Difficult conversations are an inevitable part of management. The last thing you should do is put them off and allow a problem to continue or undermine your leadership authority. One of the more difficult conversations you may have to have with your employees is about pay, especially if the news isn’t in their favour. You should also be mindful that one of the main reasons cited for leaving a job is over pay.
If you are faced with a potentially difficult discussion about pay, what’s the best way to have a conversation that will leave your employee still feeling engaged, even if the news is not what they were hoping for?
Prepare in advance and manage expectations
I’m not solely talking about preparing for the conversation in advance although this clearly does play a part in this preparation. To start with things should not come as a huge shock to an employee. With regular contact throughout the year on their performance and the company’s performance they should have an idea of what to expect.
Do plan and prepare for the conversation in advance, but don’t be too scripted. You need to have flexibility and allow it be an open discussion. Listen to the member of staff and have a constructive conversation.
Check your facts and know if you are paying above or below the market rate for their job. Is this member of staff exceeding their goals and objectives or are these not being met?
Meet face-to face
Take the time to have a one-to-one meeting in a suitable location. For the majority of people the salary review will be a clear indication of how they are valued by their manager and the company. By taking the time to sit down with the individual to deliver the news gives you the opportunity to put it in to context and ensure they understand the reasons behind the decision. It also provides them the opportunity to ask any questions and resolve any concerns they have. Be prepared to offer a follow up meeting at a later date to discuss in more detail if their concerns cannot be immediately addressed.
Be transparent and honest
Always be honest about the reasons why you have had to either turn down a pay rise request or why a pay rise hasn’t been given. Whether it’s due to the individual’s performance needing improvement, or if the salary budget is under pressure, make sure you explain the reasons clearly and give a clear timescale of when the situation can be reviewed.
If a valued employee is unsettled and looking as though they are about to resign it can be tempting to try and keep hold of them by offering a promotion or pay rise in the near future. Before you do this make sure that this is realistic and not a promise you will end up having to break. The damage this will do in the long term is not just to that individual employee but to others in the team too. You will lose their trust and run the risk of them becoming disengaged as a team when they see you have failed to deliver.
Can you offer an alternative to a pay rise?
If you are unable to offer someone a pay rise, then think about what else they might value. This could be employer pension contributions, benefits through subsidised gym membership or shopping vouchers. Another high value alternative to employees is offering flexible working or learning and development opportunities.
Businesses will have different approaches to the way they manage pay rises, some will be directly linked to performance whilst others will have an annual increase across the board. In larger organisations line managers are having to deliver the news although have very little control over the decisions about reward. The key is to learn how to handle these difficult conversations that produce a better outcome for each party whilst keeping the relationship intact.