Business owners and managers often dread discussing salaries with team members. However, by making salary discussions less taboo, you can help keep the narrative focused on fair compensation. 

Here, we look at effective salary discussions through ongoing conversations.

Keep the Conversation Going

First, it’s important to sit down with team members often so salaries become a familiar topic. 

For example, once you understand the financial health of the business in the new year, you can review those numbers so teams understand where you’re coming from. Whether it’s via discussions about the previous year’s bonus, the idea of annual raises, or specific goals, this annual conversation sets expectations based on the company’s financial performance.  

Then, throughout the year, set up quarterly check-ins that address both the team member’s performance and the company’s ability to meet their targets for that period. This keeps people abreast of both your views of their performance and the company’s ability to meet its objectives, so any salary or bonus-related decisions make more sense.

Understand Team Expectations

Different people have different expectations when it comes to compensation. 

Understanding what’s important to the individual can help you meet their expectations in this area. Asking people how they feel about their compensation relative to the work they do and what they feel they deserve based on their accomplishments, for example, provides a benchmark when considering compensation for that individual.

You might also find other meaningful ways to compensate team members when raises are not possible, such as reduced or flexible hours or the opportunity to work from home.

Do Not Discuss Salary at Performance Reviews

Although you will decide on a team member’s compensation level based on their performance, it’s important to avoid discussing raises during a performance review. You want them to be open to feedback instead of focusing on the end of the conversation when they expect to hear about raises. 

This format sets a precedent, so team members never expect the two topics to intersect.

Don’t Make Salary Decisions Independently

Biases can get in the way of business smart salary decisions. 

Managers, HR, and accounting might want to weigh in so that your decisions aren’t driven by personal preferences. Managers understand performance, HR understands competitive salaries and compliance, and accounting knows the books. 

As a team, you can make objective decisions so everyone is treated fairly.

Present the Facts

It’s unfair to tell someone they’re not getting a generous raise or no raise at all without putting that decision into context. 

It leaves the person feeling unappreciated. Outlining the reasons for the decision, including basics about their performance, the company’s financial challenges, timing, etc., can help explain your position so people are less inclined to feel resentful. 

Your goal is to help them understand you’ve done the best you can. It doesn’t hurt to throw in some stats regarding their position and what is considered competitive in the industry to help them see where their salary falls.  

While salary conversations are never easy, keeping the lines of communication open, timing your conversations properly, and putting your decisions into context all help make your discussions more effective.

About Focus HR, Inc. 

Focus HR, Inc. uncomplicates the people side of business by providing small business owners with outsourced HR, project HR, and Leadership Coaching. For more information, please contact us today! If you liked this post, please subscribe to our blog. You can opt out at any time. 

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