How to have a constructive conversation about pay

Job-hopping season is upon us and employees everywhere are dusting off their CVs, polishing their shoes and taking their interview outfits to the cleaners. You would think that after a tumultuous year – and in particular all the uncertainty created by Brexit – that people might be more likely to stay put in their roles. But research out this week from Investors in People suggests the opposite might be the case.

The organisation’s latest Job Exodus Trends Report shows that in fact nearly six in ten workers (59%) are considering moving jobs this year. Pay was cited as the most common gripe employees had with their current role, with 51% of those interviewed saying it is one of the main reasons they are looking for pastures new.

Organisations will have many different approaches to the way they manage payroll. For some, there will be an annual increase across the board. For others, pay rises are directly linked to performance. Line managers often have very little discretion over decisions about reward – but are in the front line when it comes to employees who feel they are not getting what they deserve.

So, if you are faced with a potentially difficult discussion about pay – or are managing the annual salary review process – what’s the best way to have a conversation that leaves employees feeling engaged, even if they don’t get the news they were hoping for?

1. Get your facts straight

Make sure you are equipped with all the relevant information before you enter into a discussion about pay. Is the company paying above or below the market rate for jobs in its specialist sector or geographical area? Is the employee being asked to go above and beyond the bounds of their job description? Are they meeting or exceeding the targets and goals that have been set for them?

If you have an in-house HR person, they should be able to help you with market information. If not, scour relevant job ads or seek advice from a recruitment agency so that you can make a sound judgement about whether a request for a pay rise – or a complaint about being underpaid – is justified. If it is, take it up with senior management. Salary budgeting exercises usually focus on the bigger picture, and it’s your job to flag it up if one or more of your team needs to be treated in a different way.

2. Meet face to face

Face-to-face communication and explanation of pay decisions are invariably preferable to telephone calls, emails or texts. For many employees, the salary review is the clearest indication of how much the company – and more specifically, their manager – values them.

Taking the time to sit down with individual team members, even if it’s just for a few minutes, is the best way to break both good and bad news. It gives you the opportunity put decisions in context and make sure they are understood. It also gives you the opportunity to listen to what the employee has to say. If a face-to-face meeting is impossible, arrange a call and perhaps follow up with a meeting at a later date.

3. Manage expectations

Ideally, decisions about salary increases shouldn’t come as a big surprise. Regular performance reviews and regular information about how the company is doing can help ensure that employees don’t have unrealistic expectations, or are somehow missing out in comparison to their colleagues. If people feel they are being unfairly treated, it can cause ill-feeling and may even lead to ructions within the team.

It’s important to let people state their case and to have an open discussion about their role, what expected of them and how they might be able to progress up the reward scale. If you have not already covered it during a performance review, involve them in an open discussion about the challenges of their job, how you both feel they are doing and what if anything may need to change.

This is equally important when you are actually able to give someone a pay rise. Celebrate their achievements, but make sure they are also clear about why they’ve been given the rise, any additional responsibilities or expectations that may come with their enhanced salary.

4. Be transparent

If you have to turn down a pay rise request, be honest about the reasons, if you can. Perhaps the salary budget is under pressure because the business needs to focus its spending on new equipment or facilities, or attracting and keeping staff with specific skills that will help drive or ensure business growth. Or, it could be that you just don’t feel the individual in question is performing as well as they could and you’d like to see some improvements before you can take them to the next level. Whatever the situation, make sure you explain your reasons clearly and if appropriate, give people a timescale for when the situation can be looked at again.

5. Consider what else you can offer

People very often under-estimate the value of their reward package. They compare their annual salary with other jobs they see advertised but overlook the fact that their role may also come with valuable benefits such as employer pension contributions, subsidised gym membership, health benefits or discount shopping vouchers. Make sure employees are seeing the whole picture and are taking advantage of what’s available to them.

If you are not able to offer them much in terms of a salary increase, think about what else they might value. The ‘Investors in People’ survey found that over a third of employees would choose flexible working over a three per cent pay rise, for example. You may also be able to keep hold of valuable employees who have become flight risks by offering them training and development, stretch assignments or the opportunity to do voluntary work in the community.

6. Don’t make promises you can’t keep

If you can see an employee is unsettled and may be heading out of the door, it’s tempting to try and keep hold of them by dangling the carrot of a promotion or a pay rise in a few month’s time.

Just make sure you are not making promises you may not be able to keep. This will only lead to disengaged employees and a breakdown of trust in the team when others see that you have failed to live up to whatever was put on the table.

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