Share the big picture with them: How the company is performing compared with competitors and the range of raises or bonuses the organization is offering this year. “They might be a cog in a wheel but they have to understand the wheel,” says Narayanan. When employees are disappointed by their raise or bonus, it’s often because they lack information. “You want to inspire them to continue to create value,” says Narayanan. Make it clear that you appreciate their work. Don’t just let the bonus or raise figure speak for itself. “You’re in a partnership with your employee and you have to let them know that you deeply value their contributions,” says Dillon. In most cases, this conversation is an opportunity to tell employees how important they are to the organization. But what you say should persuade them that what you are giving them is fair,” she says. “Ask yourself: How is this person going to hear my message? It’s unlikely that you’ll be giving them a raise they’ll be absolutely joyous over. “You have to wear the corporate hat but you don’t have to act like a robot,” says Dillon. Think through how you’re going to represent the company while also being yourself. Write down your main points and rehearse them. Even if you’re a seasoned leader, it’s helpful to work out what you’re going to say ahead of time.
”When more people make the call, employees know there are checks and balances, and that the process is fair and consistent.”ĭillon says that rookie managers often make the mistake of walking into these conversations without a plan. He recommends working on compensation decisions in teams of two or three. Then wait several weeks to deliver news about raises or bonuses.Įveryone has favorite employees - “We’re human beings - we like some people and don’t like others,” Narayanan says - but there are ways to counteract those natural biases. Instead, deliver the formal evaluation first, focusing on personal growth and development. “If you talk about money in the shadow of performance, it will sound like white noise and your employees will just fixate on the compensation,” agrees Narayanan.
Plus, he explains, if you allow your employees to imagine themselves in the decision-making role, they’re likely to be much fairer.Ĭompensation should be linked to performance, but Low advises discussing the two topics separately. Narayanan says this can help stave off later disappointment and level expectations. In that initial conversation, you might consider asking the employee what they expect in the coming year in terms of a raise and bonus. That way, he won’t be taken aback by your formal evaluation and salary decision at the end of the year. Then have regular check-ins throughout the year to talk about how he is performing. Talk about what kind of bonus or raise the employee might expect if she meets her goals - or doesn’t. He suggests you start the year by discussing compensation. “The more frequently you have the conversation, the easier it is,” says Narayanan. When you sit down with an employee to talk about salary, there shouldn’t be any surprises.
#Awkward conversations about money audio free how to#
Professor of Business Administration at Harvard Business School and chair of the Board of Directors Compensation Committee Executive Education Program, says, “These are the most important conversations you have throughout the year.” Here’s how to master them. “It’s awkward for everybody,” says Karen Dillon, author of HBR Guide to Office Politics and co-author of How Will You Measure Your Life?Still, avoidance is not an option. But it’s also because these types of discussion can be challenging - for the manager and the employee. This is in part because many bosses lack the information they need to do so, notes Tim Low, Vice President of B2B Marketing at PayScale. Whether it’s your decision or not, one thing is certain: it’s a critical part of a manager’s job to have frank and open discussions with employees about pay.Īccording to a recent PayScale survey, 73% of leaders don’t feel “very confident” in their managers’ ability to have tough conversations about compensation with their employees. It’s especially difficult if you’re not the one calling the shots (most managers don’t set their own compensation budgets). Even when you’ve got good news to share - a generous bonus or a well-deserved promotion - assigning a number to the value of someone’s work is tough. Talking about money with your employees can be uncomfortable.
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