How to Discuss Compensation with Employees

June 24, 2014

How to Discuss Compensation with Employees

Managers need to have frank and open discussions with employees about pay. It’s not a comfortable subject, but these are some of the most important conversations of the year. Here are three ways to make them better: 
(1)Talk early and often. 
There should be no surprises when you sit down to talk about salary. The more frequently you meet, the easier it will be. Ask what kind of bonus or raise the employee expects if she meets her goals. Then have regular check-ins to discuss progress.
(2)Do performance evaluations separately. 
Compensation and performance should be discussed separately, so the employee doesn’t fixate on the money. Deliver the formal evaluation first and focus on growth and development. Wait a few weeks to deliver any monetary news.
(3)Provide context. 
When people are disappointed, it’s often because they lack information. Share the big picture – how the company is performing and the range of raises being offered this year.


Adapted from “ How to Discuss Pay with Your Employees” by Amy Gallo.