Money Talks: Speaking With Your Employees About Money

Let’s be honest. Speaking with your employees about money can be awkward. After all, their compensation is a sensitive topic that reflects their efforts and abilities, impacts how they see their own worth, influences their household budget, and affects how they feel about their job and your organization. 

How To Discuss Pay With Your Employees

Regardless of whether you’re informing employees you’ve recently hired of their salaries or communicating salary increases to employees who have been with your company for years, there are certain things you can do to make the conversation more comfortable and productive. Here are some tips we recommend.

Schedule A Private Meeting

Since pay is such a personal topic, it should only be discussed in a private environment. Before speaking to an employee about their pay, schedule a one-on-one meeting with them in your office or a conference room. Also, let them know what the meeting will be about so they aren’t caught off guard and they’ll know what to expect.

Explain The Reasoning Behind Their Pay

The truth is that employees want to know the reason they’re getting paid X amount, as their pay can dictate whether they’re living comfortably or paycheck to paycheck. Therefore, it’s a good idea to explain why they are starting at a certain salary or what they did to earn their promotion or bonus. Be as specific as you can so there isn’t any confusion.

Express Faith And Confidence

After you’ve told an employee about their starting pay or increase, explain that you feel confident that they’ll be (or continue to be) a valued member of your company. You can say something like “I look forward to seeing the great things you’ll do in this coming year.”

Only Focus On The Employee

One of the greatest mistakes you can make when speaking to an employee about their pay is bringing up another employee’s compensation. Keep the conversation about the specific employee you’re taking to and avoid comparing their pay or performance to that of others.

Be Prepared For Emotion

Conversations about money can make employees emotional, so don’t be surprised if an someone seems overly excited or upset when you tell them about their pay. Do your best to acknowledge how they feel and listen to what they have to say. 

If you believe they have a valid point, tell them that you’ll stand up for them and schedule a follow-up conversation. No matter what you do, however, don’t give someone more money solely because they are unhappy or you feel bad for them.

Get Creative

There may be times where an employee does deserve to be paid more money but your company simply can’t afford to give them a financial boost. In these instances, get creative and try to offer them other incentives they may appreciate. Greater flexibility, work-from-home days, and professional growth opportunities are all great, low-cost ways to show them you value their contributions. 

Communicate About Pay Regularly

The more you and your employees talk about pay, the more comfortable the conversations will make you both feel. Try to schedule pay-related conversation every 6 months or every year so that your employees are well-informed on how your company makes incentive and bonus decisions, when pay raises occurs, and how performance correlates to conversation. 

Create Literature About Compensation

To make pay-related conversations a bit easier, create a few PowerPoint slides or a one-pager that outlines your organization’s compensation philosophy. Distribute it to your employees when you discuss pay with them and ask them whether they have any questions. This can ensure that you are both on the same page. 

Be Honest

As the owner or manager of a company, you should be able to talk about pay candidly and objectively. Let your employees know how your organization is doing, whether there are any competitive threats you’re concerned about, and what they can expect from a compensation perspective in the future. Avoid hiding or sugarcoating anything.

Have Pay Conversations At The Start Of The Year

After the holidays are over and your employees are back from their time off, schedule private pay conversations to kick off the new year. Explain what types of raises or bonuses they may receive if they meet or exceed their goals and what they can expect if they don’t.

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