The Compensation Conversation

By AES Placement | April 29, 2022

While not all compensation conversations are difficult, they oftentimes can be uncomfortable if you’re unprepared. Lucky for you, we’re here to help! We’ll help get those big questions and some “How Tos” out there so that you can reach a conclusion that that is fair to everyone at the table. 

The Why

Before we dig in, let’s discuss the “why.” Your team should be paid fairly – this isn’t a haggling opportunity or a chance to get the “best deal.” You aren’t buying a car. You are putting (and hopefully keeping) people in charge of the success of your business. To do so, it’s important to cultivate a quality team and relationship with the individuals who you will likely be seeing more than you see your own family. 

If your team is a happy, well-oiled machine, your business will prosper.  Don’t cut off your nose to spite your face. An employee with a family is often paying for childcare while they are at work for you, which means they are literally PAYING to come to work. While your pay doesn’t need to be a mirror image of childcare, try to keep it in mind – among the other factors surrounding their choice to be there. These people want to work for you; make it worth their while to do so. This is an opportunity to thank them for having your back – and for helping you to successfully run your business. 

The Prep Work

  • Arrange a private meeting with minimal interruptions.
  • Block enough time that the conversation won’t be cut short.
  • Prepare what and how you will communicate to the employee.
  • Make sure the job description accurately reflects the position.
  • Research pay range for that role – you can find payment information for your city/state on glassdoor.com, payscale.com or via Indeed. 

The Conversation 

There are a few scenarios that you might run into:

1. The employee’s performance doesn’t make them a candidate for an increase in compensation

  • Express appreciation for their performance.
  • Discuss their pay range and where they presently stand within that range.
  • Discuss why the employee isn’t eligible for a pay increase.
  • If necessary, set-up a performance plan or time-frame for follow-ups.

2. The employee’s performance merits an increase in compensation but are you unable to provide an increase

  • Express appreciation for their performance.
  • Discuss their pay range and where they presently stand within that range
  • Discuss why you’re unable to provide a pay increase. Are they at the high end of the range already? Have there been no changes since their previous bump in pay? Do you have budget restrictions? Try to be as transparent as possible here so you don’t have a disgruntled employee.

3. You are able to provide an increase in compensation, but the employee feels they deserve more

  • Express appreciation for their performance.
  • Discuss their pay range and where they presently stand within that range.
  • Discuss why you’re unable to provide a larger increase. Are they at the high end of the range already? Discuss their other benefits and why you feel the pay bump was appropriate. Try to be transparent, yet firm.

4. The Ideal Scenario: The employee’s performance both merits an increase in compensation and you are able to provide one.

  • Fantastic! Express appreciation for their performance.
  • Discuss their pay range, where they presently stand within that range, as well as the increase you’ll be implementing.

Things That Should Happen Regardless

  • Answer any questions and thank them for their time – this is just as awkward for them as it is for you.
  • Implement any changes immediately.
  • Discuss future steps
    • How can the employee’s pay be reviewed again in the future?
    • Discuss other avenues for growth 
      • Don’t have alternative positions? New skills or certifications may provide the incentive they need.
  • Try to get to the bottom of what the employee is truly interested in. Maybe some additional time off would be more appreciated than a pay bump. 
  • Speak in bullets, not paragraphs – be clear and direct when explaining how you arrived at your conclusion.
  • Try to provide specifics on their contributions to the practice – this is a great opportunity to let them know you see their hard work and dedication to the practice.
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