As a compensation professional, you don’t need me to tell you how chaotic things are at this time of year.
When January comes around, employees have had time to think about their newly minted salaries (and discuss them with their families)—and that initial gratitude can quickly turn into confusion and even disappointment.
In my decades of compensation experience, I’ve seen the same major themes at play every January. Keep reading to find out what those themes are, why they exist, and what your organization can do to combat them.
- Top Complaints Comp Pros Experience (& Why They’re Occurring… Again)
- How HR Pros Can Address These Issues & Solve Them For Good
- 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 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:
- “I’ve gotten the same salary increase for X years, and others are getting more of an increase than I am.”
- “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.
How HR Pros Can Address These Problems & Solve Them For Good
If you’re an HR pro who’s hearing these complaints consistently and from multiple employees, here’s how to address them with a long-term solution—not a quick fix. If you really want to solve the issue and avoid revisiting the same problems in 2025, you need to commit to doing all of these things.
1. Understand this is a relationship problem, not a compensation problem—and communicate with (and educate) your managers.
Your employees need (and deserve) to have an honest conversation about how you arrived at the compensation decision. They should know:
- How management and the compensation team evaluated them on the performance spectrum
- Where they sit on the contribution spectrum
- What the company can actually offer in terms of compensation
Prepare your managers to explain how and why compensation at your organization will likely differ from what other companies can offer in adjacent industries.
Then, give your employees an opportunity to respond. A good partner and leader knows what their employees expect in terms of salary increases; can identify why an employee might be dissatisfied; and has documentation about the employee’s goals with the company and their plan for future growth.
2. Get feedback from your managers about employee conversations.
Gather information about the conversations managers actually had with their employees and ask for their perspectives on how those conversations were handled. Here’s how I recommend doing it:
- Ask: What were the benefits and drawbacks of the experience? Ask open-ended questions. Don’t ask “whether or not” the conversations were good—this does not provide helpful data.
- Ask: What three things would you expect me to fix in order to be more helpful to you as you prepare for next year’s conversations? Tally up your feedback from across all managers, find the common themes, and you’ll see the items you need to address and take action on.
Their feedback will help you decide what changes to make.
Once you make that decision and start implementing changes, make sure your actions are clear to everyone. That means communicating about what you’re going to change; communicating what you’re currently changing; and communicating what you’ve changed after you’ve done it. All these touchpoints will make it clear to your managers that you’ve been listening—and took action to help.
3. Ask for help in making changes.
There’s no need for you to take on everything all by yourself. Doing something right may require asking for help.
For example, ask your HR partners for help with how to have tough conversations if communication is a weak spot for you. (Trust me—your colleagues know your weak spots already; use their strengths to help you improve!)
4. Make sure your organization’s budget addresses any issues you have.
Anytime you’re trying to improve a process or improve pay equity, you have to make sure your budget addresses issues in larger areas. Address pay equity issues before the cycle. Did you create compression, are you facing inversion issues, etc.? It would be nice to know before—get ahead of the numbers.
5. Identify and prioritize changes to your compensation planning.
If you’re aware you need to make changes, know you do not have to change everything at once. Especially if you’re new to an organization and you’ve not had a structure before, give yourself permission to do only a grade structure, or organize the merit process to be less chaotic, etc.
One important note: If you don’t have a performance management plan, it does not make sense to start with a compensation plan. Your performance should inform your compensation plan, and your comp should support it, so implement a performance management plan first, then a compensation plan.
6. Start your merit cycles earlier.
Don’t wait until you return from summer vacation in August to start the comp process. There are important milestones to accomplish each month of the year; below is a calendar to use as a road map so you don’t put things off or forget them altogether, and end up in a mess come Q4.
Addressing (& Solving) Compensation Complaints For Good: 3 Resources You Need
Juggling all your tasks as a comp pro (or an HR pro who is in charge of comp for their organization) is a daunting task—but it doesn’t have to be that way!
Below are a few tools and resources I use and/or recommend. Some of them were created by our team because there were no existing solutions outside of spreadsheets. With these tools, your next comp cycle doesn’t have to be a “chaos cycle.” Here we go:
Some of the January frustrations you’re feeling might be because of how you gathered compensation information. It was stressful to you personally—as well as everyone else involved in the process—because it was based on archaic spreadsheets. We heard this complaint for so long that we had to fix it ourselves.
Enter SimplyMerit.
SimplyMerit is a tool that frees your people from errant spreadsheets and one-off data manipulation. With spreadsheets, it’s easy for someone to undo data, unlock fields, or make unauthorized changes. This isn’t the case with Simply Merit. It’s an organized, easy-to-use tool that’s a godsend for comp and HR pros.
HR pros and managers want what SimplyMerit provides: accurate, complete compensation data at their fingertips and a way to move through it that guides them in making effective merit decisions.
With spreadsheets, you’re just postponing conflict. With SimplyMerit, you have the ability to address issues as they arise instead of going through an entire cycle. It’s not just easier to use than a spreadsheet, it’s a holistic tool for communication and collaboration that can transform companies.
See what it would be like to ditch salary spreadsheets forever: Try SimplyMerit for yourself here.
At many organizations, employees feel like managers are throwing darts on a wall to determine their pay, and managers assume people are just thankful to be getting paid. No one is privy to the reasons why the numbers are what they are—which leads to a disengaged workforce, inconsistent compensation practices, and compliance risks.
If you could get your entire company to understand why they get paid what they get paid, how to get paid more, and how to create more value (as in, get promoted), you could change the entire dynamic of your organization!
You can get started doing exactly that with our CompAware training program. The goal of the program is to teach leaders how to clearly and effectively discuss pay and performance in a way that inspires and motivates their teams.
These live, interactive 90-minute sessions are delivered virtually or in-person. Training can be delivered to individuals or teams. Curious to learn more? Visit our CompAware page.
Sometimes you need an outside expert to help you identify the obstacles you’re facing and see clearly how to address them.
At MorganHR, that’s who we are. We’re a strategic partner in navigating the complexities of compensation and human resources, and we help companies like yours figure out their needs, serving as your strategists and partners.
Learn more about MorganHR’s HR and compensation consulting expertise, and let us help you change your compensation cycle for the better.
