Pay is often the first thing that comes to mind when we think of work, right? Well, maybe, kind of…it depends!
Pay isn’t top of mind for everyone; people’s top concerns vary based on different factors. Consider this: If you feel fairly compensated, know your earning potential, work in a valued organization, utilize your strengths, and genuinely enjoy what you do and who you do it with, then money might not be your top concern.
In this case, the real focus becomes the work itself and the goals you strive for.
But let’s be honest—finding an organization like that can be tough. It’s even tougher for organizations to create this kind of culture. Yet, it is possible with the right level of leader transparency.
Yes, I said leader transparency.
I know we keep talking about pay transparency, but our leaders are key. Again, the goal is to take the issue of money off the table.
This takes a partnership between leadership, the employee, and HR. At any stage of the employee lifecycle—from talent acquisition to performance management—compensation is still a key part of the conversation and when it’s handled right, it can help us focus on what truly matters.
Research shows that now during a post-pandemic time employees want to feel the work they do has a purpose. Of course, this comes with they still need to feel they are being paid fairly.
However, Gartner research shows that only 32% of employees believe their pay is fair. How can we help change this perception?
Educate employees and our managers!
We already know that managers are the key to employee retention and development—particularly when it comes to building a trusting relationship between the employee and the company—but without trust and communication, there is a higher risk of churn and disenchantment.
As compensation consultants, we’ve seen time and again that leaders are key to pay transparency. Creating a culture where money takes a backseat to the other factors mentioned above requires a partnership between leaders, the employee, and HR.
In this article, we’ll share five tips to help you empower managers with the tools and knowledge to engage in meaningful compensation conversations.
Why it’s worth teaching your managers about compensation
HR professionals don’t have the time or bandwidth to have individual compensation conversations with every employee in their organization. As a result, your managers are critical in cascading compensation information throughout the company.
However, most managers don’t feel equipped to speak to their organization’s compensation strategy—let alone unpack the details with each of their team members.
Further, their lack of confidence makes these discussions awkward and uncertain, often leaving employees more confused than before. Without manager buy-in, the compensation process remains a black box.
When employees are told, “no,” to compensation increases with avoidant explanations like, “I wanted to give you more but HR told me I couldn’t,” this builds distrust and increases the likelihood of turnover.
When your managers are equipped to discuss compensation with employees and deliver a clear response to their questions, it will be easier to coach them toward their ultimate performance goals.
5 Ways To Empower Your Managers To Have Meaningful Compensation Discussions
Managers typically haven’t received formal training or rewards for understanding compensation practices.
However, they need a good, high-level grasp of your organization’s basic compensation philosophy and practices to engage in transparent conversations with employees about current and potential opportunities.
HR teams can help reduce the learning curve and enable managers to have meaningful compensation discussions with their teams. Let’s bridge the knowledge gap together!
1. Talk about the organization’s compensation philosophy.
A transparent and well-communicated compensation philosophy is essential. It is important to share your organization’s compensation philosophy with your leaders and educate them on how it anchors your compensation practices and decisions.
Leaders and HR teams should align on the organization’s compensation principles, including how to price jobs competitively, how performance impacts pay and promotion decisions, and how pay aligns with the company’s culture and values.
Once your compensation philosophy is set, create concise and digestible resources that clearly articulate it. Having this is a key attraction and retention tool. However, the real key is making sure managers understand how to talk about it.
2. Teach your managers basic compensation principles
Managers don’t need to be compensation wizards, but they should grasp the core principles. That means getting a handle on the basics: salary structures, market data, and performance metrics to promote more consistency in decision-making.
Simple manager compensation handbooks are not the answer.
Conduct live training classes to help managers explain these basic concepts and how they are used in your company’s compensation practices. Use practical case studies and a facilitated discussion where they can ask questions.
More importantly, help explain concepts in a way where they can be positioned to answer employee questions about pay transparency.
3. Help managers own their pay decisions.
Managers should be trained to plan pay conversations effectively.
This involves empowering them to answer tough questions about their team members’ pay, progress, and potential for growth within the company.
Honesty and transparency are key to building engagement and trust.
4. Promote a “total rewards” compensation perspective.
Fair pay is essential, but so is providing a holistic view of the total compensation package (base salary, bonus, benefits, culture, remote work, career development).
Managers should understand and communicate the value of total rewards, emphasizing what makes the company’s culture and benefits unique and appealing.
This one is key, especially for employees who have not worked in many other organizations and simply may not have the perspective.
5. Conduct periodic “experiential learning” sessions.
Most managers haven’t been trained in how to understand their compensation practices, much less have conversations about pay, so give them a safe place to practice those conversations and learn from each other. Confidence will skyrocket!
The bottom line: Leader transparency around pay contributes to a more fulfilling work culture.
While pay is a critical consideration for employees, it is not the sole driver of engagement.
To create a fulfilling work environment, organizations must empower managers with the knowledge and tools to engage in meaningful compensation conversations.
Transparent communication, training on compensation practices, and fostering a safe space for practice can lead to richer conversations centered around employees’ goals and development.
Ultimately, this approach can change employees’ perceptions about fair pay and foster a more engaged and purpose-driven workforce.
If you need help with any aspect of compensation—from job alignment and pricing to compensation structure and manager compensation training—reach out to us at MorganHR!
We’re compensation experts dedicated to making pay feel fair, relevant, and right. We’ve helped many organizations achieve pay transparency and seen the positive culture changes as a result—and we can do the same for you! Get in touch with our team today to learn more.
