Compensation Training for Managers: How to Boost Leaders' Confidence and Employee's Motivation
When it comes to compensation conversations, how your managers talk about pay can make a real difference to how your people feel—from valued and motivated to overlooked and disengaged.
But talking about pay isn't easy: balancing company direction on compensation against employees' pay aspirations can be challenging.
So, what can you do to help your managers?
In this article, we'll explain why compensation training for your managers is essential—it equips your managers with the skills to have informed and productive compensation discussions, helping your people feel more confident and satisfied with their compensation arrangements. And motivated to keep giving their best work for your organization.
⚠️ Why compensation conversations matter
Successful compensation discussions establish the groundwork for a trusting relationship between managers and their people, says Mykkah Herner, Director of Talent Strategy, Total Compensation, and Rewards at McKinstry.
But most managers are not equipped to handle pay discussions well, argues Herner, as they're simply unfamiliar with the compensation management principles.
To add insult to injury, few managers receive training on how to conduct compensation conversations—as few as 3 in 10.
The compensation training will:
- Give your managers a better understanding of your organization's compensation philosophy.
- Help them have more effective conversations with your people.
- Boosting your people's confidence in those conversations.
Good compensation discussions will also leave your people feeling positive, informed, motivated, and appreciated, according to West Virginia University.
🏆 6 Key reasons why you need to offer compensation training to your managers
Research by PayScale shows that only 19% of employees have confidence in their managers' abilities to have tough compensation discussions.
How do your managers fare?
Do they inspire confidence in your people when they discuss compensation?
Or do they stress out whenever pay discussions come up?
Here are six reasons why it's worth training your managers to bring their best to compensation discussions.
- Ensure fair and competitive compensation—Through meaningful and informative conversations, your managers can explain compensation decisions so that your people better understand how they're being paid.
- Improve employee engagement and retention—With proper training, managers learn how compensation is derived and allocated and how to convey compensation decisions with empathy and clarity, which fosters stronger engagement and loyalty amongst your people.
- Build trust with your people—When your people feel their managers are being transparent about compensation decisions and can articulate the rationale underlying them, especially when they have an opportunity for discussion and debate, they're more likely to trust their managers and your organization's compensation framework.
- Help your leaders be more effective managers—Compensation discussions are complex, particularly for conflict-averse managers. So learning how to deal with them offers a valuable training opportunity as part of your managers' leadership development plans.
- Mitigate legal risks—Evolving regulations, such as US transparency laws requiring salary range disclosures, prompt managers and employees to discuss compensation in more detail, suggests Heather Shoemaker, CEO of Language I/O.
- Develop your leaders' competencies—Compensation conversations tap into leadership skills such as relationship-building, negotiation, and managing potential conflicts, according to the Young Women's Leadership Connection, and can form a key component of your managers' competency models.
👩🎓 Sample syllabus for manager compensation training
So, what does good compensation training for your managers look like?
Here's a syllabus that highlights the core elements of an effective compensation program.
Part 1: Understanding compensation
- Introduction to compensation management
- Types of compensation—base salary, bonuses, benefits, and perks
- Factors that influence compensation—job responsibilities, industry standards, company budgets, and employee performance
Foundational knowledge of compensation frameworks will help your managers understand your organization's compensation structures, the rationale behind them, and how they relate to industry practice.
"Providing managers with knowledge of compensation basics is critical to the success of their conversation," argues Mykkah Herner, "because it's difficult to convincingly communicate information that a manager doesn't fully understand."
Part 2: Preparing for salary review talks
- How to review employee performance evaluations and job responsibilities.
- How to identify market rates for the employee's position and experience.
- Understanding the company's compensation policies and budget constraints.
"Even experienced leaders need to take some time to reflect on each pay review discussion prior to the meeting," says Georgina Pacor, HR Specialist at Ai Group. Your managers should also think through the specific compensation decisions under discussion, how your people are likely to receive them, and any questions they're likely to have, says Pacor.
Part 3: Boost your negotiation skills
- Introduction to negotiation techniques
- Identifying interests and positions in a negotiation
- Developing creative solutions and reaching mutually beneficial agreements
"Enhancing your negotiation skills has an enormous payoff," says Harvard Business School Professor Michael Wheeler.
The delicate nature of compensation discussions and the potential for conflict means that effective negotiation techniques can significantly assist your managers.
A collaborative approach to communication, applying emotional intelligence to boost perceptive skills, and using value creation to highlight areas of mutual benefit are examples of techniques that will help your managers have more fruitful compensation discussions.
Part 4: Conducting salary review talks effectively
- Setting the tone for an open and productive conversation
- Evaluating employee performance and discussing compensation
- Handling employee feedback and negotiating a fair compensation package
"Focusing on delivering information in a manner that is sensitive and empathetic, yet still clear and direct, will be more effective and accepted by most employees in a positive way," says West Virginia University.
Also, most employees favor salary transparency even if compensation discussions seem uncomfortable.
A Glassdoor survey, for instance, found that 70% of adult workers across seven countries believe salary transparency boosts their job satisfaction.
With the right tone and relevant information, most of your people will likely welcome a full and frank discussion about their compensation arrangements.
Part 5: Five scenarios you should be able to handle
Being aware of typical scenarios that may arise during compensation discussions helps your managers respond constructively and confidently. Here are five scenarios that your managers may face:
- When an employee isn't getting an increase because performance doesn't merit a raise.
- When an employee brings you a salary report they found online and asks for more pay.
- When an employee isn't getting an increase because their pay is already high.
- When an employee is dissatisfied with the proposed increase.
- When your company cuts standard bonuses during difficult economic conditions.
Part 6: Communicating the outcome
- Active listening and effective questioning techniques
- Being ready to address any additional questions or concerns
- Documenting the outcome of the salary review talk for future reference
Compensation discussions don't always proceed smoothly.
Suppose an employee is unhappy about their outcome. In that case, your managers need to hear their concerns and understand what's driving them.
"This means not rushing to judgment or defense if an employee is expressing concern or dissatisfaction with their salary or pay rate. Become a strong listener—it's an art that's worth practicing", advises Rita Patterson, an HR specialist.
It's also helpful to make compensation discussions engaging. "The most critical (yet most commonly overlooked) aspect of a successful salary review process is not just managing employees' expectations, but more importantly: their engagement in the process," according to Perform HR, an Australian HR consultancy.
Try to include:
- case studies;
- interactive exercises, e.g., role-playing for the five scenarios;
- discussion forums to help managers apply what they've learned to real-world scenarios.
Bringing compensation discussions to life prepares your managers for the challenges that may arise in practice.
Working through case studies, role-plays, interactive exercises, and actively discussing scenarios that may eventuate are powerful ways to prepare for constructive and helpful compensation discussions.
💡 5 Tips for making your manager compensation training engaging
Just as actual compensation discussions ought to be engaging, so should the training you give your managers.
But corporate training doesn't have a stellar reputation when it comes to engagement and remains a significant challenge for L&D professionals.
"It can be hard to change employees' perceptions when their previous training experiences were marred by 'death by Powerpoint' and Zoom fatigue," suggests Graham Glass, CEO of Cypher Learning.
So, how can you make your manager compensation training engaging?
Here are five tips.
1. Interactive elements and real-world scenarios
"People tend to remember things more vividly when they are involved in the action," says Snehnath Neendoor, Senior Vice President at Hurix Systems.
Interactive learning is all about engagement. It gives your managers first-hand experience of scenarios they'll likely deal with in real-time compensation discussions, driving learning outcomes through a unique and sensory-driven approach.
2. Visual aids
Visual aids, including videos and graphics, are more appealing than text-based alternatives, suggests Dana Jandhyala, an experienced educator and coach, and help boost the impact of training by:
- Promoting information retention in long-term memory.
- Making communication quicker and simpler.
- Assisting comprehension.
- Stimulating emotions.
- Driving motivation.
3. Short modules with spaced repetition
The average human attention span is now shorter than a goldfish's, according to Jill Ebstein, an author and editor.
And while this "fun fact" may be debatable, there's no denying the many distractions of modern corporate life—messages, emails, phone calls, tweets, and notifications, to name a few.
Shorter, more targeted, and on-demand learning content—known as microlearning—is an effective way to combat distractions and engage learners in a flexible and easy-to-digest manner. With periodic repetition, it also results in better reinforcement while being scalable and cost-effective for organizations to deploy.
4. Gamification
Gamification in training means using game-like elements, mechanics, and principles in a training context. It helps to make training more fun, engaging, and memorable.
Gamification uses elements like goal-setting, status ranks on leaderboards, community connections, and rewards (such as points or badges) to promote a game-like environment.
5. Social learning
Social learning recognizes the value of human interaction and imitation in learning and was made famous by psychologist Albert Bandura.
Social learning facilitates high engagement and more immediate learning outcomes while promoting better collaboration and productivity amongst learners, according to Subramanyam Reddy, founder of KnowledgeHut.
You can incorporate social learning in your training by including discussion forums, peer conversations, social networks, and other collaborative platforms in the program.
➡️ Check out Zavvy's training plan examples and templates and help your people grow through innovative training.
🙅♂️ Do's & don'ts for managers in compensation conversations
Salary dissatisfaction is one of the main reasons that people quit their jobs.
Considering the costs of voluntary turnover—estimated at over $1 trillion each year in the US alone—how your managers handle compensation conversations can greatly impact your organization's well-being.
Here are some helpful "do" and "don't" tips for productive compensation discussions.
The "do's" are:
- Communicate clearly and transparently about the process of compensation calculations.
- Share the total rewards statement with the employee at the beginning of the chat so they can follow along as you walk them through the package.
- Know that it's ok for your people to ask for more money.
- Explain the decision-making behind a pay decision.
- Be prepared to listen (more than you talk).
- Be curious when an employee expresses dissatisfaction. But don't ask "why,"; instead, ask "tell me more" questions.
- Be prepared to negotiate and compromise to find a mutually agreeable solution.
- Be ready for follow-up conversations to ensure that the employee is satisfied with the outcome of the conversation.
- Avoid a culture of surprises—rather than last-minute updates on company financials or other compensation factors, start conversations early and soon after the information becomes known.
Our suggested "don'ts" are:
- Don't make promises you cannot keep or offer unrealistic expectations about compensation.
- Don't apologize or over-explain why the raise isn't larger. Don't cite budget constraints, instead help clear up mismanaged expectations.
- Don't blame the organization—the manager "is" the organization for the purposes of the discussion.
- Don't make unprofessional comments like, "you're already paid higher than you should be," or "some of your colleagues performed better than you ... be grateful for what you got."
- Don't discuss other employees' compensation during the conversation, as this can create tension and resentment.
- Don't rush through the conversation or appear disinterested in the employee's concerns. This behavior can damage trust and engagement with the employee.
- Don't focus only on cash compensation, review all components of the compensation package.
➡️ Drive learning and performance with Zavvy
Zavvy has world-class learning solutions to give your managers effective, flexible, and relevant training for their compensation conversations.
From intuitive employee development software using proven, scientifically-backed methods—like microlearning, spaced repetition, and social learning—Zavvy has the tools and expertise to help your managers run best-in-class performance reviews and compensation discussions.
Book a free 30-minute demo to see how you can maximize the potential of your people with Zavvy.