Failure to Communicate Employee Compensation Effectively Hurts Companies.

by on June 26, 2009 · 0 Comment POSTED IN: HR Info Center

Communicating employee compensation seems to be at the root of lots of different problems.

To the extent that you can, actually communicate to managers and employees about compensation so everybody understands really how we’re going to be paying people. You have a much better chance of having an effective pay for performance employee compensation program.

At least the employees should know the company’s philosophy on employee compensation. Are we really a pay for performance kind of a company? And there should be words specifying that. It’s a mantra for employee compensation. You should get used to saying that you pay for performance if that’s really your philosophy. Employees should at least know their own salary ranges. So when you’ve got salaries, grades with ranges, they should know what the potential for a pay within their range is.

Communicate performance expectations. What are you asking these people to do? How are you going to be rating them and what are the results of their performance against expectations and why did you rate them that way? If they’re eligible for incentive or stock programs, you need to tell them how these plans work. If you’ve got these all written up, it makes your job a lot easier. But people will have questions. And managers or HR should be able to describe how these programs work.

Talk to employees about career progression, it’s very important to the people to describe where they might go within the organization. And what kinds of skills they need in order to make these kinds of boost. Now, the manager needs to know all these things that the employee needs to know but even a little bit more. They should know employee compensation philosophy, structure, and at least the salary ranges for their own people.

But they also ought to know in detail how the incentive plan works because you probably want these guys to answer the day to day questions for their employees. They need to also know how to figure out a starting rate for a new hire. They need to know how to promote somebody. And generally, how the whole paper process works for salary increases promotionals, new hires and that sort of thing. You may have certain employee compensation dates too, in which employees are asked to either appraise people, grant salary increases, that sort of things. So make sure they know that.

They need to know all about the performance appraisal forms and process, what kinds of things are going to be evaluated on. There’s no problem in giving employees the actual form itself even before it’s filled out and explain the process that you’re going to be following.

Edited Remarks from “The Seven Deadly Sins of Employee Compensation Plans (and How to Fix Them)” by Rick Olivieri

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