Communicate about pay to get employees' total attention.

Communicate about pay for everyone’s total attention!

Pay, or ‘compensation’ as it is often termed in the US, is a key subject in any organization, as well as being deeply sensitive to employees. The employers need to communicate about pay from two broad perspectives – as a policy and framework to all employees, and very specifically to individual employees. Employees need to understand pay structures, philosophies, and actions they can take to progress financially in their career. Since the subject is so sensitive, most organizations under-communicate about it. Pay information is a responsibility of the HR department, who are usually like lawyers – they are habitually reluctant to communicate in case they go beyond regulations and policy relating to employees.

As a communicator, you can add value to your organization, especially to the HR department, by acting as a catalyst on communication about pay. This topic is close to everyone’s heart – and hip pocket – but too often employees are left in the dark about how their pay is calculated.The HR department doesn’t say how the amount was decided, which is something absolutely everyone wants to know. Employees want to know the pay and benefits they receive, and every employee wants to know what they need to do to earn a pay rise.

Perceptions of pay

Above image: Pay perceptions from 2017 survey of US employees by PayScale and BambooHR.

Negative pay perceptions create a strong need for employers to communicate about pay for their employees in view of the PayScale research in 2017 that revealed most employees believe they are paid below market rates.

  • About 35% of staff who are paid above market rates believe they are paid below market
  • About 64% of staff who are paid at market rates believe they are paid below market.
  • About 83% of staff who are paid below market rates believe they are paid below market.
Value drivers for employers and employees

Above image: Value drivers shown in BambooHR and PayScale 2017 ebook on communicating about pay.

Gallup’s 5 traits of outstanding managers

In a 2019 report, “The Manager Experience,” Gallup indicates its view of the most important 5 traits of great managers:

  1. Motivation. Inspiring teams to get exceptional work done.
  2. Workstyle. Setting goals and arranging resources for the team to excel.
  3. Initiation. Influencing others to act; pushing through adversity and resistance.
  4. Collaboration. Building committed teams with deep bonds.
  5. Thought process. Taking an analytical approach to strategy and decision-making.

But they have left out something vital! Like many management consultancies, Gallup seems to take for granted the importance of communication in the workplace as a vital skill at all levels – because good communication is central to the success of all these traits. But they hardly mention it in their report.

Roles for communicating about pay

Above image: Communication roles at different levels shown in BambooHR and PayScale 2017 ebook on communicating about pay.

Similarly, the above image includes a mention of the central role of communication in pay matters, but it seems to assume that HR, executives and managers can all communicate effectively. Yet as found in the two surveys below, internal communication is often weak, especially about pay. Therefore, employers need to communicate about pay policies to their employees much more than currently.

Managers are obliged to adopt a balancing act for employee pay matters. On the one hand, they are expected to support and develop members of their team, while on the other hand they need to represent the employer’s interests. It is essential for managers to be mindful of this balancing act when discussing pay with their direct reports. They want their team members to feel valued and respected, and if they fall short of achieving this intention, their people’s attitudes will turn negative and they will become disengaged.

In my own experience as a corporate affairs manager in some large organizations, I usually had almost no discretion on pay decisions, which in a low economy would be merely a cost-of-living adjustment of 2-3% rise per year. Consequently, team members were not motivated by the thought of pay reviews.

Managers are poor communicators

Mykkah Herner of PayScale discussed the results of a 2017 survey of 7,700 organizations about employee pay, including these alarming figures:

  • Only 11% of respondents strongly agreed that employees have a great relationship with their direct managers.
  • A mere 17% strongly agreed that there is frequent, two-way communication between managers and employees.
  • Just 19% were very confident in managers’ abilities to have tough conversations about pay.
  • And yet, 38% of managers overall were communicating about employee pay.

The PayScale findings align with the results of a Harris poll discussed in a 2016 Harvard Business Review article that showed a ‘stunning majority’ (69%) of managers said they were often uncomfortable communicating in general with employees. In view of these shortcomings, it is essential to train managers to handle pay discussions successfully.

How to prepare managers to communicate about pay

Despite employee feedback of general dissatisfaction about the way managers discuss pay, only 30% of respondents in the PayScale survey said their organization offered managers training for conducting pay discussions. And as shown in the image below, training managers to talk about pay issues is the least frequent training topic. Yet discussing pay is arguably the most critical conversation for a manager to get right because it establishes the groundwork for a trusting relationship.

Above image: BambooHR and PayScale 2017 ebook on communicating about pay.

Understanding exactly how pay for an employee is determined can be difficult. For instance:

  • How is industry data interpreted?
  • How are the employees’ pay ranges determined?
  • How do you determine where the employee fits within their range?
  • How is performance, responsibility and tenure factored in?
  • How is potential of the employee taken into account?

Providing managers with knowledge of pay basics is critical to the success of their conversations with staff because it is difficult to convincingly communicate information that a manager doesn’t fully understand. Herner says:

Managers also need step-by-step guidance to have specific compensation conversations with their employees. This requires a partnership between managers and HR teams as well as a mutual understanding about the degree of transparency around pay at the organization. It can be very daunting for managers to have more open conversations about pay because they don’t have experience fielding questions that are often highly emotionally related to an employee’s feelings of being valued and appreciated.

Put a communication case to key stakeholders

To improve managers’ handling of pay discussions, you should develop the outline of a communication plan showing the key results of the above general surveys (and any more-recent ones), plus any specific results of feedback or surveys within your organization. You need to base your plan on the fact that improvement is clearly needed on this vital aspect of employment. Then use the results in a discussion with your HR department about providing support for communicationi about pay. Assuming you are successful in gaining their support, put a case individually to members of your executive group, especially your CEO and the top HR executive. Don’t forget to brief your own boss. Is all this worthwhile? Yes, because understanding pay and benefits is extremely important to all employees.

Basically, you need stakeholder support for this initiative. If you don’t make the effort to informally gain their early support, you are not likely to get far with this proposal. You need to be tactful in your discussion with the HR department, because your are basically saying their current way to dealing with pay discussions is unsatisfactory, and they could get very defensive about this. So look for ways you could gently say this strategy is needed. Perhaps you could base your case on your organization’s need to explain to employees about forthcoming changes to government regulations about employee pay, or base it on your own organization’s planned changes, or could even time it to coincide with your organization’s annual pay reviews.

Communication plan about pay

Communication consultant Alison Davis recommends a 3-step approach to explaining about pay. The PR team can develop communication training content, enhance skill sets and provide tools to guide managers:

1. Ensure managers understand pay policy and framework

The best approach is to give managers good opportunities to learn about the organizational pay system. Decide the arrangement that best fits your situation and meets managers’ needs. For example:

  • Face-to-face group sessions can be arranged for managers to practice pay conversations and for more-experienced managers to share what works and what doesn’t in reality.
  • Create online learning modules that explain key aspects of the pay structure. These should be brief — 10 to 15 minutes — and allow managers to go through the module at their own pace at a time to suit them. Initiate some form of checking up on them to confirm they have done this. For instance, they would need to enrol for the module, which would then show when they have completed the requirements.
  • Invite managers to a virtual learning session. If possible, limit this meeting to 30 minutes, and present for a maximum of half the time, allowing the rest of the time to be used for answering managers’ questions.
  • Hold an in-person workshop when making big changes to pay arrangements. When the topic is complicated and/or the change is significant, provide managers with a more detailed briefing so they are well prepared.
2. Develop online resources so managers and other employees can find information they want
  • As much as you’d like managers to plan their pay discussions well in advance, the reality is that managers often wait until the last minute to prepare to talk to their team members. So by providing managers with an exclusive intranet section, they can find the information they need on a just-in-time basis.Include useful tools, plus an online forum  where managers can connect with a pay expert or other managers to ask questions and get advice. Also, summarize government regulations and the employer’s current policy about pay in a readily accessible area in your organizational intranet so employees can read current information about pay when they wish.
3. Create tools that support the way managers communicate

A good toolkit for managers can include:

  • Compensation plan talking points, including templates, flow charts, etc, for general briefing sessions and updates of their team
  • Compensation plan information
  • Details relevant to each employee they supervise
  • Tips for each type of conversation they may have.
  • Provide PowerPoint slides (just a few) for face-to-face meetings with their team. Managers won’t want to give a detailed presentation, but they will be prepared to use a short (5–8 slides) presentation for their team. PowerPoint presentations can be used to share key points at staff meetings and during one-on-one discussions. These slides can be printed and given to team members.
  • Frequently Asked Questions help managers feel prepared when team members approach them with questions. To create the best FAQs, include tough questions and candid answers and avoid corporate speak.
  • A one-page info sheet containing essential information for managers? Distill that information into a brief one-pager managers can print out and refer to as needed, and also distribute to team members, if appropriate.

Act as a catalyst to communicate pay information

You can offer to write all the standard text of information material. For instance, all employees should be informed about the total cost of their employment. An annual statement should be provided to every employee in a letter, leaflet, brochure or report. A good time to do this is when employees are notified of a forthcoming pay review.

Many employees have no idea of the total cost of employing them, and tend to vastly under-estimate the non-salary, benefits component of their employment costs, assuming them to be a ‘given’. Obviously some of the more flexible benefits relate more to senior executives, but the importance of communicating to all employees about the components of their overall pay package is still a key principle.

Benefits summary

A benefits document is a valuable communication tool to educate employees about the details of their salary and benefits entitlements. Experience has shown that producing an individual benefits (non-salary) document for each employee will create beneficial strategic consequences by strengthening positive employee attitudes towards the employer. Specialist consultants have software readily available to handle this process. This is a valuable investment because, at the least, such communication helps to reduce the time taken by HR staff and managers to answer common pay questions and misconceptions about employee benefits. Even if your employer does provide a statement of total employment cost to each employee, take the initiative and review the wording of the information material. Most of the time you will find it has too much HR jargon that many employees don’t understand. So jump in and get your hands dirty!

Sample covering letter on salary package information

You can write a covering letter on behalf of the CEO or the HR manager broadly along the following lines:

“Dear [name of employee, preferably first name]

Hard working and dedicated employees are the backbone of every successful organization. At [name of organization], employees like you are our most valued resource and we believe it is important to provide you with a competitive salary and benefits.

This [booklet/report] briefly summarizes the salary and benefits provided to you, as well as their total cost to [name of organization]. This will help you understand the value of the total package provided to you in your employment here.

Please read this information carefully. If you wish to clarify any information contained in the summary, please call the human resources department on [HR phone number], or speak to your manager.

I encourage you to share the general information in this booklet with your family so they are aware of the range of benefits provided to you. Your total non-salary benefit package provides added security for you and your family.

I appreciate your contribution to the success of [name of organization].

[Signature]

Chief Executive”

Further reading

You can read further in my article about how to increase engagement of employees at all levels by communicating about their pay.

Also, the helpful articles below are worth reading on how to communicate about pay with employees, especially in these times since government regulations require new transparency by employers:

  1. Employers boost pay communications SHRM 2023
  2. How to communicate compensation decisions to employees Figures HR 2023
  3. A Guide to Salary Negotiation – 9 Tips for Communication [especially being interviewed for a job]. Galt Foundation 2023
  4. How to ask for a raise – A guide (with tips and scripts) Indeed 2023
  5. Communicating Compensation to Your Employees – A Quick Guide [2,355 words!] Astron Solutions 2023
  6. How to communicate compensation & manage employee expectations around pay Salary.com 2023
  7. 3 steps to better salary conversations with your staff. SEEK undated.
  8. What is pay communication and why does it matter? PayScale 2020
  9. Will salary transparency become standard? Wharton Business Daily 2023 transcript of podcast, including summary of salary transparency laws introduced in 8 US States.
  10. Pay transparency laws [US] GovDocs 2023
  11. Pay transparency – How are changes in the EU likely to impact UK employers now and in the future? Clyde & Co 2023
  12. Navigating the new EU directive on pay transparency Aon 2023

Kim Harrison

Kim J. Harrison has authored, edited, coordinated, produced and published the material in the articles and ebooks on this website. He brings his experience in professional communication and business management to provide helpful insights to readers around the world. As he has progressed through his wide-ranging career, his roles have included corporate affairs management; PR consulting; authoring many articles, books and ebooks; running a university PR course; and business management. Kim has received several international media relations awards and a website award. He has been quoted in The New York Times and various other news media, and has held elected positions with his State and National PR Institutes.

Content Authenticity Statement. AI is not knowingly used in the writing or editing of any content, including images, in these newsletters, articles or ebooks. If AI-produced content is contained in any published form in future, this will be reported to readers.

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