Training Managers for More Effective Raise Cycle Compensation Discussions

Only 29 percent of organizations train their managers to have retention- and satisfaction-critical conversations about pay. That’s a mistake. Managers are on the frontlines, often delivering information about raise cycle compensation changes to team members. Even if they don’t have a formal role in your process, they are likely fielding questions from their team members about compensation. Unfortunately, these conversations can be fraught with discomfort and misinformation—leaving human resources with messy situations to clean up.

It’s important to give managers the right amounts of compensation information, in language they can understand, with context that they can relate to, on a recurring and consistent basis. Managers must be able to clearly explain to each team member why they make what they make, and how they can make more. Then, when it comes time to talk about raises, they’re prepared to make those conversations great. Here are the steps to improve those conversations.

Assess manager knowledge

Before you build your training plan, you need a clear picture of your starting point. Set up small group meetings with managers from different parts of the company to get a sense of how well they understand your company compensation philosophy. Try to discern how well your managers understand the following concepts (as applicable to your organization):

• Structuring offers, including sign-on bonuses
• Review/focal cycles and merit increases
• Market adjustments
• Performance bonuses
• Stock grants and refreshers
• Spot bonuses
• Commission programs
• Severance

This may seem like a lot of information that falls outside the raise process, but the overall fluency picture is important. This understanding will allow you to focus your education efforts, so you can meet managers where they are. Use what you’ve learned to create a “frequently asked questions” document with definitions, important dates, and expectations around the review cycle.

Communicate thoroughly

Repetition is powerful. Saying the same thing several times in different formats will accommodate different learning and communication styles, and ensure your message sticks.

For example:

• Communicate that you’re going to share a message. Send out an email to managers to let them know you’re running a compensation training, and the benefits to attending. When you communicate before you communicate, you prepare the listener to be ready to receive new information.
• Communicate the message. Present your compensation training in a live presentation, send out a video recording, or do both. You know your company and team members best, so do what feels right. For instance, would your team benefit from practicing hypothetical situations in small groups, or do asynchronous learning opportunities better suit your team?
• Communicate the message again. Following the training, share a written summary of what was covered. This should use the same language as the prior verbal communication, so they reinforce one another.
• Communicate that you communicated the message. Reiterate your message in subsequent communications, including high-level HR updates and raise cycle-specific updates. Add a link to the written summary or video recording, as applicable.

Build this manager communication plan into your compensation cycle timeline to ensure you make space for this important part of the compensation cycle planning process.

Create a script

A sample script can help guide managers during compensation discussions. They don’t necessarily need to follow it exactly, but it’s helpful for them to have talking points to guide their conversations.

For example, a sample script for a raise conversation might look like this:

We’ve already talked about your performance rating for last year, which was <rating>.

Our company has a compensation philosophy where we generally pay at the <middle> of the market. We also regularly update our compensation targets with new market data, and use a combination of your performance and market changes to set our employee raises.

< hand them their Total Compensation Letter >

Based on this, your new salary for next year is <total salary>. That breaks down to <change> for market adjustments, and <change> for your performance last year. You have also earned a bonus of <bonus> based on hitting our company targets last year, as you’ll see in the letter. All of these will be in your <date> paycheck.

You’re also getting a new stock grant of <refresher> – as part of our employee stock program. 

So what are your thoughts? What questions can I answer now?

You may also want to prepare answers for common questions that employees may have. For example:

• Why didn’t I get a higher raise/bonus/stock grant? Most questions center around a mismatch of expectations, and employees want to know why theirs weren’t met.
• How can I get a promotion to the next level? This is a common question during raise conversations, as level is tied to higher compensation.
• When will I receive a promotion? When will I receive my next raise? Don’t promise or imply a future promotion or raise is guaranteed after a set timeframe.
• How does my raise compare to [colleague]? Don’t disclose other team members’ compensation changes.

This sort of proactive guidance can help managers prepare more effectively for compensation conversations. You can also remind them to reach out for help if they need to talk through any potential concerns.

Collect feedback and make improvements

Just like any program, you won’t know how you did unless you gather data. Survey managers to learn how they felt about the overall process and experience. Go beyond Net Promoter Score-style questions and include some confidence questions. For example, like “Did you learn more about how our company approaches compensation during this process?” and “Do you feel better prepared for future employee conversations?” Leave space for open comments around the training process and how you might improve in the future. Use this feedback to build a stronger manager training program and update your training support materials.

Final thoughts

Though many managers are not initially comfortable talking about compensation, it’s a crucial skill they must develop. Even in companies that are not particularly transparent about pay, it is becoming more and more common for employees to candidly share information about their own compensation packages. 

There’s no more room for inefficient and inaccurate conversations around compensation, and it’s time for managers to level up. HR and total rewards professionals can use multi-touch communications, consistent language, and scripts to help managers better prepare for these discussions. In turn, better compensation conversations improve manager relationships and increase employee trust.