It’s rare for companies to provide much transparency about how they make pay decisions. But, as laws are being passed mandating pay ranges be shared in job postings, withholding information regarding pay will become more challenging for employers.
The lack of transparency around pay typically contributes to a culture of ambiguity, which hamstrings the employees trying to request a raise and the leaders who field their requests. Too often, leaders are put in the impossible situation of weighing in on a process they don’t control and know little about.
To prepare for the inevitable moment when an employee wants to talk about raises, leaders should make sure they can comfortably answer these ten questions about how pay works at their companies (and it can’t hurt for non-managers to understand these dynamics too).
1. What is the company’s pay philosophy?
2. Who determines that philosophy (executive team, compensation committee, etc.)?
3. What do we invest in our employees as part of their “total rewards,” such as benefits and bonuses?
4. Do we pay at, above, or below market rates? How does this differ across the organization?
5. When and how often do we give raises?
6. How do we determine what’s allowed for raises across the company—that is, are raises based on revenues, specific company-wide performance goals, or individual goals?
7. When was the last time a job analysis (confirming what the role does) or a job evaluation (confirming what the role should be paid) was done for your department, team, or roles you manage?
8. For each employee, you’ll also want to be armed with this information: What is their classification/band and the corresponding salary range? Where are they in the salary range? What is their raise history?
9. What is the company’s stance on pay transparency? (New York State and Colorado already have passed mandates for employers requiring transparency)
10. How large is the organization’s pay gap for women and people of color?
If you can’t answer these questions, ask your organization’s senior leadership or human resources department for a meeting so they can fill you in. Because these topics can be tricky, take good notes and summarize what you learned back to them in an email to ensure you’re passing along the correct information to your team members. This preparation will go a long way toward ensuring more productive pay discussions when the time comes.