and pay decisions.

Finally, Level Five is total transparency: a fully open-book approach where ALL salaries and pay ranges are visible. Most organizations aren't ready to publish the pay of their CEO. And that's okay. Radical transparency is far from the norm.

You should aspire to the "why," which offers plenty of context to build trust.

Owning the pay conversation for once and all

Pay conversations will never be easy, but here's a few tried and true fundamentals to follow.

#1. Know your audience

Tailor your pay communications. With leadership, connect comp plans to business outcomes.

When talking to employees, discuss salary ranges and the "why" behind their pay.

The right framing gets results.

#2. Preparation is key

Pay conversations are emotionally charged events.

Give people managers proper training and practice, so they're prepared to handle the tough questions.

#3. Establish a clear path forward

Don't just explain where employees stand. Show them how they can grow.

Clarity about career growth makes for a productive workforce.

#4. Balance directness with empathy

Pay impacts people's ability to buy houses and provide for their families. Don't forgot the personal side of pay communications.

Lead with compassion, but also be direct about performance expectations and your comp plans.

#5. Present the complete story

When discussing pay with employees, present the total rewards picture.

Focusing solely on salary overlooks the other benefits and perks you offer.

#6. Maintain consistent communication

Encourage ongoing dialogue about compensation concerns. Some managers and HR professionals avoid pay discussions, but this only makes them more challenging.

Regular communications identifies issues before they escalate.

Practical tips for managers

When preparing for employee questions about salary, consider the four most common concerns employees typically raise.

Having thoughtful responses to the above questions help managers conquer comp convos with ease.

Preparing for challenging scenarios

Difficult pay conversations require practice and preparation. Communicating about comp requires practice.

When employees present external salary data, start by acknowledging their contributions. Next, share your organization’s compensation philosophy and explain how market data determines pay.

Remind them that online data varies significantly in quality and accuracy, and job posting ranges often reflect factors not disclosed in the listing.

Also remember to explore alternative solutions.

Sometimes when employees request salary increases, they may actually be expressing dissatisfaction with other aspects of their work.

Before jumping into pay adjustments, consider whether alternatives like additional PTO, modified assignments or job responsibilities, flexible scheduling or remote work options, or professional development and training opportunities might address their concerns.

The role of data in pay communications

Successful pay conversations run on a diet of reliable market data. When employees know comp decisions are thoughtful data-based decisions, they gain trust in the process.

Without this clarity, ambiguity creeps in. Messages get lost in a game of telephone with biases and emotion filling in the gaps as information passes from HR to managers to employees.

Strong data gives managers and employees alike confidence that pay is fair and principled.

Total reward statements are especially powerful tools for not dropping the call. They show your compensation philosophy, the pay range for a role and where the employee sits in it, current market trends, and benefits and perks in full.

Making sure your pay messages are clear turns tough conversations into productive ones.