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Communicating

COMPENSATION
Your guide to tackling tough
conversations about pay.

A PAYSCALE PUBLICATION

Introduction
Whether youre rolling out a brand new compensation plan,
preparing to make a pitch to your executives about why you need a
compensation plan, have recently updated your plan, or just want to
learn more about compensation, this is the eBook for you!
At PayScale, we believe the messaging about your compensation plan is as important as the
plan itself. Thats why this eBook is full of all sorts of useful tips and tools for getting your
compensation communications right.
Youll learn:
Compensation and communication basics
What to consider when developing a compensation communication plan
How to gain executive support for your compensation plan improvements
How to prepare your managers to talk compensation with their direct reports
Sample language your executives can use to spread the word about the plan
Commonsense answers to questions such as: How can I tell my high-performing, high-paid
worker that shes not eligible for a raise? Or, How can I motivate my low-paid, low-performing
worker? And, what are some ways to sweeten the compensation pot when theres no money
in the kitty?

The eBook contains five sections:


Section One: Communication Basics 4
Section Two: Compensation Basics 11
Section Three: Gaining Executive Support 16
Section Four: Communicating Compensation 22
Section Five: Equipping Managers 25

Waddya think? Lets get started!

Section One

Communication Basics

Youve got all kinds of fantastic ideas about improving your companys
compensation plan, dont you? (We thought so!) But before you
approach the powers that be about any sort of change (you know how
they hate change!), make sure youve got your communication and
compensation basics down pat.
Communication Dos and Donts
Youll be hard pressed to send the wrong message when you do your communications right. Wow your audience with
your communication AND business savvy by following these communication dos and donts.
DO know your audience: Whats important to them? How do they prefer to receive communications? (Via e-mail,
memos, group meetings, etc.)
DONT go crazy with the jargon: Break concepts down to simple language.
DO present a way forward: Be sure youre getting to yes.
DO focus on results: Dont get lost in the details.
DO develop a timeline: Work backwards from your desired end date.
DO be direct and empathetic: Talking about compensation can be downright uncomfortable! Money is a personal
topic for many(although not Millennials, apparently, but more on that later) and impacts an individuals livelihood
and sense of self-worth, even. (Gee, this stuff is heavy, huh?)
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Hot tip!
When developing appropriate messaging,
think PACT. Purpose, Audience, Context,
and Technique.

Communication and Conflict


Sometimes managers are reluctant to talk about compensation because they fear the conversation could cause
conflict, and it might. However, your managers need to know that conflict is a part of the job. It cant be avoided
entirely, only managed.
Teach your leaders how to do just that by first recognizing the three stages of conflict: low (latent tension), medium
(overt conflict), and high (power
struggle).

Stages of Conflict

During the low stage of conflict,


the goal should be to prevent
any further escalation. During

10 Roles in
Managing Conflict

Power Struggle

Overt Conflict

Latent Tensions

Contain

Resolve

Prevent

The Peacekeeper

The Healer

The Bridge-builder

The Referee

The Equalizer

The Teacher

The Witness

The Arbiter

The Provider

the medium stage, youll want


to resolve the conflict thats

The Mediator
Adapted from William Ury, thirdside.org

brewing. And during the high


stage, youll need to contain the conflict before it erupts into full-blown combat.
Try and keep your conflict management role in the yellow area (see Graphic) by functioning as a provider, teacher, or
bridge builder. Once youre in referee (red) territory, things have gotten out of hand. (Cue scary music.)

The take-away? Address conflict early and often for best results.
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Communication and Transparency


Employees know...

Managers know...

Only their own salary

Only their own salary

Their range and where it caps out

The salary of their direct reports

All grade assignments for jobs up to a certain level

The salary of all those on their team

All grade assignments for all jobs

The grade assignments & ranges of their direct reports

The ranges associated with grade assignments to a certain level

The grade assignments & ranges of all those on their team

The ranges for all jobs

The grade assignments of all positions up to their level or up to a


certain level

Everyones pay

The ranges of all positions up to their level or a certain level


All grade assignments for all jobs
The ranges for all jobs
Everyones pay

Everybody is talking about transparency these days! Transparent organizations are committed to the free flow of
information, from the top on down and all around.
However, it may not suit your company for everyone to know everything. Thats okay. Transparency occurs on a
spectrum, and theres a right level of transparency for every culture.

Levels of Transparency
Whatever level of transparency your company decides is best, be sure that your messaging across the organization is
consistent and managers are on board with the decision.
For example, if its been decided that managers can only share with employees the pay ranges up to the employees
level, managers shouldnt share higher level pay ranges as that will detract from a sense of fairness.
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Communicating with Executives


Communicating with executives involves:
Understanding the executive audience: Put yourself in the shoes of your executives.
Making sure compensation is aligned with business objectives: Present yourself as someone who understands
the business.
Incorporating leading edge practices: Your execs need you to keep them abreast of the best of the
best practices.
Keeping executives up to date with quick snapshots: Keep the details to a minimum, please.

Listen up!
Good listening skills are vital to good communication.
Before you can listen well, however, you first have to SELF-REFLECT.

Listen Actively

What kinds of things may be impacting your ability to listen or


consider what youre hearing? Are you distracted (focus, please) or
biased in certain areas? (Dont worry, we all are. Its a question of
facing and then managing the biases.)

Self Reflect

Agree & Act


Communicate
Assertively

Practice ACTIVE LISTENING while COMMUNICATING ASSERTIVELY.


Both are important for effective communication. If youre thinking
about your next response while the other party is speaking, or if
youre not speaking at all even when a response is required, youre missing the boat. (And most of the discussion, too.)
As the conversation is winding down, try and come to some sense of agreement and then move forward with action.
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Hot tip!
Good listening requires more than ears to hear! Experts
estimate that words make up only 7% of face-to-face
communicationsthe rest is through tone of voice,
demeanor, body language, and other behavioral cues.
Train your managers to recognize and respond to these
other means of communication.

Section Two

Compensation Basics

Compensation is a Keystone
Heres your MANTRA for the day (and all the
days to come): Compensation is a keystone.

Individualized rewards
and recognition

Keystone n. Something on which associated


things depend for support.
Compensation holds together your business strategy so
that your organization can withstand the weight of the
competition. (Clever, huh? We like it, too!)
Good compensation ensures organizational success. When
people arent paid right, all kinds of things go wrong. (Think
turnover, loss of engagement, loss of productivity, and
lawsuits, to name a few!)

Variable costs

The Compensation Mix


Your compensation mix consists of four tiers: compensation
philosophy, strategy, and culture; your fixed costs from
base pay; your variable costs from variable or incentive
pay; and individualized rewards and recognition. Your mix
should be unique to your organization and aligned with your
organizational goals.
For example, it could be that some combination of pay for
performance, bonuses, and commissions works best to
incentivize your employees to desired performance, but that
may not hold true for other companies.
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Fixed costs

Comp philosophy,
strategy and culture

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Compensation Terms
Need to brush up on your comp terms? (Or want a handy dandy cheat sheet to show your execs?) No problem. We aim
to please!

Talent (i.e., labor) market: It is described by the industry, size, and location where you compete for talent in both
recruitment and retention efforts.

Pay range width: The span of a pay range. Encompasses the minimum, middle, and maximum amounts.
Range penetration: Where an individuals rate falls relative to the range.
Compa-ratio: Measures the relationship between the salary of an employee and the midpoint of the pay range for
that employee.

Market ratio: Measures the relationship between the salary of an employee and the value of their position in the
market.

Red-circled employees: Red outliers (or red circled) are individuals whose pay exceeds the maximum
of the pay range.

Green-circled employees: Green outliers (or green circled) are individuals whose pay falls below the minimum of
the pay range.

Pay for performance: Rewards are based on whether an employee exceeds, meets, or fails to meet expectations.
Schedules: A group of grades and ranges used to differentiate fair pay to the local market while preserving internal
alignment.

Differential: Pay premiums on top of base pay based on differences in shifts, holiday hours, etc.
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Compensation Plan Design Elements


Approach your execs knowing the plan design basics (philosophy, strategies, structure, and policy) and being prepared
to get their input.

Philosophy: n.
A broad set of ideas about how you intend to compensate your employees.
What is your compensation philosophy?
We pay the best because we want the best.
We pay to market and hire the best we can.
We pay what we can and offer great benefits and a great work environment.
We pay below market but are willing to train.
We pay some positions at or below market and others above market in accordance with our talent needs and our
strategic plan.
We (fill-in-the-blanks)
Your compensation philosophy sets the foundation for your compensation policy.

Strategy: n.
A careful plan or method for achieving a particular goal, for example, defining talent markets,
level of competitiveness, and what to reward.
What is your specific plan for effecting your philosophy?

Structure: n.
The way that something is built, arranged, or organized.
How will you structure your comp plan? Think about pay grades, pay scales, bonuses, commissions, and other incentives.
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A well-structured comp plan:


Provides alignment to business strategy.
Clarifies relative worth of the position both internally and externally.
Ensures fair and legally defensible pay.
Defines a pay range for a position.
Creates clear career paths.
Provides flexibility to rewards based on performance and/or experience.

Policy: n.
A definite course or method of action selected from among alternatives and in light of
given conditions to guide and determine present and future decisions.
Your comp policy is an outgrowth of your pay philosophy and should support your organizational objectives. Your
policies (and/or guidelines) help you carry out your philosophy, strategy, and structure as intended.

Leading Edge Pay Practices


Incorporate leading edge pay practices into your compensation plan. These include:
Pay for Performance: Rewards are based on whether an employee exceeds, meets, or doesnt meet expectations.
Pay Grades and Ranges: Ensures competitive pay to market and internally; gives greater control over costs while
providing flexibility.
Targeted Strategy: Workforce segmentation of your organization depending on their value to the organization.

Thats So Yesterday!
Out-of-date pay practices include cost of living adjustments (COLA), broadbands, and singular strategies.
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Section Three

Gaining Executive Support

Understand the Executive Audience


Your executives got to where they are by learning how to get what they
want, so before approaching them you better get your ducks in a row if you
hope to get want YOU want. Understand that executives:
Dont want to be told what to do: Does anyone?
Can be distrustful of change: Change? Yeck! More hoops, more work,
and more $$$.
Are used to making decisions: Do your homework to provide several
options, then ask for input. Itll make your execs feel special!
Know they know stuff: Avoid coming off as a know it all yourself.

Ask the Right Questions


The RIGHT compensation policy starts with asking your executives the
RIGHT questions. (Weve provided a few right questions to get you started.
Arent we the best?)

Question: Why do you want to have a good comp program?


Answer: To pay people RIGHT.
Question: Why do you want to pay people right?
Answer: To attract and retain top talent.
Question: Why do you want top talent?
Answer: To accomplish our business objectives.
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Speak So Executives Will Hear


As you head into that oh-so-important meeting with your execs to get them on board with your plans, here are
examples of what to say and what NOT to say.

Example #1
Objective: You want to move from COLAS to pay for performance.
Dont say: I think its time to move to a pay for performance compensation structure.
Your execs will think...
Here we go again! This must be the hot new thing she heard at SHRM! Pay for performance? Thatll mean more
paperwork, forms, tough conversations, and maybe even tears! Whats wrong with the way we do things now?
Instead, say something like...
Weve all been tasked with making sure were good stewards of our budgets. Since compensation is our biggest
expense, I want to ensure our organization is doing everything we can to get the best ROI from our compensation
costs. Id like to get permission to explore compensation structure improvements.

Example #2
Objective: You want to move from broadbrands to pay grades and ranges.
Dont say: Im going to assign all our positions to grades and set ranges for our jobs.
Your execs will think...
Youre going to decide the value of our jobs without our input? And, This all sounds very formal. I dont want my
hands tied if I need to pay someone more.
Instead, say something like...
Lets determine our key organizational needs and use that information to drive the value of positions. From there I can
provide tools to enable management to make good pay decisions.
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Example #3
Objective: You want to move from a singular strategy to a targeted strategy.
Dont say: Im going to benchmark all the positions against market and create
salary ranges.
Your execs will think...
How does he know what the jobs are? Does he think he knows best about our
competitors? What IS the market? This all sounds like more rules. Arrrgh!
Instead, say something like...
Ive noticed [insert business problem in need of a solution here]. I believe its
important that we decide where we think we want to be with compensation and
what is going to serve our business best. Im going to do some research about
where we get and/or lose our talent and present my findings to you so we can
decide what course of action to take.

Immediate Actions
Here are some things to do right now to improve your compensation
plan (as well as improve your chances of getting your executives to
support your plan ideas):
Determine the level of transparency acceptable to your organization.
Understand your companys business goals.
Know your audience.
Review your current pay practices.
Share key information with stakeholders.
Provide managers with expectations, education, the big picture, and tools.
Stay flexible! Review compensation for your hot jobs at least quarterly to keep
current without having to go into full-blown project mode.

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HOT TIP!

Keep Your Executives in the Loop


Your executives have approved your compensation plans, and youre feeling pretty good.
Well, you should feel good! Congratulations!
However, your job isnt finished just yet! Even after the plan is implemented, they could use your
support. Give them the information they need to create and communicate policy intelligently:
Regularly REPORT OUT how the plan is performing. Your information should be high level (avoid
too many details) and relevant. Hint: PayScale makes this easy with multiple dashboards.
Give them TOOLS FOR SUCCESS (e.g., reports with relevant information).
Give them INSIGHT into what employees care about.
Give them TALKING POINTS for conversation with employees.

Section Four
Communicating Compensation

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Communication Roles
When it comes to communicating your compensation program, everyone plays a part: Executives, HR, managers, and
even employees (who need to provide feedback about the program). The plan clarifies who says what to whom, when
and how.
Executive role: Approve the program, communicate program company-wide, and perform manager role (if also a
manager with direct reports)
HRs role: Create the program and/or work with compensation experts to create the program, provide ongoing
communication with company executives, train managers, and perform manager role (if also a manager with direct
reports)
Manager and supervisor role: Understand the program, communicate with employees, get support from HR, and
support executive management and HR
Employees role: Understand the program, agree to the program, and communicate with manager/supervisor

Developing Your Communication Plan


Your compensation communication plan includes a timeline, objectives,
and key messages and should cover both pre- and post-implementation
phases of the plan AND messaging from your executives and managers.
(Yep, its a lot!)
Timeline: When will all communications be completed? Work backwards from your desired end date (make this BEFORE the payroll
during which any adjustments will be effected, please)!
Objectives: What do you want employees to know? What is your
purpose in communicating certain information?
Key Messages: What are the key messages employees should hear
from your leaders?
Because they work directly with line staff, managers bear the bulk of the
messaging, so well cover those communications in details in the next
section (Section V).
For now, lets focus on your executives.
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Executive Communication
Assist your executives to deliver high-level overview information about your compensation plan (managers will handle
the details when they meet with employees individually), by providing them with talking points, including a reminder of
the compensation plan philosophy and purpose.
A sample message from your executives might sound something like this:

Dear Employees of XYZ Company:


As you know, weve been conducting a market salary analysis to ensure our wages
are competitive and equitable both inside and outside the organization.
For the most part, our compensation is in line with the market. In some cases,
however, adjustments are needed, and these will go into effect with the next
payroll. Your managers will provide more detailed information during your next
review meeting.

Well say it again. How your company communicates your compensation plan is as important as the plan itself.

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Section Five
Equipping Managers

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Managers play an important role in supporting and administering the company compensation plan, but they cant do it
well without help from you. Equip your managers to have productive talks with employees about compensation by:
Setting expectations. Ask more and expect more from your managers.
Teaching negotiation skills.
Teaching listening skills.
Helping to prepare them for the compensation review meeting (including talking points).
Presenting compensation basics.

Ask More and Expect More


PayScales 2014 Compensation Best Practices Report found that 73% of leaders dont have confidence in their
managers abilities to effectively communicate wage and salary issues with employees. (Ouch!)
Managers are agents of the organization. Knowing how to talk compensation with employees is a must-have skill.
How can you assist your managers to feel more confident and speak more confidently about their compensation
decisions, knowing the decisions are sound and solidly link employees roles and organizational goals? Your assistance
is crucial, because when managers dont own their compensation decisions, employees become demotivated.
Come on. How hard would YOU work knowing your manager had no authority to reward your efforts? (Thats what we
thought.) And sadly, this kind of apathy can affect an entire organization.
Fortunately, there IS a solution. When managers are informed, educated, trained, and supported in compensation
matters, theyre better able to handle the tough conversations.
www.payscale.com

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HOT TIP!
Bring your execs into your managerial training,
and have them introduced. They will be more
supportive of the process and get some
training themselves!

The Art of Negotiation


When managers meet with employees to
discuss pay issues, they should expect to:
Sell the organization and put the full
package on the table. Your compensation
includes not only cash, but group
benefits and perks like a casual working
environment, free coffee, etc.
Sell the benefits of the offer (whether
initial wage or wage increase). Is your
employees compensation high relative
to his or her peers? If so, dont forget to
mention it!
Listen to the ask behind the ask. What
REALLY matters to your employees? Listen
for what theyre saying in between the lines
of what theyre saying.
Meet them and THEN move. What can the
employee do to increase his or her value to

PayScales Employee Report, including the Total Compensaton Statement,


facilitates conversations with employees and makes the conversation go a
lot more smoothly.

the organization and earn more money? Dont


end the conversation until youre given the
employee some place to go.
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Preparing for the Compensation Review Meeting


Assist managers to prepare for the dreaded compensation review meeting by providing talking points and a
managerial toolkit and by training managers in performance feedback and proper meeting follow up.

Talking Points
Talking points for the compensation meeting include any market/study results, your organizational compensation
philosophy, your compensation plan structure, the employees wage penetration, the employees new wage and the
rationale for it, career pathways, and an invitation for questions/comments.

Manager Toolkit
Your managers will appreciate a toolkit that includes all the forms and information theyll need to have a smart
conversation. Suggestions for packet material include the employees wage history, the teams wage history (useful
when discussing where this employees pay fits within the whole), the employees job description, and assigned goals.
(Note: PayScale does this for businesses who subscribe to our software with the Employee Report.)

Feedback
Before the compensation review meeting, give your managers this feedback tip: Its good to ask for permission. (Yes,
were serious!) Train managers to ask employees Is now a good time to share some of my observations with you? If
the employee says no, well... he probably wasnt going to be listening anyway! Better to schedule the talk for another
time.
Once permission has been granted, the manager will want to cover the employees behavior, the impact of the
behavior, and any changes needed.
Use the feedback sandwich. Start with positive information, delve into the negative, and then end with something
positive.

Think SPEAK. Specific, Professional, Empathetic, Authentic, and Kind. (We just made that
up, by the way!)
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No Surprises!
A compensation review meeting should never, EVER contain
information thats a surprise to the employee. Instead, the meeting
should, in many ways, be a recap of what the employee already
knows about her performance.
Earn more do more. The compensation conversation should always incorporate how the employee can do more and
earn more. Even your most stellar employee could learn something new or contribute in a new way.
Follow-up. The meeting follow-up is as important as the meeting itself. Be sure your managers know to sign anything
that needs signing, document the meeting outcomes, and (as time progresses) start or continue to provide ongoing
feedback.

Check Us Out!
At PayScale, we feel so strongly about communication that weve developed a training plan specifically to instruct
managers how best to introduce a new compensation plan.
Available as part of our Expert service offers, our Manager Training Program covers compensation basics (such
as compensation lingo and definitions) and emphasizes how managers must champion the pay philosophy and
understand the rationale for compensation decisions. We show managers how to use the PayScale Employee
Report as the basis of their discussions with employees. The training also covers how managers can align pay with
performance by assigning SMART (Specific, Measurable, Attainable, Relevant, and Timely) goals and providing direct
reports with regular performance feedback. Well even teach managers the proper way to calculate pay increases!
Finally, we talk managers through how to handle some pretty typical scenarios around communicating compensation,
including what to say when someone says, I found this report on the internet...
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Conducting the Compensation Review Meeting


Your compensation plan has been developed, and your execs and managers think its grand. Now its time to deliver
the news to employees.
Depending on your organizations level of transparency, your employees may know a lot or a little about whats been
happening. Regardless, the rubber is about to meet the road, because news of pay adjustments (or not) is on its way.
Your managers, in particular, have an awesome responsibility ahead of them. Theyll be meeting with employees
individually and delivering the good or not-so-good news about what those employees will be paid going forward. You
want your managers to enter these conversations with confidence, say what needs to be said, hear what needs to be
heard, and end the meeting knowing they handled it well.
A managerial toolkit (See page 28) can help. The toolkit can contain compensation plan talking points, specific
information about your compensation plans structure, compensation history for each of the managers direct reports,
and conversation tips, depending on what type of conversation the manager needs to have with each employee.
In addition to the toolkit, however, your managers might need some coaching. Our two best coaching tips are lead the
conversation and anticipate employee questions and concerns.

Lead the Conversation


Eighty percent of employees compare pay information. The information they receive can influence:
Desire to stay/leave
Overall job satisfaction
Work effort
Put another way, your employees already have some information about their pay, and they definitely have an
opinion about their pay. So, train your managers to lead the compensation conversation. If the manager leads the
conversation, rather than waiting for the employee to frame the discussion, the manager will be in a better position to
ensure the meeting covers what the manager intended.
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Anticipate Employee Questions and Concerns


What do employees want? The answer will depend on the individual employee, of course, but most employees will
want something on this list:
More pay
Promotion
To be paid like their peers
To understand why others earn more than they do
To understand how their own pay was determined

Sample Scenarios
Of course, in addition to preparing for conversation that could happen, the manager needs to prepare for those
conversations that should happen.

Consider the following scenarios:


Scenario #1
Employee Pay: LOW
Employee Proficiency: GOOD OR ABOVE AVERAGE
Budget Available for Upward Adjustment? YES
Manager Mission: Deliver the good news that this employee is getting
a pay increase.
Sample Message: Dear_______. Youve been doing a great job, and our
research indicates that your position is gaining in market value. Last year you got an increase of X%, which was higher
than our average of X%. This year your increase will be X%, in recognition of your great performance and the value of
your skills in the market. Thank you and keep up the good work! Easy peasy.
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Scenario #2 (NOT easy peasy!)


Employee Pay: LOW
Employee Proficiency: BELOW AVERAGE
Budget Available for Upward Adjustment? N/A
Manager Mission: Deliver the not-so-good news that this employee is NOT getting a pay increase.
Sample Message: We appreciate your work on behalf of XYZ company, but as weve been discussing, your skill set is
not current with what were seeing in the market for similar positions. Our research indicates that your pay is low, but
we think this is fair considering your skill set. Therefore, you will not be receiving a pay increase this year. However,
should your performance improve, you may be eligible for an increase next year. Here are some goals. Lets discuss
your movement toward those goals at the end of the next quarter. Can I answer any questions?
Whew! You made it.

Scenario #3
Employee Pay: HIGH
Employee Pay: HIGH
Employee Performance: AVERAGE
Budget Available for Upward Adjustment? N/A
Manager Mission: Deliver the not-so-good news that this employee is
NOT getting a pay increase.
Sample Message: We appreciate your work on behalf of XYZ
company, and your skill set is current with what were seeing in the
market for similar positions. However, our research indicates that
your pay is high for this skill set. Therefore, you will not be receiving a pay increase this year. However, should your
performance improve significantly, or should your position gain in market value, you may be eligible for an increase
next year. Here are some goals. Lets discuss your movement toward those goals at the end of the next quarter. Can I
answer any questions?
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Scenario #4
Employee Pay: HIGH
Employee Performance: ABOVE AVERAGE
Budget Available for Upward Adjustment? Yes
Manager Mission: Deliver the news that this employee is NOT getting a pay increase, but WILL receive a lump sum
reward. (This could be touchy!)
Sample Message: Youre doing a great job, and we appreciate it! Our research indicates that your position value is
holding steady in the market. However, our research also indicates that your pay is above the maximum for the range,
so we cant offer you a pay increase this year. However, we can and are pleased to offer you a lump sum payment in
the amount of X in recognition for your contributions to the company. Thank you for doing such fine work! Also, Im
always available to talk about career pathways, should you decide that youd like to transition into another position
that offers greater income potential.
That wasnt too bad, eh?

Scenario #5
Employee Pay: AVERAGE
Employee Performance: BELOW AVERAGE
Budget Available for Upward Adjustment? N/A
Manager Mission: Deliver the not-so-good news that this employee is NOT getting a pay increase.
Sample Message: We appreciate your work on behalf of XYZ company, but as weve been discussing, your
performance is not where wed like it to be. Therefore, you are not eligible for a pay increase this year. However, if
your performance improves significantly, you may be eligible for an increase next year. As a reminder, here are your
performance goals. Lets begin tracking your progress monthly. Do you have any questions?
All done!
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HOT TIP!
Hey boss, I found this salary report on the internet, and...
Your employees have access to all kinds of wage information on the internet,
including PayScales personal salary reports. Some of its pretty good (hint), and
some of it is NOT so good.
What should you do when your employee brings you information from the
cloud and then asks for more money?
Here are a few tips:
Deal with conflicting information: The report your employee finds may not be relevant to your business, your
industry, or the size of your organization. Be prepared to tell him that.
Refer to your own data: Yes, we know its a little self-serving, but its also TRUE: If youve been matching your
compensation data against a reliable market data source such as PayScales compensation software, youll have
all the information you need to address your employee concerns intelligently.
Be mindful of position pricing versus people pricing: Organizational needs dictate job requirements and
therefore determine the appropriate value and range for the job; employee skills, abilities, and experience dictate
position in range.

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Generational Considerations
If you believe money issues are private, youre probably NOT a Millennial (1982-2002). Most likely youre a Baby
Boomer (1946-1964), or possibly an older Gen Xer (1965-1981).
Getting stuck on perceived generational differences has its downfalls, but thats not to say there isnt some truth to all
the brouhaha.
Overall, Boomers and Gen Xers expect to stay at your workplace longer than Millennials, and their career mindset
differs a bit, too. (For example, Gen Xers tend to value work/life balance, while Millennials value flexibility.)
Just something to think about as you consider and discuss total compensation with your employees!

When More Money isnt an Option


When theres no money in the budget for compensation increases, but you want to do something to recognize
employee performance (or retain employee loyalty), its time to get creative. Here are a few ideas.
Know what interests your employee. What motivates him or her? (Everyone is different.) Greater autonomy? The
chance to work on a high-visibility project? The chance to contribute to a special project of interest?
Additional/alternative perks. One company we know of brought a Ping-Pong table on the premises. Employees
loved it! What about free coffee (the good stuff)? Or fresh fruit?
FWAs. Flexible work arrangements (FWAs) include part-time work, job sharing, compressed workweeks, and
alternative hours. Would your business lend itself to any of those?
Staggered increase or offer. A little now and a credible promise of a little later can go a long way.
PTO. Would you employees appreciate more paid leave? You wont know if you dont ask.

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Immediate Actions
Here are some things your managers (and you) can do right now to begin improving employee conversations about
compensation.
Connect with employees about what motivates them. An engagement survey might reveal some interesting
answers.
Identify the compensation conversations managers need to have with employees.
Develop clear career paths.
Prepare any high-level messages about compensation.
Prepare toolkits for managers to use when communicating with employees.
Assess manager capacity for communicating compensation.
Develop a toolkit for your managers.
Train your managers.

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Summary
Well, that about wraps things up for now!
Need a few KEY TAKE-AWAYS?
Here goes:
Compensation is a keystone.
How you communicate the details of your compensation plan is as important as the plan itself.
Your compensation mix consists of: compensation philosophy, strategy, and culture; your fixed costs; your variable
costs; and individualized rewards and recognition. Your mix should be unique to your organization and drive your
organizational goals.
Most employees value transparency around compensation issues, but there is a right level of transparency for every
culture.
Managers and executives need your help in developing a compensation plan that supports your organizational
goals and in communicating that plan to employees.
Its good to review your compensation plan at least annually, and for certain hot jobs quarterly might be better.
PayScale is here to assist you with your compensation plan needs!

Want to learn how PayScale dashboards and reports can make


communication easier?
Get a demo of PayScale Insight and see how to get pay right.

GET A DEMO
http://resources.payscale.com/hr-request-a-demo.html
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About PayScale
Creator of the largest database of individual compensation profiles in the world
containing 40 million salary profiles, PayScale, Inc. provides an immediate and
precise snapshot of current market salaries to employees and employers through
its online tools and software. PayScales products are powered by innovative search
and query algorithms that dynamically acquire, analyze and aggregate compensation
information for millions of individuals in real time. Publisher of the quarterly PayScale
Index, PayScales subscription software products for employers include PayScale
MarketRate, PayScale Insight, and PayScale Insight Expert. Among PayScales
3,000 corporate customers are organizations small and large across industries
including Zendesk, Miele, Keen, H&M and Clemson University.

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