When you are unable to offer your high performing employee an annual increase.
This vlog is part one of a four-part series regarding tricky employee compensation situations. I will go through several different compensation scenarios with you to help you through challenging situations and get employees questions answered correctly.
https://youtu.be/CI1C6Yddt9c
Today’s scenario: You have a high performing employee who is paid at the high end of the salary band due to their great performance and advancement within the company. You may have a situation where your budget is lean because you need to allocate funds to the company or sales have been slow. You’re ramping up to have a tough conversation with the employee to let them know that they will not be getting a raise this year.
One thing you want to focus on with the employee is their contribution to the organization. Make sure you recognize all the ways they’ve contributed to the company’s success with specific examples. They need to know that you are paying attention and recognize their contributions. Be open and honest with them about your decision. Let them know they are on the high end of the pay scale. Show them how you came up with their salary band in the first place. What market data are you using to determine they are highly paid? Share the data with them.
Keep in mind; if this employee is at the high end of the pay scale, it may be because they are maxed out in their current position. Instead of leaving the conversation with the fact they are not getting an increase this year, consider a plan for the individual to continue growing through challenging and rewarding activities that will eventually lead to a promotion. They want to move to the next step for more opportunity for a salary increase and professional growth.
When an underperforming employee is seeking an increase.
Thank you for joining me for the 2nd vlog in my series of four that covers challenging compensation scenarios you may have with your employees. The 2nd scenario I’d like to discuss is when you are approached by an underperforming employee who is asking for a pay increase mid-year or may not understand why they are not eligible for an annual increase.
With an underperforming employee, you need to quickly steer the conversation away from pay and first discuss performance. Provide very specific examples of behaviors and actions that are not meeting expectations. After performance issues are addressed, then you can discuss compensation. Compensation increases are awarded to employees that are meeting performance expectations. Therefore, because you are not meeting those expectations, you are not eligible for an increase at this time.
Do not, however, end the conversation there. The ultimate goal is to improve performance (and therefore compensation increase eligibility) for everyone to be happy. Work with the individual to put a plan in place that includes timely goals to improve their performance. Continually monitor progress and keep communication lines open regarding progress toward those goals.
When an employee is not happy with the increase they’ve just been given
Hello and welcome to my 3rd vlog in a series of 4 on challenging compensation discussions with employees. Today I’m going to address an employee disappointed with an increase that you have given to them. They are not happy with the amount of the increase that you have just allotted them. How do you address the situation?
https://youtu.be/W8y2fTFDy84
As I’ve stated in my other videos, it’s essential to be very clear with them regarding their performance. If they are a high performer, acknowledge their contributions and give them specific examples that tie their performance to the amount of the increase you’ve given to them. It is helpful to be aware, as a manager, of your organization’s compensation philosophy and where that data is coming from so that you can have open and honest conversations with your employees. You can share the market information and relay how their increase and their current salary lines up with your organization’s philosophy. If they are a great performer and they want to know how they can contribute more to see larger increases in the future, put together a plan with them about how they can continue to learn new skills that add value to the organization for increased compensation.
When an employee brings you compensation data to ask for an increase
Hello and thank you for joining me for my 4th vlog in a series of 4 on challenging compensation discussions with employees. The scenario we are going to look at today is when an employee brings you their own compensation data to ask for an increase in compensation.
https://youtu.be/fRjpIVL4Jso
Before meeting with them, understand your organization’s compensation philosophy and where your organization obtains their data that determines the salaries for any given position. Is it specific to the industry? Is it job specific? Does it take into consideration your location within the country? All of these factors will have a huge impact on compensation rates. By understanding the data you will be prepared with confronted by an employee. You should not hesitate to share your sources. Be comfortable with the reliability of the data you use. Hopefully, you are using multiple sources as well.
If the employee is still frustrated with their compensation, I encourage you to put together a plan with them to get to the next step. Let them know you value their contributions so far and lay out the next steps to get to that next level. Show them you are committed to helping them grow.
Thank you for listening!
Tandem HR
Tandem HR is an IRS certified professional employer organization (CPEO) providing custom HR solutions to hundreds of small and mid-sized businesses. Contact Tandem HR for a FREE consultation today at 630.928.0510 or simplify@tandemhr.com.