How to Turn Your Managers into Salary-Setting Experts

Guest Writer: Marie Wikander

More and more employees demand transparency from their employers regarding salary setting in the workplace. This trend has been ongoing for over 10 years, yet few companies have adapted to these demands. Now, the implementation of the EU Salary Transparency Directive into Swedish law will soon require Swedish employers to quickly adjust. However, there are tremendous benefits to increasing transparency around compensation.

Having worked with salary transparency for nearly a decade, I have witnessed its numerous benefits firsthand. Employees experience a greater sense of satisfaction, and managers gain valuable tools, feeling better equipped for salary discussions with their team members. This leads to fewer complaints during these conversations, resulting in both managers and employees feeling satisfied with the process—a clear win-win.

60% of organizations lack confidence in their managers' ability to conduct effective salary discussions.

The key factor for employee satisfaction during salary reviews lies in how managers handle the process, particularly the salary discussions. Research shows that a manager's approach significantly impacts employees' experiences.

According to a study by WorldatWork, 60% of organizations reported that managers lack the necessary skills to effectively conduct salary discussions.

A major 2018 research report from Stockholm University and the Confederation of Swedish Enterprise revealed that 50% of employees do not perceive their salary as performance-based, and nearly 40% feel their salary is unfair.

However, this often occurs because managers have a limited understanding of salary processes. They frequently fail to set proper expectations for salary revisions or adequately explain how salaries are determined.

So how can you turn managers into salary experts?

The key lies in equipping managers effectively. Here are my best tips:

Tips on Preparing Managers for Salary Revisions:

1. Educate your employees about how your organization's salary revision process works. Typically, this responsibility falls to HR, but providing standardized training ensures consistency and clarity.

2. Equip managers with clear salary criteria and salary ranges to enable them to fairly assess employee performance and reduce subjective judgments.

3. Provide comprehensive training for managers on the salary revision process, including role grading, salary ranges, and budget distribution.

4. Set high expectations for managers, as their role is critical to employee engagement and satisfaction.

5. Offer managers training in handling difficult conversations. Salary discussions can be challenging, and equipping managers with these skills ensures better outcomes.

6. Facilitate opportunities for managers to discuss salary processes and challenges with peers, fostering mutual learning and improvement.

Ultimately, employee satisfaction with salary revisions hinges less on salary alone and more on feeling appreciated and fairly treated. Managers play a crucial role in creating this environment by building trust, providing continuous performance feedback, and clearly explaining salary decisions.