Mastering Salary Discussions: Preparation and trust are key
January and february is the time of year when many, both team members and managers get that lump in the chest and a general feeling of discomfort as the annual performance talks and often related salary discussions are getting closer. Doesn’t need to be that way!
In this article, we walk you through the steps, and give tips and advice on how to: Prepare, Run and Follow up on these sometimes challenging talks.
As in the case of any difficult conversation, what we would call a effective or successful salary discussion focuses on listening and empathy to generate the trust and openness that will turn it into an opportunity for both.
By taking the time to truly taking in and understand your team member’s needs, you can create a dialogue that leads to productive results. Additionally, it’s important to be open to reasonable negotiation and be prepared to justify your decisions.
the Psychology and Nature of Salary Discussions.
When it comes to these conversations, it’s important to understand a bit of science behind. Having a firm grasp of the psychology of these conversations can help you navigate them more effectively, while being aware of the significance of listening and empathy can help create a more productive dialogue.
The psychology is complex, and three things you need to keep in mind that makes the salary discussion even more complex:
- First, people tend to be very sensitive about their salaries, so it’s important to approach these discussions with sensitivity and care.
- Second, people also tend to compare their salaries to others’, so it’s important to be aware of this tendency and try to avoid creating any comparisons during the discussion.
- Finally, people tend to react emotionally to news about their salaries, so it’s important to be prepared for this possibility and have a plan for how to address it if it does come up.
The importance of Listening and Empathy.
In these conversations, all science points to listening effectively and showing empathy towards your team members as the absolute key. These two things can go a long way in establishing trust and rapport with employees, which is essential for productive dialogue around sensitive topics like salaries.
When approaching these conversations, make sure to give your full attention and really listen to what your team members are saying. At the same time, try to see things from their perspective and show that you understand their feelings on the matter.
Essential – Preparations
While the psychology of salary conversations and the importance of listening and empathy are both critical factors to consider, there are also some essential elements that all effective salary discussions should include.
- Expectations – Set expectations first of all for yourself. It’s important to be clear about what you’re hoping to achieve from the discussion.
- Research – make sure to do your research ahead of time so that you’re well-informed about fair market rates and the specific situation of your team member.
- Finally, prepare for responses – be prepared to respond appropriately during the discussion, demonstrating positive reinforcement, being open to reasonable negotiation, and providing justification for decisions made.
In the coming sections we will walk you through the preparations, what to thing anbout in the meeting, and what follow up and documentation you should always do.
Place & Setting for the meeting
Select a place for the talk where you will not be disturbed. Ideally go offsite or to a floor where your closest colleagues don’t pass by too frequently. Do something a little new and avoid holding this talk in the habitual meeting-room where you hold all other meetings.
When preparing for salary discussions, it is important to first research fair market rates for the position in question. This will ensure that you are able to justify any salary arguments to the team member, and will help to set expectations on both sides.
There are a number of resources available online to help with this research, such as salary surveys and cost-of-living calculators.
Before entering into salary discussions, it is also important to take some time to analyze the team member’s performance. This will help you to identify any areas where they may be under- or over-performing, and will give you a better sense of what their true worth is to the organization. If possible, try to use objective measures such as sales figures or customer satisfaction ratings rather than subjective opinions.
Generate Constructive Dialogue.
Once you have done your research and prepared your arguments, it is time to start thinking about how you will actually structure the conversation itself.
In general, it is best to avoid coming across as confrontational or adversarial; instead, try to focus on generating constructive dialogue that will lead to a mutually beneficial outcome. To do this, start by clearly stating your objectives for the discussion, and then invite the team member to share their own thoughts and concerns. Once you have both had a chance to speak openly, work together towards finding a compromise that meets everyone’s needs.
During – In the meeting
It is essential to demonstrate positive reinforcement in order to maintain a constructive dialogue. Some things to remember:
Keep open and be aware of your own behaviors
Maybe this goes without saying, but here you need to suppress own negative thoughts and reactions to your colleagues’ words and ways. Use affirming body language, such as making eye contact and nodding in agreement. Use verbal encouragement, such as saying “thank you” or “I appreciate your input.” Finally, it is beneficial to offer specific praise for the team member’s contributions. For example, “Your work on the Smith account was impressive and helped us land the client.”
Be Open to Reasonable Negotiation.
Another key element of effective salary discussions is being open to reasonable negotiation. This means being willing to consider the team member’s perspective and compromise when necessary.
It is important to remember that salary negotiations should never be about winning or losing; rather, they are about finding a mutually beneficial solution that meets the needs of both parties. Try to move it away from becoming just a zero-sum game.
Sometimes you may not have much room to negotiate anything close to what your team-member asks for. Then you need to refocus and reengineer the persons perception, just like you would a customer in Value Selling. This way you make other areas and values appear much more important than the immediate paycheck next month.
Provide Justification for Decisions.
Finally, it is important to provide justification for decisions made during salary discussions. This helps team members understand the rationale behind decisions and feel like they are being treated fairly.
Justification can be provided verbally or in writing, depending on the situation and preference of the team member. For example, if a team member asks why they are being paid less than another team member with similar experience, a manager could explain that the other team member has been with the company longer and has taken on additional responsibilities over time.
After – Agreement & Follow up
After the meeting, establish clear expectations with the team member, and repeat what was agreed. This will ensure that everyone is on the same page and that there are no misunderstandings. Be sure to go over what was discussed during the meeting, what was decided, and what the next steps are. It is also a good idea to provide a written summary of the discussion for the team member to refer back to.
Ensure the Team Member is Satisfied.
It is important to ensure that the team member is satisfied with the outcome of the salary discussion. If they are not, try to understand their concerns and see if there is anything that can be done to address them. It is also important to follow up after a few months to see how they are doing and if they are still happy with the arrangement.
Document the Process.
It is important to document the process of salary discussions in order to keep a record of what was discussed and agreed upon. This can be helpful in case there are any disputes later on or if you need to reference something from the discussion. Be sure to include date, time, names of those involved, and a summary of what was discussed.
In conclusion, as managers and team leaders you need to use some basic psychology in order to prepare for and respond appropriately to these conversations.
- By preparations – researching fair market rates, analyzing a team member’s performance, and generating constructive dialogue, managers can set the stage for successful salary discussions
- During the discussion itself, it is important to demonstrate positive reinforcement, be open to reasonable negotiation, and provide justification for decisions.
- Finally, follow up after the discussion by establishing clear expectations, ensuring satisfaction from the team member, and documenting the process.