5 Go-To Tips for Compensation Communication

Compensation is a touchy subject and now more than ever the hot, blinding spotlight is keeping a close watch. The scruples of pay gaps, compensation perception and how compensation is communicated are now the center of an ongoing discussion that’s keeping employers and HR professionals on the edge of their seats.

Perhaps the most famous call outs regarding the gender pay gap came from A-list actresses like Charlize Theron and Jennifer Lawrence this year, making a public spectacle of their employers for paying their male counterparts significantly more money. To add to the discussion, the SEC recently announced a rule, effective Jan. 1, 2017, that requires a public company to disclose the compensation of its CEO to the median compensation of its employees. There’s a storm coming Mr. Wayne…


If employers and managers want to weather the storm, they have to be equipped with the right tips for communicating compensation. It may take some time to master, but here are 5 things to keep in mind when communicating compensation to employees.

Tweet This: Keep these 5 things in mind when communicating compensation to employees:

Tip #1: Outline Compensation Philosophy
One of the biggest problems with compensation perception is it’s been a common practice to simply be hush hush about what other people get paid and why; this leads employees to question a seemingly subjective process of compensation regulation.


What’s more is that, based on recent research, there’s a huge proportion of employees with serious pay misperceptions. For example, 79% of employees paid above market rate believe they’re paid either at or below market rate. And those are the employees paid ABOVE the market rate! Combatting this perception doesn’t have to be difficult.


➔      Try This: Focus on being as transparent as possible when communicating compensation philosophy. Remember to inform new hires and, if you haven’t already, update current employees on how their pay packages are determined, what benchmarks are used and other elements that influence their compensation plan including how their base pay is calculated and how it compares to the market rate.


Tweet This: Try this next time compensation conversations arise:

Tip #2: Choose the Right People to Communicate Compensation
Another important thing to avoid is upper-level managers or supervisors who aren’t involved in the employee’s day-to-day having conversations about compensation, especially if the news isn’t particularly good. Why not? This employee most likely has no real relationship with this manager. That means no rapport, no knowledge of communication style and most importantly no trust. And for the most obvious reason: this manager hasn’t been a witness to this person’s performance so why are they tasked with compensation communication?


➔      Try This: Make sure managers are well-versed on the company’s compensation philosophy and the relevant details of each employee’s compensation plan. If they communicate regularly and effectively with their team, they will have the best knowledge of each person’s performance and communication style and, hopefully, a strong foundation of trust to support the conversation. Did you know 91% of surveyed employees admitted that it’s highly important to them to have a boss they can trust? Are you doing everything you can to gain your employees’ trust? If not, start now.
Tip #3: Emphasize Total Compensation Regularly
When people are unhappy with something, they often focus on what they don’t have and forget about the big picture. That’s even more true when it comes to compensation packages and the focus tends to be on one important, but singular factor: salary. In fact, 61% of employees will leave their current job for higher compensation. Even if a company can’t afford higher compensation, there is much more to total compensation than just salary and that should be communicated regularly.


➔      Try This: When managers are discussing pay packages with employees, whether it be for a performance review or to introduce new hires to the process, they should emphasize everything that is a part of that person’s compensation. That includes salary AND benefits. Even reminding employees of simple perks they get to enjoy as a member of the company can reinforce a positive attitude towards their total compensation. If possible (and necessary), put a dollar value on benefits so employees can see how much the company truly values them as an employee.
Tip #4: Be Mindful of Workforce Differences
One team might consist of a Vietnam Veteran, a recent college graduate and a part-time employee, all with extremely different backgrounds, circumstances and needs. What this means for managers who communicate compensation is that they can personalize each message depending on what will appeal most to a particular employee. It’s just like marketing!

Tweet This: Think of compensation messages like marketing. Read more:


➔      Try This: When it comes to communicating compensation and benefits, remember to put a heavy focus on what is going to best benefit the employee. For example, maybe your Vietnam Vet is unhappy that he isn’t getting a raise with the most recent review. His manager, using supported knowledge about this person and his generation, can outline the company’s generous retirement options to remind the employee that even though he isn’t getting a raise, the company is doing other things to compensate him. Tip: Download our performance review templates to stay on track with these conversations!
Tip #5: Make Communication Frequent
Whatever methods a manager decides to use is up to them, but there is one important thing to remember for the message (any message really) to be received: regular communication. This could be daily, weekly or monthly, but anything beyond that is too long. This frequent communication will help build relationships, reinforce strengths, reevaluate weaknesses and it will set the stage for successful conversations about compensation. In fact, according to the 2015 Mobile Trends in the Workplace survey, 68% of Millennials and Generation X workers said frequency of communication from their superior directly impacts their job satisfaction. If the job is done right, there will be no surprises for employees and managers alike.


➔      Try This: Mix up communication mediums to keep conversations dynamic and less rehearsed. For example, managers can send a short email to let an employee know they’re doing a good job, but they can also arrange quick face-to-face meetings to set small goals and identify areas for improvement. There is no one way to do it, but as long as it is done regularly, employees can become more aware of their own performance and, consequently, be prepared for conversations about compensation.
Don’t Wait
The actions of those who desire fairness in compensation have quickly resulted in a snowball effect that will no doubt continue to gain traction throughout the new year. Everything is pointing to a more transparent and structured compensation process for employees. From the complaints of A-list actresses to the rules imposed by the SEC, it seems the workforce, so very compelled by things like transparency, fairness and trusting relationships, will get its way one way or another. Employers should be smart, act now and continue to monitor the situation for the future. Good luck!
Maximizing communication in the workplace doesn’t have to be difficult. Ask how Reviewsnap can help! Master compensation management today!
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