The latest Salary Trends Survey conducted by Employment Conditions Abroad International (ECA) found that Singaporeans will see their salaries increase by 4 percent in 2018….
Negotiating on Pay: How to Hold Compensation Conversations?People Development Productivity Resource RETAIN May 18, 2017
It is no secret that good compensation remains a crucial force in making sure, your top performers stay with the organisation. The problem however is, discussing pay with employees which can be a difficult task to accomplish, let alone negotiating about it. The ‘money talk’ can be difficult, given the sentiment that every number you offer to employees might either boost their spirit, or depress them instead.
If you find similar problem in dealing with compensation issues, you’re not alone. According to 2017 Compensation Best Practices Report conducted by PayScale, only 19 percent organisations are very confident about their manager’s abilities to have tough conversations about compensation with employees.
As uncomfortable as it might be, pay negotiation is but an obligation that every manager has to deal with throughout the year. The discussion should be handled cautiously to retain top talents, while preventing the risk of voluntary turnover.
When it comes to compensation conversation such as pay raise or incentives, most leaders understand that in most cases, these reimbursements should be based on employee’s high performance and active contribution rather than biases and favouritism.
However, while you might adhere to this principle, there are chances where pay negotiation goes into the wrong direction. When managers fail to plan an upright strategy, companies might end up paying more than they could afford, thus creating room for salary disparities among co-workers, or even losing the best talents.
So the question remains, how should you hold successful compensation conversations that create win-win solution for both employees and the employer? Here’s how:
- Maintain regular check-ins with employees
Make sure that you already have well-arranged procedures regarding to compensation, raise, and bonus negotiation within the company guideline book. This kind of written policy will facilitate a better salary discussion.
You should also conduct regular check-ins with employees, such that they will know their performance ratings within particular period. Through this method, they won’t be surprised when they get less or more compensation during the annual salary review.
- Do your homework well
Money discussion is a sensitive issue. Therefore, it is crucial to always base your decisions on solid facts. Do your homework well to check and review employee’s performance assessments before meeting with them in the first place.
If they are complaining why they don’t get the bonus, you have to explain the details why. This way, they won’t be resentful or even think that your decision is made by subjective point of view.
- Eliminate any chance of bias to grow
To prevent any prolonged claims of bias during pay negotiation, you should eliminate any chance of favouritism to grow within the organisation. Make sure that any decision which is grounded on fair and square assessment towards individual work quality rather than personal reasons.
- Do not overpromise
Be cautious about everything you promise to employees, as this might backfire you in the future. For instance, you might think that promising pay raise next time is a good way to motivate employees to work harder. However, that is not necessarily true. This will only give them false confidence that they will receive larger pay regardless of their performance.
- Communicate the employee’s value
Take compensation discussion as an opportunity to let the employees know their value and contributions for the organisation. Rather than merely handing them the incentives and leaving without words, show your appreciation by telling them how their efforts have been helping the company to stay competitive.
- Keep it confidential
Just like performance review, you should always keep the pay talk confidential, as only you and related parties are involved during the negotiation. Conducting salary conversation is part of leader’s responsibility.
The key point to hold an efficacious pay negotiation is to be frank and open with your employees about how much they are worth for the company’s sustainable growth. While this often comes across as an awkward situation, you should not let tough compensation conversation ruin your efforts to retain top employees onboard.
You might also like
Back then, when someone used to switch careers after shorter periods of time (usually say one or two years working for a company), they would…