The Key to a Successful Salary Increase Conversation

Salary adjustments.  Merit increases.  Annual salary reviews.

Call them whatever you want, this simple fact remains:  the process of reviewing and adjusting salaries for employees is a stressful one.  So much anxiety, tension and trepidation.

Many companies are focused on a standard process, a fair review that incorporates performance and potential, and hitting “the number” just right, to compensate employees according to the factors important to the company.  As a matter of fact, many companies do this very, very well.

Why is this, exactly?  Why does it almost never go well?

During my recent reading about Customer Experience, Employee Experience and how important Employee Expectations are in both of those equations, I had an epiphany.

I think I have discovered the key ingredient:  expectations.

Think of it this way – the success of a salary increase conversation hinges not on whether the process was fair or equitable.  It hinges on whether the employee thinks it is fair.  That is a fairly small, but at the same time HUGE difference.  Let that sink in for a minute…

It hinges on whether the employee thinks it is fair.

Soooo…

What am I saying, exactly?  Am I saying that the only successful salary increase conversation is one that the employee dictates entirely, and basically chooses what his/her increase will be?  Nope.  Not at all.

I’m saying this – understanding what your employee expects going into the entire process will help you understand their mindset coming in, and allow you to have multiple productive conversations to arrive at a point where trust is present, and the ultimate decision (even one that you may not have agreed with, or approved of) can be successful.

Here are a few tips on how to do that:

  1. Build trust first.  It starts early on in the relationship and needs to be sustained over time.  Trust matters.  Seeds of successful salary conversations are planted months before the actual salary conversation.
  2. Hold regular 1:1 conversations.  Become comfortable talking with each other about work topics, and “how do you feel about ______”.
  3. Introduce the topic frequently enough to make it a comfortable conversation.  In these private 1:1 conversations, talk openly about salary & compensation.  This will allow future conversations about compensation to happen much more easily.  #practicemakesperfect

Note:  countless managers talk about compensation/pay once per year (at salary adjustment time) and are shocked when it doesn’t go well… OF COURSE IT WON’T GO WELL!!! 

It takes effort and practice!

Now, I understand it’s never this simple.  There are so many complex factors and variables in each individual circumstance that it would be impossible to prescribe one “best practice”.  But start with building trust over time, and understanding expectations, and you will feel better prepared during the entire process.

(“What’s next?” after you understand their expectations is a future post… please share any thoughts/comments/questions below!)