Addressing Compensation Complaints: Strategies for HR and Compensation Pros

As a compensation professional, you don’t need me to tell you how chaotic this time of year can be, especially with compensation complaints.

When January arrives, employees have had time to evaluate their newly adjusted salaries—and often, their initial gratitude shifts to confusion or disappointment.

Over the years, I’ve observed recurring themes each January. Below, we explore the top compensation complaints, why they happen, and what your organization can do to prevent them in the future.

1. Top Complaints Comp Pros Experience (& Why They’re Occurring… Again)
2. How HR Pros Can Address These Issues & Solve Them For Good
3. Addressing (& Solving) Compensation Complaints For Good: 3 Resources You Need

Video highlights:

If you’d like to learn in-depth about this topic, including real-life stories about how to handle employees who are unhappy with their compensation, check out our latest video discussion on compensation complaints.

Top Compensation Complaints Comp Pros Experience In January (& Why They Occur Each Year)

My own experiences and those others have shared with me suggest that employees have two major complaints around compensation:

1. “I’ve gotten the same salary increase for X years, and others are getting more of an increase than I am.”
2. “Inflation is so high this year—why am I only getting a small increase?”

While it’s helpful to know about specific complaints, the complaints themselves are only a symptom of a deeper problem. Usually, the problem starts long before employees go to their manager or the HR department (or you) and share their disappointment.

The most common problems that contribute to complaints are:

Problem #1: The process of determining compensation begins too late.

In many cases, the December prior is when managers recommend increases and data is collected. This is way too late to strategically plan compensation. Comp pros have so much to accomplish, and they have to rush through it all—everything goes too fast and you’re not doing any of it the best it can be done.

Problem #2: Senior leadership and management may not be in the loop about the actual amounts of increases or the rationale behind them, so they can’t knowledgeably respond to employees’ “why” questions.

They often have just a number they’re supposed to communicate to employees, and no contextualization for how that number came to exist or what can be done to increase it. This means they can’t answer hard questions employees ask.

Problem #3: Employees don’t get a clear explanation for their increase because the systems or processes for communicating increases are broken or do not exist.

I’ve heard of situations where employees get a Post-it note to inform them of their pay raise! This is very often a systemic issue—managers may have never experienced healthy, productive compensation conversations with their higher-ups, and they tend to follow suit with what they know when it comes to their own team members. They also don’t think to reach out to HR to develop a supportive partnership that can help them handle comp conversations in a different way.

Top Compensation Complaints (And Why They Happen)

Employees typically voice two major concerns about compensation:

1. “I’ve received the same salary increase for years, while others are getting larger raises.”
2. “Inflation is high—why is my increase so small?”

While these complaints are common, they are symptoms of deeper systemic issues. Most problems originate well before employees raise their concerns with HR or leadership.

The Root Causes of Compensation Complaints

Problem #1: Compensation Decisions Start Too Late

Often, compensation planning begins in December, leaving little room for strategic decision-making. Rushed evaluations lead to inconsistencies and misaligned pay increases.

Problem #2: Leaders Lack Context for Compensation Decisions

Managers may be given final compensation figures without a clear understanding of the rationale behind them. This makes it difficult for them to effectively communicate salary decisions to employees.

Problem #3: Poor Communication of Pay Decisions

Some employees receive little to no explanation for their salary changes—sometimes as informally as a sticky note. When managers lack the skills or tools to communicate pay decisions effectively, employee frustration grows.

How HR Can Address and Prevent Compensation Complaints

To tackle these recurring issues and create long-term solutions, HR professionals should implement the following strategies:

1. Improve Manager Training and Communication

Managers should be equipped to discuss:

• How compensation is evaluated
• Where employees stand in terms of contributions and performance
• What the company can realistically offer in terms of salary increases

Providing this transparency helps employees understand and accept compensation decisions more readily.

2. Gather Feedback from Managers

Encourage managers to share insights on employee compensation discussions. Ask:

• What challenges did you face in discussing compensation?
• What three changes would help improve next year’s conversations?

Identifying recurring themes from manager feedback will help HR refine compensation strategies and communication.

3. Seek Support When Making Changes

Improving compensation processes is a team effort. Collaborate with HR partners to develop better communication strategies, and ensure managers are equipped to discuss pay transparently and effectively.

4. Ensure Your Budget Supports Compensation Goals

Strategic compensation planning requires proactive budget adjustments. Address issues such as pay compression and inversion before they impact employee satisfaction.

5. Prioritize Compensation Planning Improvements

Not every change needs to happen at once. Focus on:

• Establishing clear pay structures
• Streamlining merit cycles
• Ensuring performance management supports compensation decisions

For organizations lacking a structured performance management plan, start there before refining compensation strategies.

6. Start Merit Cycles Earlier

Don’t wait until late in the year to address compensation planning. Establish a year-round calendar with key milestones to keep compensation strategies proactive rather than reactive.

Tools and Resources to Improve Compensation Processes

SimplyMerit: Eliminate Spreadsheet Chaos

Many compensation frustrations stem from outdated processes. SimplyMerit replaces spreadsheets with a real-time compensation management tool that provides:

• Secure, structured compensation data
• Guided merit decision-making for managers
• A streamlined, organized approach to salary planning

Try SimplyMerit and eliminate compensation chaos.

CompAware: Compensation Training for Leaders

Managers need guidance on effectively communicating pay decisions. CompAware is a 90-minute interactive training that teaches leaders how to:

• Discuss compensation confidently
• Address employee concerns effectively
• Align pay discussions with performance evaluations

Learn more about CompAware training.

MorganHR: Compensation Consulting Expertise

Sometimes, an external perspective helps identify obstacles and solutions. MorganHR provides strategic consulting to help organizations refine their compensation approach.

Learn more about MorganHR’s compensation consulting services.

The Bottom Line

Compensation complaints don’t have to be an annual headache. With proactive planning, transparent communication, and the right tools, HR professionals can transform compensation conversations and build a more engaged, satisfied workforce.