Compensation Conversation – Talking to Employees About Pay

Talking to employees about pay can be uncomfortable, even when the news is good. In a survey given by West Virginia University, 70% of managers admitted feeling uncomfortable when talking to employees about pay. Assigning a dollar value to an employee’s work can be tricky, but it’s a meaningful conversation to have for the sake of bolstering trust, increasing engagement, and improving retention.

What is an employee compensation conversation?

An employee compensation conversation, or a salary review, is an employer’s evaluation process to determine if employees’ salaries fairly and accurately reflect their performance at work.

How often should you review employee compensation?

It depends on your company policies. Some companies review employee compensation every six months, and others review it once a year. At the least, reviewing employee compensation once a year should be appropriate for most organizations.

How should employers determine compensation for a salary review?

There are several factors to take into consideration when determining an employee’s pay:

  • Analyze market pay for the position: Assess internal data by looking at employee salaries to understand your company’s current state of wages. Then, get an update on current market pay data for the specific employee role from resources such as Glassdoor, the Indeed Salary Tool, or the Bureau of Labor Statistics (U.S.)
  • Evaluate employee performance: Employees often connect their worth in the company to their salary. However, you don’t want employees only to see their worth in terms of a dollar amount. Offer recognition for what your employees are doing well and have regular one-to-one talks. These factor into employee performance, as 86% of highly functioning organizations hold such discussions with employees and see productivity rise.
  • Decide on factors you feel are most important: While performance is essential in determining employee compensation, there are other factors to consider. These can be a combination of employee and company factors, such as:
    • Company structure
    • Company budget and size
    • Living costs and location
    • Employee retention goals
    • Historical employee performance
    • Length of service

It’s important to ask questions and discuss among leadership what items are most important to the company when it comes to employee compensation.

How do I talk to my employees about compensation?

  • Show appreciation: First and foremost, you want to show employees your appreciation for the work they do. Point out and give examples of their specific contributions to your business.
  • Provide background: Review the employee’s role. Talk about their current pay and where they currently stand.
  • Mention other value points: In addition to reviewing salary, you should also mention what else factors into their compensation, such as a 401(k), Paid Time Off (PTO), insurance, monthly reimbursements, or volunteer days.
  • Listen to concerns: Be sure to listen to any concerns employees have about their compensation or position. Listen to what the real ask is behind their concerns and find what they deem the most valuable. For example, pay may not be the most critical concern—they may want the opportunity to work on more challenging projects.
  • Communicate well: Be very clear and direct when explaining pay decisions. If the employee asks, offer suggestions and goals on how to improve their performance by the following salary review.

Handle compensation situations

You can’t anticipate how every salary review will go. But you can be as prepared as possible. Here are some possible scenarios and how to handle them:

  • Performance doesn’t merit a compensation increase: Talk about their current salary, why they’re not eligible for a salary increase, and give specific goals to work on, along with a time frame to complete those goals.
  • Performance is high but doesn’t merit a compensation increase: Share their current salary and why they will not receive an increase. Determine if something else can be offered (flexibility or opportunity to work on a specific project) and discuss how they can continue to advance within the organization.
  • Compensation increases, but employee feels like it isn’t enough: Share their current salary and how it compares to the current market for their role. If another co-worker’s pay is brought up, direct the conversation back to the specific employee’s compensation. Point out their key accomplishments and how those influence their pay. Finally, listen to what’s behind the concerns. It’s possible there are other things that could satisfy your employee’s needs.
  • When an employee’s performance and experience result in a compensation increase: Recognize the work that they have done and what they bring to the role. Discuss their compensation and how they can continue to advance within the company.

It’s a tough job, but someone’s got to do it

Talking to employees about pay is tough, but you don’t just want to tell them that you’re giving them a raise (or not) and send them on their way. By preparing for these talks and recognizing your employee’s contributions, you’ll enter these conversations with less dread and more ease.

 

Content provided by Q4iNetwork and partners

Photo by fizkes

 

Three Books to Help You Build a Powerful Business

As a business owner, you most likely have a lot of expertise, experience, and vision that you rely on each day to build, develop, and grow your business. But no one has all the answers. And in a quickly changing society, it’s critical to keep your mind open to new ideas, approaches, and strategies to stay relevant and successfully meet challenges. Below are three books that have made a serious impact and helped business owners and leaders re-imagine and reach new heights in the past decade.

 

Measure What Matters

By John Doerr

In this book, venture capitalist John Doerr breaks down a revolutionary tactic to business management through the practice of goal setting using Objectives and Key Results (OKRs). In the book, he illustrates the power of using Objectives (which define the goal), and Key Results (which define the actionable steps needed to achieve the goal), through a broad range of case studies, each with its own success story defined by the implementation of OKRs.

As you read this book, you’ll see how OKRs create clarity throughout an entire company, from entry-level workers to CEOs, and help leaders make the tough decisions necessary to enable growth. Whatever industry you fall under, Measure What Matters can help you create clarity within your organization and develop a sure path towards growth.

 

The CEO’s Guide to Restoring the American Dream

By Dave Chase

In his book, Dave Chase breaks down the misconception that controlling health benefits spending is out of employers’ hands by demonstrating how public and private employers have successfully reduced their spending. In the book, he challenges employers to re-think the reason behind offering employee benefits in the first place, shifting the groundwork, goals, and measurements of success in a way that illuminates the true value of employee benefits.

This book does a wonderful job of breaking down the facts, uncovering the reality behind the challenges the health insurance industry poses to employers, and explaining how real-life organizations have come out on top and been able to reduce their spending by 20% or more. He challenges employers to re-think their approach, uncovering how they hold themselves back while offering solutions and strategies to help them improve their situation. Any employer, CFO, CEO, or HR leader interested in getting the upper hand on their benefits spending would be wise to give this book a thorough read.

 

The Go-Giver

By Bob Burg and John David Mann

The Go-Giver is celebrated in the business world for upending the widely held belief that to succeed, you have to be selfish. Burg and Mann tell a story illustrating how, when you act in service to others, you build a relationship based on trust and gratitude. The book explores how these relationships have a value and strength that surpasses the fiber of relationships built on self-interest.

While this may seem obvious, it’s incredible how often professionals unintentionally steer themselves into relationships based on self-interest, undercutting their potential by depriving them of one of the most powerful resources: a network of relationships based in gratitude, respect, and service to one another. Their story offers thoughtful and provoking insights into how changing your philosophy around building relationships can enrich and enhance your personal life, career, and business.

Get to reading!

Although it can be challenging to find time in your day to read, it is well worth the effort. By opening your mind to new ideas that challenge your way of thinking, leading, and building relationships, you create a significant opportunity for you (and your business) to grow. Plus, now you don’t have to come up with your next book to read! We’ve done it for you. So pick one up, curl up in bed, or sip your morning coffee, and get to reading—or should we say growing!

 

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The Truth About Reactive Management

If you’re a business owner or manager of a team, you likely wear many different hats. Especially for small businesses, owners often find themselves going in different directions every day. If this sounds familiar, ask yourself when was the last time you were able to sit down and think ahead? What about actually plan ahead?

All too often, leaders get wrapped up in moment-to-moment tasks, allowing their time to get sucked down the drain of immediate crises. Working in a constantly reactive state can feel good, though. You may be thinking:

I’m a fast and efficient problem-solver!
I’m a doer. I get s**t done!
I don’t let problems bring me down—I face them head-on!

Yes. You probably are all those things. But when you spend 100% of your time being all those things, you miss out on time spent being a strategist, a planner, a thinker, and a visionary! How do you expect your business to grow if you can’t think farther ahead than the next problem brought to you?

Reacting to every little thing that comes across your path can make you feel like you’re getting a lot done. But while you’re focusing on what’s right in front of you, more significant problems will grow in the background, and you may not even notice them developing. And when they catch up to you, you won’t have the time or energy to manage them.

Rewiring your approach

Although reacting to urgent problems is part of every leader’s job, it’s critical they also make time to manage for the future, not just the current moment. Get a handle on your reactive managing style and start building a foundation for the future by:

1. Sharing responsibility

One of the major issues with reactionary managing is allowing unimportant but urgent tasks to eat up your time. Start practicing the art of delegation and hand off some of these tasks to your team. It can feel scary to delegate, but hopefully, you’ll soon find that your team is more than capable of answering phone calls and emails, calling that cranky client, or fixing a botched order. Save your time for issues that need your attention specifically—not just attention in general.

2. Re-imagining your schedule

If you’re wondering where you’re supposed to find the time to plan, look at your calendar and pinpoint areas that can be re-prioritized.

But I don’t have the time!” isn’t an excuse.

Yes, you do have the time. You’ve just decided it’s better spent elsewhere. But is it? Really?

It’s a safe bet that you’ve got 30 minutes, or even an hour, every day you could re-allocate to a different activity. If you’re not sure where to start, try tracking your time throughout the week, detailing exactly how you spent each moment at work. Chances are, you’ll be unpleasantly surprised by how much time you ended up spending on unnecessary tasks that don’t require your energy.

Block out designated time on your calendar to spend looking at the big picture of your business. Allow yourself to identify those background problems that are much more easily dealt with before they grow, rather than after they’ve boiled over. Hold boundaries around this time. Tell your team you are unavailable during these blocked-out times and give them time to develop their independence with your newfound delegation.

Treat this time like it’s sacred—because it is! You need that time to make sure your company grows smoothly and efficiently.

3. Creating, refining, and implementing processes

A common issue among businesses that are run reactively is a lack of clear processes for employees to follow. If your management style is running around putting out fires, you probably haven’t had time to build an organized system for solving problems and dealing with spontaneous change.

Every leader, team, and organization will face roadblocks, speed bumps, and detours. But if you don’t have a map for your team to follow to their destination, the efficiency with which they’ll arrive at a solution will take a big hit.

It is time well spent to work out and document processes for your team to follow when issues arise. Proactively planning for potential challenges that your team may face will save you a lot of time and energy for when they do appear.

Be proactive

Being quick on your feet and always moving to the next shiny new challenge may be fun at times, but it’ll eventually burn you out and leave you with larger problems. If you want to grow your team or business in a sustainable direction, prioritize strategy and proactively plan for your future. It’s the only way to win.

 

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What You Need to Know About Group Life Insurance

A study conducted by LIMRA and Life Happens found that 41 million Americans say they do not have life insurance coverage at all. When it comes to providing benefits for your employees, life insurance ensures they give their families much-needed financial security. All too often, however, life insurance is a misunderstood and confusing topic. We are here to help.

Here is what you need to know about group life insurance plans.

What is life insurance?

Life insurance is a contract between a person and an insurance company. A premium is paid, and after a person’s death, a lump sum, or death benefit, is paid to the beneficiaries the person designates. The beneficiaries can use the money for any purpose they like.

What is group life insurance?

Group life insurance is when an entire life insurance contract covers a whole group of people. The policy owner is the employer or organization, and the policy covers all the employees at the organization.

Are there different types of group life insurance?

Yes, there are two different types of group life insurance: employer-paid or voluntary. These are usually seen as term life insurance, which provides your employees coverage for the term of their employment.

Employer-paid life insurance

Employer-paid life insurance is when the policy is paid by the employer. This offers your employees a convenient way to receive life insurance coverage. This type of coverage, at times, offers them coverage portability or the ability for your employees to continue their life insurance policy when they no longer work for you.

Voluntary life insurance

Voluntary life insurance is an optional benefit offered to employees. This type of life insurance is paid for by the employee directly to the workplace’s insurance company via a monthly premium taken out of their paycheck. Like employer-paid life insurance, voluntary life insurance can also offer coverage portability.

Why is life insurance important?

As an employer, you may wonder why life insurance is important to provide to your employees, and there are several reasons:

  • It provides for lost income: Providing a group life insurance policy helps ensure that your employees’ loved ones will have some financial replacement for the lost paycheck in the case of their death. This allows the family time to get a footing in their new reality.
  • It reduces stress: Losing a loved one is already a difficult and emotional experience without the added financial burden of losing a partner or parent. Life insurance will help protect the family from the difficulty that awaits. For example, finding help for childcare after the loss of a parent is a huge stress for the surviving parent. Knowing they have financial support to afford it can ease the pressure.
  • It helps cover bills and debts: Life insurance will help cover bills or debts your employees leave behind, so they are not passed to your employees’ loved ones.

It doesn’t have to be confusing

Life insurance can be, admittedly, confusing. But it is a smart move for employers who want to add family-focused benefits into their employee benefits plan. Talk to a trusted advisor who will help you decide on the best group life insurance plan for your employees.

 

Content provided by Q4iNetwork and partners

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Facing Challenges as a High-Performance Team

Imagine your team works on a project or goal, and they need to get from point A to point B. Do you believe the bridge between the two points provides the necessary support to carry your team over? What if an obstacle is thrown their way?

Perhaps an essential team member calls out sick, and the team depends on them to reach a deadline. This is when your team will show whether they are a high-performing team or merely highly productive.

You can have intelligent, capable, and productive individuals on your team, but if they cannot persevere through challenges, it is time to foster a high-performance team. This is possible by establishing the primary components of a high-performance team: a positive work environment, collaborative problem-solving, and leadership.

Positive work environment

The first component of a high-performance team is having a positive work environment. Start by creating ground rules to establish the values of the group. The ground rules communicate personal behavior expectations that reflect the team’s values.

And how your team handles emerging challenges depends on your team culture!

For example, if a team values learning and openness to new approaches, they would expect others to ask questions and offer guidance while promoting curiosity.

Foster a team identity built on a commitment to a shared goal or vision. Strong team identities are built on listening, trust, respect, and understanding strengths and diversity. These values are critical for working interdependently because they enable people to rely on one another.

Collaborative problem-solving

By fostering listening skills, trust, and team identity, a team can problem-solve collaboratively. Problem-solving demands an exchange of ideas, which is possible only if team members work hard to listen to perspectives that are different from their own. An excellent way to approach collaborative problem-solving is by using divergent and convergent thinking strategies.

Divergent thinking helps high-performing teams identify many solutions to
a potential problem. The spirit of the activity is to defer judgment and encourage contributions in a free-flowing and creative way. There are
many exercises you can use to promote divergent thinking:

  • Letting your team have time to think about the problem
  • Making lists of the potential solutions to the problem
  • Doing verbal brainstorming or mind-mapping

Once you have a solid set of potential solutions, the team moves into the convergent thinking stage, where they work together to:

  • Narrow down options
  • Decide on the best solution
  • Reach a consensus based on a benefit and risk analysis

When you have fostered a healthy team environment, the inevitable conflict will be manageable through your ground rules of mutual respect. Create a positive work environment with strong listening skills and team identity and you will see your teams making decisions and action plans to face challenges head-on in a collaborative way.

Leadership

Leadership helps provide the bridge’s strength and support to push a team to persevere when faced with a challenge. The leader creates a positive work environment and encourages collaborative problem-solving while nurturing their team’s capabilities. Remember that leaders are not always the boss; you can have a de-facto leader on your team too!

Leaders contribute to high-performance teams by attending to the team’s health, maintaining the strategic vision, supporting team members individually, demonstrating and encouraging accountability, and modeling the way through behavior and action.

Be the three-legged stool

Although the three primary components of a high-performance team are fostered separately, they all depend on each other like the three legs of a stool. If one leg is not stable, the others will not be either. Nurture all three components and embrace challenges head-on!

 

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