Effective Communication Strategies for Tough Topics: How to Talk About Money as a Manager
Welcome to the third installment of our four-part blog series on navigating difficult conversations in the workplace.
In Part 1, we explored how to provide constructive feedback to underperforming employees in a way that promotes improvement and growth. Part 2 focused on the delicate art of delivering disappointing news, such as saying no or discussing budget cuts, with transparency and empathy. Now, we turn our attention to another challenging yet essential conversation: discussing money and compensation from a manager's perspective.
Part 3: How to Talk About Money as a Manager
Discussing money and compensation can be one of the most sensitive topics in the workplace. Approaching these conversations with transparency and fairness is essential to maintaining trust and satisfaction among employees, especially in a diverse and hybrid work environment. Whether you're negotiating a salary increase, explaining a compensation decision, or addressing concerns about pay equity, handling these discussions with care and clarity is crucial.
Preparing for the Conversation
1. Review Compensation Policies:
Before initiating any compensation-related conversation, ensure you are thoroughly familiar with your company's compensation structure and policies. Understanding the guidelines will help you communicate decisions clearly and confidently.
2. Gather Market Data:
Research industry standards and benchmarks to provide context for the discussion. Having concrete data on what others in similar roles are earning can help frame the conversation and provide a basis for your decisions.
3. Consider Timing and Medium:
Choose an appropriate time and setting for the conversation. For remote employees, a video call is preferable to ensure clarity and personal connection. Timing is also crucial—avoid scheduling these discussions during particularly stressful periods or right before major deadlines.
4. Handle Your Nerves:
Managing nerves is crucial for maintaining composure and confidence. Practice your talking points out loud, rehearse with a trusted colleague, and write out your main points in advance. These steps will help you feel more prepared and reduce anxiety before the conversation.
During the Conversation
1. Be Transparent:
Clearly explain how compensation decisions are made within the organization. Detail the criteria and processes involved, such as performance metrics, market comparisons, and budget considerations. Transparency helps build trust and shows that decisions are not arbitrary. Use the power of storytelling to illustrate your points effectively. For example, describe a scenario where an employee's specific achievements, dedication, and growth influenced a positive compensation decision. This narrative approach not only clarifies the process but also humanizes it, making the conversation more relatable and impactful.
2. Acknowledge Contributions:
Start by recognizing the employee's achievements and contributions. Acknowledging their hard work and dedication sets a positive tone and shows that you value their efforts.
3. Provide Rationale:
If the compensation discussion involves denying a raise or offering a smaller increase than expected, explain the reasons behind the decision. Be honest about the factors that influenced the outcome, such as budget constraints or market conditions. Providing a clear rationale helps employees understand the bigger picture.
4. Offer a Path Forward:
Outline steps the employee can take to achieve future compensation goals, even if the current denial is due to market conditions or poor sales. Provide specific, actionable feedback and set clear expectations. Discuss professional development opportunities, additional responsibilities, or performance improvements that could lead to future compensation adjustments once the market improves. Additionally, explain how the organization plans to navigate the current economic challenges and how the employee's role can contribute to a potential turnaround. This approach not only provides clarity but also keeps the employee motivated and engaged during tough times.
5. Encourage Open Dialogue:
Allow the employee to ask questions and share their perspective. Be prepared to address their concerns with honesty and empathy. Active listening is crucial—make sure the employee feels heard and understood.
Follow-Up
1. Regular Reviews:
Schedule regular compensation reviews to keep the conversation ongoing and avoid surprises. Consistent check-ins allow you to provide feedback, recognize achievements, and discuss career growth opportunities.
2. Continued Support:
Offer ongoing support and resources to help the employee meet their compensation goals. This could include access to training programs, mentorship opportunities, or additional responsibilities that align with their career aspirations.
Talking about money and compensation can be challenging, but it's a necessary part of effective leadership and management. By preparing thoroughly, communicating with transparency and empathy, and providing clear paths for growth and improvement, you can navigate these conversations successfully. Remember, the goal is not only to address current compensation concerns but also to foster an environment of trust, fairness, and continuous development.
Stay tuned for the final installment in our series, where we will explore strategies for resolving conflicts in the workplace with professionalism and diplomacy. At Bespoken, we are committed to helping you master these essential communication skills. If you need further assistance, don't hesitate to reach out for our expert guidance.
About the Author
Jackie Miller launched Bespoken in 2015 to channel years of professional performance experience into techniques that improve public speaking, presenting, and professional communication skills. She holds a B.F.A. and M.A. both from New York University’s Tisch School of the Arts.