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Salary Negotiations Are Good For Both of You
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By this time of year, many companies have spent the last few months doing a talent market study, squaring away the budget and securing approvals from managers on pay increases for their employees. Now that managers are sharing the good news, many HR professionals are hearing that employees are hoping to negotiate their raise. This can create an uncomfortable situation, since most HR professionals, organization leaders and managers alike have a fear of negotiation. They wonder, “What if my employees ask for more? What if they ask for something I can’t give them?” Or perhaps worse yet, “What if they ask for something I don’t think they deserve?”
It’s an interesting scenario because — outside the organization — workers are encouraged to negotiate pay.
They are urged to do their salary research, seek online resources, practice asking for a raise or a promotion and more. PayScale, the company where I work, just released a newly updated salary negotiation guide for employees, providing valuable information for individuals who want to negotiate pay.
In response, it’s time for organizational leaders, managers and especially HR professionals to think differently about negotiation and prepare themselves to have more productive conversations about pay increases with employees.
Here are a few ways to ensure your next pay negotiation with employees goes more smoothly.
First, be sure to understand exactly what is being asked by the employee and truly hear them. Employees negotiate because it’s their way of communicating to the employer that they want something they don’t currently have or there is something they are not being offered.
Right now, many organizations are deciding how transparent they want to be about pay and their pay decisions. Negotiation is the other side of the transparency coin where employees are sharing with managers where they ‘think’ they should be in terms of compensation or other benefits.
Even if the ask is not realistic, it’s essential to really hear the employee and not be dismissive because the ‘ask’ is important to them.
Negotiation is scary for most employees and many don’t really know how to negotiate. However, this process is so critical to establishing open communication that managers should find ways to support employees to communicate their ‘ask.’
One approach is to offer training in communication and feedback to both managers and employees. In addition, proactively share more information across the organization about the overall compensation program.
The more employees know about how and when pay decisions are made, the more perspective employees will gain about their place in the bigger picture.
Once managers and HR professionals start talking openly with employees, they often learn the employee wants more than compensation. Usually employees lead with the monetary number and sometimes that is the whole ask.
For some employees, there is something else occurring. For example, sometimes employees are throwing up a flag that says, “I’m disengaged, help me!” Perhaps these employees want to do different or more interesting work. Or sometimes employees talk about pay to signal that they want to grow into a more senior position at the organization. And other times, employees feel underappreciated and are looking for a thank you, more time off or some other reward to recognize their efforts.
When an employee starts communicating with their manager or HR, take it as a positive sign that they’re willing to engage in a meaningful way about their value at the company.
Once you understand what will make the employee feel better, it’s time to start communicating. How do you feel about their ask? Is it something you can and/or should do? Is the employee deserving?
If meeting their ask is not in the cards, this is a good time to provide some coaching around performance, goals and their job expectations. If they’re deserving, but the company has tight purse strings, it may make sense to come clean about the financial realities and brainstorm alternatives together. For example: Would the employee take another week of vacation in lieu of a raise right now?
Once the employee has taken the risk to ask for something, it’s the manager’s opportunity to show they value the employee and respond by showing they understand what will be meaningful to this particular employee.
Next, work to establish an agreement that will feel good to the employee. Show that you understand what they’re asking, then reiterate what you can and what you’re not going to do. As much as possible, keep in mind the main business goals, objectives, projects and budget (i.e. don’t offer something that can’t be delivered). If you can’t finalize the details of an agreement in one meeting, let them know that you’ve heard what they’re asking and set a meeting to revisit the conversation once more information has been obtained.
Once an agreement has been made, get it down in writing. This can be a quick email that starts by thanking the employee for raising the issue and summarizes the key points of the agreement.
Finally, don’t stop there. Check back in with the employee in another week, month or quarter to see how they’re doing. Is the agreement still mutually beneficial? Are they feeling more engaged? Are they closer reaching the goals to earn higher pay? If not, provide additional guidance and find something that works better for both the employee and the organization. In the end, the goal is to continue having an ongoing and open dialogue about pay.
There are times when it’s helpful to have a healthy fear of negotiation. Fear helps heighten our senses and alerts us to potential danger. However, rather than running away from negotiating pay with employees because it’s scary, why not face this communication challenge head on? Read what employees are reading, then share information about negotiating with managers and prepare them to engage and respond to employees. Perhaps managers will become confident enough that they welcome negotiation with their employees because they understand that it can encourage a greater dialogue about how valued employees feel.