Early in my career, I dreaded the annual pay conversation. Even as an HR leader, I dislike conflict—whether the raise wasn’t enough, someone wanted to negotiate, or I had to deliver tough feedback. When the conversation ended, I’d sigh with relief, glad I didn’t have to deal with it again for another year. However, over time, I learned employees wanted to talk about their pay, performance, and career….often!
Here’s the reality: pay is never a one-and-done topic for employees. It’s personal, sensitive, and constantly changing. Employees continually compare their compensation to job postings, friends’ salaries, and what they feel their contributions are worth. Pay isn’t just about numbers; it’s tied to how employees perceive value.
What Holds Us Back?
For managers, the hesitation to talk about pay more than once a year likely stems from the same concerns I faced years ago. Many of us want to avoid confrontation, uncomfortable questions/negotiations, or delivering disappointing news. These conversations can feel like potential conflict waiting to happen, so we tend to avoid them.
Plus, let’s be honest—managers rarely get recognized for having great pay and performance conversations.
However, the tide must change. The workplace landscape has shifted. Employees today expect transparency. They want feedback, and they have access to pay information from multiple sources, leaving them more informed—and often more uncertain—about where they stand. Employees, too, may feel unsure about how to broach the topic of pay.
However, the norm still tends to be that pay is only discussed once a year. I hear this all the time in our CompAware training sessions. But does this approach help anyone? Having only annual pay conversations can only create tension and missed opportunities to clarify, educate, and engage employees.
Benefits of Changing the Norm
Changing the norm by making pay conversations part of ongoing dialogue throughout the year offers several benefits:
- Builds Trust: Consistent discussions show that pay is not taboo. This transparency fosters trust, and employees feel comfortable asking questions.
- Creates a Safe Space for Growth: Linking pay to career development discussions helps employees understand how their performance and contributions align with compensation.
- Gets Ahead of Retention Issues: Regular pay conversations allow managers to address concerns before employees seek answers elsewhere.
I’ve often heard the concern, “Well, that employee is looking—they’ve got one foot out the door.” But is that the case? If employees have questions about their pay, wouldn’t you rather have them ask their manager than rely on their research or external sources? I certainly would. I’d vote for an open conversation any day over losing someone due to unanswered questions.
Five Quick Tips for Infusing Pay Discussions Throughout the Year
1. Provide Constructive or Positive Feedback:
Use regular check-ins as an opportunity to recognize employees’ contributions. Or, in some cases, be frank about how performance that doesn’t meet expectations may impact merit.
Tip: “You have missed several deadlines. As of right now, your performance isn’t meeting expectations. I want you to know that this could negatively impact your merit increase. Let’s talk about how we can adjust.”
2. Be Open and Transparent:
Don’t shy away from sharing how pay structures and merit increases are determined. The more information employees have, the less they’ll speculate.
Tip: “Here’s how the merit budget works this year and how your performance ties into potential pay increases.”
3. Tie Pay to Development:
Regularly connect pay conversations to performance and development goals.
Tip: “If you continue to take on more leadership in these areas, you are headed towards an exceeding expectations rating; let’s talk about compensation during our next check-in.”
4. Make Pay a Two-Way Conversation:
Encourage employees to share their thoughts or concerns about pay.
Tip: “How are you feeling about your current compensation? Is there anything you’d like more clarity on?”
5. Check-In Frequently:
Don’t wait for the annual review. Incorporate pay discussions into quarterly or project-based reviews to create a sense of ongoing progress.
Tip: “Now that we’ve completed this project, let’s discuss how it reflects/impacts your compensation and what’s next for you.”
By making pay discussions a regular part of the conversation, we take the pressure off the annual merit review and turn it into something more natural and constructive. It helps build trust, encourages growth, and keeps employees engaged. So, let’s move past the once-a-year chat and start making pay a topic we discuss openly and often—because, ultimately, it’s about keeping our people connected, informed, and valued.