How to talk about employee compensation during a salary freeze?

by on June 12, 2009 · 0 Comment POSTED IN: HR Info Center

Guidelines for conversation about employee compensation during a salary freeze

How do you talk about employee compensation during a salary freeze? It’s a bit longer. What you’re going to find is the employee compensation conversation during a freeze is very similar to the cut conversation with a very slight modification.

Conversation timing
It’s going to be a short conversation. You don’t have a lot to talk about here. But I want you to talk about it in a way that is not going to sap lots of energy. I want you to at least come out as neutral or better.

How do you do it?
“I’m sorry. Due to business conditions, we’re unable to make any merit-based adjustments at this time.”
If that’s the case, you don’t have to do this one on one by the way. If everybody is getting the same thing, you might start off by giving this speech to your group, okay?

Group conversations about employee compensation during a salary freeze
“To remain competitive in this difficult marketplace, we’ve decided to hold salaries constant. This is a measure we’ve taken with all groups and with all levels starting at the top”, now, I’m assuming you can say all those things. And I’m assuming you want to say all those things. If you’re going to freeze anybody, executive and managers should be freezing more than anybody and before everybody.

If you got to say, “We made some exceptions to these people in x category because, you know, we just wouldn’t be able to hold these folks because of market conditions. But everybody else is exempt. We realize this is difficult for you and your family. We don’t take this step lightly without serious reflection nor do we take this step in isolation. It is part of an overall strategy to allow us to remain viable.” This may be tough, very tough. But your honesty will pay off in the long run.

Talk about what you did before cutting employee compensation
“As you know, we’ve already curtailed executive bonuses. released contractors, accepted early retirements, laid off groups A, B C, instituted travel restrictions, delayed building renovation, reduced training budget”, Tell that little story about pain sharing what you did before cutting employee compensation. Okay, you may not be able to say all those things. Heck, I hope you don’t have to. But if you’ve done any, take credit for it here.

Emphasize the temporary nature of the employee compensation freeze
“The salary freeze is a temporary measure. We’ll commit to revisit the situation in six months.” Even if you know there’s no possibility in six months things are really going to change, I would strongly encourage you to tell them you’re going to look at it again in six months. It gives hope.

Encourage continued performance
“To maximize the chance we make it out of this downturn, we need everyone’s hard work and dedication. This is not the time to feel sad and stop working hard. We need your help to have a more positive conversation in six months.”

So, what you hope to get out of this – what you ought to hope for is people who say, “I got to help.” You know, that we better keep pedaling here. Just because things are bad, it doesn’t mean it can’t get worse.

Make sure that you revisit and communicate with people in six months.
Tell them you’re going to and then do it. Even if the answer to their employee compensation question is the same in six months, if you can’t do anything else, you’re going to have to come back and talk to them again, okay? I strongly encourage you to talk to people even in difficult circumstances because when you stop talking, people fill in the gaps with things you don’t want them to fill in the gaps with. To repeat myself, silence is not golden when talking about employee compensation.

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