There’s a deal that you can cut with top employees that keeps them on board, engaged and focused, without having to raise their salary. It’s fair, focused and motivating for both people sitting across from each other. It makes both parties motivated to think deeply about the business every day and build great things.
For most managers and HR professionals, salary reviews are like Christmas with the in-laws; it happens once a year, there’s lots of awkward conversation and both parties walk away usually underwhelmed at what gifts they exchanged.
For managers of large teams, this happens more often than they like. That email from a staff member reminding them that their salary review is upcoming, or the calendar event that pops up every year. It’s as inevitable as the in-laws pulling up in the driveway and knocking on your front door.
Another 60 minutes of being between a rock and a hard place. Time to get serious. Fiduciary armor on. Check. Employee growth agenda: filed way back in your mind. It’s time to talk turkey and forget that there’s a real person with goals and aspirations sitting across from you.
That’s the thinking of many managers and HR departments as employee reviews begin and the ‘sorry to let you down’ season starts.
But this doesn’t have to happen.
For more tenured or longer-serving employees, this approach is a bit more difficult to enact, but if you have some first-time-review employees on the horizon, then you’re in luck, as the tips below will save a bit on the bottom line in the short term. More importantly however, you will be able to build trust between both parties and motivate each other to do amazing things:
We’re humans. We act differently when we are uncomfortable. There is stigma attached to talking about salary that has been carried over from the 20th century. Salary reviews very commonly become de-humanized; parties focus too much on dollars, KPIs and percentages and miss out on the important motivators to doing great things like fit, where business problems are from an employee perspective and ideas that these employees have to fix them.
By assessing honestly, not pulling punches and then listening to what the employee thinks about the assessment will build trust. From trust comes honesty. There have been many instances where these types of conversations unearth some key insights on how to be a better manager and ultimately build a strong communication foundation – a fantastic baseline to leverage as these new employees start their journey to being great leaders themselves.
This may surprise you, but many University educated employees (and even MBAs sometimes) don’t really grasp the inter-workings of how a business operates. Outside of accounting, if you’re speaking to employees who work in other functions and divisions, they rarely think about how the business makes money or think through how sales margins work. Sure, they have learned it in school, but probably haven’t applied it to their current circumstances. This is your opportunity to give them a tutorial in how your business becomes successful and how it makes money. This is also a time to share what’s worrying you about the current status quo and changes in the market that may affect success in the future.
New employees will be enlightened and will walk away with a new, broader prospective of how their everyday work impacts the bottom line of the business. They will also be able to relate their salary to outcomes and outputs. Rather than thinking about straight percentage increases to base salary, top employees will realize that a higher salary is not an entitlement; it’s an investment in future higher quality or quantity outputs. If you think hard enough about it, every role – from customer service to client relations can be linked back to business growth and profitability.
After the cordial ‘hellos’, make the first thing you say be:
“Now I know were here to talk about money. But I want to make a deal with you. In five years, I want to have the challenging salary negotiation with you. It’s going to be difficult because you will be successful and know exactly what you’re worth to the company. I don’t think you do today, and I don’t expect you to, but we’re going to talk about what you’ve been great at over the past 12 months and then discuss what you and I can work on to make that salary negotiation in 5 years really hard for me.”
By setting up the conversation about the future, you will immediately focus the conversation about potential. The employee will first be surprised, but will then change their perception of the meeting. They walked through the door ready to do battle, but after the opening remark, they switch to be ready to learn.
This deal is by no means a tactic to delay top employees’ salary reviews for five years. Everyone deserves consideration and it’s silly to think that one can waylay a salary increase for such a period. It’s a way to in that first, critical review period establish a positive, open and informed baseline of conversation between a manager and employee.
Be honest, educate and make the five year deal. When that calendar reminder pops in 12 months’ time you’ll be excited to have a conversation.
About the author
David is Univerum’s Global Vice President of Product and Head of Digital for the Americas