The role of a manager extends beyond just overseeing operations and ensuring productivity. With ongoing culture shifts and the availability of pay data to employees, managers are increasingly expected to engage in open conversations about pay with their team members.
By embracing these conversations instead of avoiding them, we can provide clarity around pay decisions and career opportunities, and help to retain talented people. However, many leaders are unprepared to talk about pay with their employees.
Our 2023-24 Global Salary Planning Survey found that 67% of participating organisations offered no training for managers surrounding pay conversations. This article aims to discuss the importance of equipping our leaders with these skills, as well as what can be done to improve our processes.
The Role of Managers in Pay Conversations
Managers are the bridge between the organisation and its workforce, responsible for conveying the company’s pay policies and decisions. However, this task is not as simple as it sounds. Pay conversations can be sensitive and demanding, requiring empathy, fairness, and a complete understanding of the organisation’s pay structure.
People often find it awkward to raise the topic with their manager, which is why it’s so important to equip leaders with the skills to approach these conversations positively. No matter the situation, it is always better to open up a line of communication than to leave things unsaid.
Unanswered questions can lead to speculation. Employees can quickly perceive their own pay as unfair when having poorly informed conversations with colleagues in similar roles.
Why Training is Essential
Despite reporting one-on-one meetings as the main method of communicating to employees about pay, our Global Salary Planning Report highlighted the current lack of support and resources for managers across the world.
Training managers to have pay conversations is not just about imparting knowledge of the organisation’s pay processes. It also involves equipping them with the skills to communicate these policies effectively and handle sensitive discussions.
With the right training, managers can build trust with their team members, leading to increased job satisfaction and reduced turnover. They can effectively address pay-related queries, preventing any misunderstanding or misinformation.
Furthermore, they can use these conversations as an opportunity to motivate employees, linking their performance and contribution to pay.
The Impact of Pay Conversations on Employee Retention
Pay is a critical factor in employee retention. Employees who are not satisfied with their pay or do not understand the pay structure are more likely to leave. By training managers to have effective conversations about this, we can ensure that employees understand their pay, perceive it as fair, and see a clear link between their performance and their salary. This can significantly increase job satisfaction and employee retention.
In fact, Deloitte company Josh Bersin found that well-communicated pay equity was 14 times more important to retaining employees than high levels of pay.
The Right Approach to Pay Conversations
Pay conversations should not be a one-time event, but an ongoing dialogue. Managers should be trained to discuss pay as part of performance reviews, career development discussions, and in response to any pay-related queries or concerns raised by employees.
The conversations should be open, honest, and respectful, acknowledging the employees’ viewpoints. Managers should also be equipped to handle difficult conversations, such as explaining why an employee did not get a pay raise or why there is a salary discrepancy between two employees.
The key to a productive pay conversation is preparation. The more prepared you are, the more confident you will be.
Ensuring managers are familiar with the organisation’s career framework, pay progression guidance, and job evaluation process will provide them with the necessary pay range information for the role in question.
Similarly, it will allow them to back up any decisions with tangible evidence—not opinions or assumptions.
Steps to Improve
Organisations can take several steps to improve the training provided to managers for pay conversations. Firstly, the training should cover the technical aspects, such as understanding the pay structure, the factors that influence pay decisions, and the organisation’s pay policies.
Secondly, we should also focus on developing communication skills, such as how to explain complex processes and decisions clearly, how to handle sensitive questions, and how to manage difficult outcomes.
Furthermore, role-plays or simulations provide managers with a practical experience of pay conversations that can boost their confidence in real-life scenarios.
Lastly, providing ongoing support and resources is essential. This may include guides, videos, or FAQs to cater to different types of learners and ensure employees and managers alike have access to information surrounding pay decisions.
If you’d like to find out more about how other organisations are managing pay and training for managers, you can purchase our 2023-24 Global Salary Planning Report here.
Likewise, our reward communications services can provide you with expert support when looking to communicate a change in pay policies and frameworks, offer new training programs, or improve your approach to pay transparency.