Teresa Murphy and David Wudyka have some ideas about how to make those conversations go a little better.
Murphy is the principal consultant for HR Partner Advantage, an HR advisory firm based in Raleigh, N.C. Wudyka, SPHR, MBA, BSIE, is the founder and managing principal of Westminster Associates, a Massachusetts-based human resource and compensation firm. They made their comments during a recent webinar sponsored by BLR.
Three Critical Steps
To prepare for a new compensation year, says Wudyka, comp managers should consider these three critical steps:
Know the compensation trends for the new year. You need to know the trends across the country, within your region, and within your industry (as much as possible). In comp, you have to be scanning the market and analyzing surveys. You have to have the data to make good decisions. Ideally, you have a survey that gives information that is local and in your industry, Wudyka says.
Decide upfront how you’ll divide the available compensation dollars. Before you allot and award any increases, make the broad decisions about compensation budgets.
Some companies just divide up the budget equally, but others allocate funds differently across departments depending on the value of the function to the organization.
Prepare your managers and supervisors. Most of all, says Wudyka, prepare your supervisors and managers for dealing with tough pay conversations with their teams. You especially want to manage any unrealistic expectations your rank-and-file employees may already have.
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Training Your Managers
Training managers and supervisors is your armor against lawsuits, says Murphy. They’ll take most of the hits, at least initially. If they aren’t prepared for the tough question, they can give a wrong answer that makes things worse. Employees assume that managers know what they are talking about. They’ll listen and they will pass on what they heard.
Consider holding one 90-minute training session before compensations plans or allocations are public knowledge, Murphy advises.
Watch out for your managers, says Murphy. For example, they may try to arbitrarily move people to exempt status because there is no money for overtime.
How to Handle the Most Common Complaints
Murphy shared her suggestions for handling the most common compensation complaints.
Complaint: “I’m one of your best workers!”
Honor the employee’s contributions, says Murphy, but don’t overdo it. Use concrete examples in your conversation to show that you do indeed realize how valuable this worker has been. At the same time, if the worker hasn’t been that great an asset, don’t “overpraise” what he or she has done. Overly positive statements might come back to haunt you later if the worker files any sort of claim, Murphy explains.
Help the employee to understand that the situation isn’t a reflection of individual performance, but a reflection of the overall economy and state of the organization.
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Be as upfront as you can if you’ve “maxed out” your ability reward this employee. If you’ve done all that you can do to offer this worker a pay raise, make sure he or she understands (in dollar terms) how you fought for the money to offer a raise in the first place. (Example: If he or she got a raise that’s larger than two-thirds of the workforce, it’s important that this worker recognize how well he or she made out.)
Explore non-monetary rewards that might appeal to this employee and show that you recognize his or her efforts. You want to have some of these in place—leave early, work on a special project, modest gift card—so you can use them when needed without breaking the bank.
In tomorrow’s Advisor, handling the “I can’t live on what you’re paying me” complaint, and an introduction to the one-stop shop for compensation managers—Compensation.BLR.com.
Great information 🙂