8 Pointers For Leaders To Master The Conversation About Pay Reviews

For some organizations, the past fiscal year has proven to be challenging. Unfortunately, there are frequently insufficient funds to compensate staff members in the manner that the company would like, despite the fact that team members have persisted in going above and above, overcoming hardship, and demonstrating creativity.

Even when there appears to be positive news to communicate, many executives find the pay review process difficult. Some team members don’t know how the process works and think the leader can assign and determine whatever they want. It is obvious that things do not operate that way, and before making any decisions, the organization must take into account a wide range of factors and industrial requirements. Their first duty should be to follow the stipulated increments in the underlying award, agreement, or employment contract.

Employers are juggling a number of other requirements in addition to this one, such performance, closing the gender pay gap, retaining talent in the face of a skills shortage, and rewarding workers for extra effort that has contributed to the success of the company. Without a doubt, it can be unpleasant to allocate a percentage or dollar amount, and some leaders may feel personally accountable if the figure does not accurately reflect the value or contribution of the employee.

Regardless of the leader’s level of confidence, the pay review meeting is undoubtedly a “make or break” moment in the past. HR has identified this as one of the most crucial conversations a leader will have.

Advice For Thriving In The Compensation Review Conversation

According to research, companies don’t think their executives can have discussions that don’t “shift the blame” or undermine worker participation. Even in situations where there isn’t any good news to offer, leaders can still have constructive and fruitful talks by using these eight essential tips.

1. Embrace A “no surprises” Team Culture

Leaders typically have access to the company’s financial information and are aware of the possibility of salary hikes. While it may be tempting to wait until the last minute to share this information, real leaders begin the dialogue with team members early in order to set realistic expectations.

2. Get Rid of The Blame Game

“If it was up to me…” should never open a salary review conversation. With all intents and purposes, a leader is the business in the conversation they are allowed to have on behalf of the company. The impulse to place the blame on the organization typically stems from a fear of severing ties with the employee. Employees do not, however, require a “don’t blame the messenger” lecture. They are worthy of integrity and accountability.

3. Be Ready To Fail If You Don’t Prepare

Before meeting with a team member for a pay review, even seasoned leaders should give themselves some space to think through the conversation. It’s crucial to consider:

• What will be the likely reaction to this?
• What kind of raise—if any—was given the previous year?
• What is the worker probably anticipating?
• How does the worker typically handle being disappointed?
• Which queries is the staff member most likely to have?
• Have I completed my homework on the rationale behind the choice?

Think about the questions or remarks that the employee is likely to make, and prepare your answers by expressing them aloud or in front of another leader.

4. Set Up and Organize The Discussion

For workers to comprehend the choice, context is necessary. There may be some resentment if they believed that the business had the greatest earnings ever documented but were disregarded throughout the review process. Workers gain by being aware of factors like:

• The financial performance of the company
• Obstacles, limitations, and unforeseen market circumstances that affected the profitability
• Whether there were new rivals, altered laws, or a decline in exports
• If the price of a product’s raw materials, which are needed for production, went up
• How the rise compares overall (a 2% increase might not be enough for some, but if the majority of the organization only received 1%, this might actually be good news).

5. Restate the worker’s offer

Pay increases are certainly something to talk about, but it goes beyond money. It is strongly advised that leaders take a position from which they may discuss the additional “hooks” of the job offer. Talks about pay increases should take the big picture into consideration. For example, this could be the ideal opportunity to change the subject by informally inquiring about the employee’s excitement for the next conference or how their flexible work arrangements are going.

6. Control Conduct

Employees will occasionally act strongly if they believe they didn’t receive the treatment they deserve. Some employees frequently feel they have been taken advantage of and express this dissatisfaction throughout the chat. Here, the leader must hear the worry out but not give in to it. Workers are expected to conduct themselves properly at all times, and a pay review is not a “free pass” for inappropriate behavior.

7. Steer Clear of Crude Remarks

Leaders may find it easy to launch an offensive in an attempt to defend their choice. Leaders must to refrain from using phrases like these:

• “You already receive more money than you deserve.”
• “You should be thankful for your 2% performance because there were members of the team who did better than you.”
• “I don’t understand why you expect more money when you’ve only been here a year.”
• “Considering your productivity, we already pay you too much.”
• Comments like these don’t produce victors, and it is far more beneficial to keep the discussion focused and professional.

8. Strengthen the value of employees

This is a difficult one because it is, at best, confusing to tell employees that their contributions to sales have made the company successful and how valuable they are, only to then be told that there will be no salary increase. The worker may feel underappreciated and used as a result. It is imperative to strike a balance between the disappointment and the organization’s overall performance and business environment, while also attempting to detach the outcome from the employee’s worth.

The Choice Has To Do With Business

When leaders have to break bad news, they may take it personally, but pay reviews are never personal; they are always business-related. Undoubtedly, it feels great to give team members generous compensation rises, but these discussions are few and far between in challenging business environments. Leaders who joined the process and dialogue with fairness, authenticity, and transparency shouldn’t feel bad about the conclusion of their pay.

Although it may seem like there are “winners and losers” in the pay review process, there is much more to the employee experience than just compensation. A bad outcome is inevitable when a team leader permits members to place “all their eggs in one basket” and base their pleasure solely on one facet of their job. It is recommended that leaders find each team member’s engagement hook and collaborate with them to build relationships that go well beyond business.