How to manage salary and bonus conversations

Jul 14, 2020


By Esmée Hardwick-Slack

Talking about money with your employees can be uncomfortable. Even when you have good news for an employee, discussing pay can be difficult. Here are a few tips for managing conversations about pay and bonuses with your staff.

Separate pay reviews and performance appraisals

An employee’s performance is inextricably linked to their salary and bonus. However, discussing the two together can lead to the employee focusing only on the conversation about pay. As such, managers should discuss performance in a separate meeting prior to any discussion about pay or bonuses. This ensures that both conversations are heard clearly by the employee, and expectations can be managed, prior to any conversation about compensation.

Prepare in advance and focus on the figures

When a salary and bonus conversation gets tough, it is often because an employee is not getting the information they need or the manager feels that they can’t answer certain questions. Managers need to have key information to hand such as pay scales for the various roles across the business, details regarding potential for pay increases or promotions and any other key information such as company performance and how this has affected the salary and bonus figures this year etc.

Stop speaking and listen

If a salary and bonus conversation is not going well, managers should spend more time listening to the employee in order to understand where they are coming from, what their concerns are etc.

There is often a lot to be gained by managers who are curious when it comes to having tough pay-related conversations. For example, they might learn that an employee feels that their job has not been correctly benchmarked against competitors or the wider market. This may or may not be true, and you should be willing to investigate the perceived discrepancy before making a final decision.

More often than not, a challenging conversation around salary and bonus will require a follow up meeting, giving managers an opportunity to come back with more facts and secure a positive outcome with the employee.

What are your top tips for salary conversations with your staff? Let us know in the comments or on Linkedin.


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