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How to Better Discuss Salaries with Employees

How to Better Discuss Salaries with Employees

Discussing salary and increments with an employee can be tricky sometimes, but it doesn’t have to be. Here are a few ways to make the discussion more fruitful.

Salary increment discussions require some amount of levelheadedness and a clear direction in order for employers and employees to have a productive conversation. Employers often lead these discussions during performance reviews where the employee’s performance is assessed.

While discussing and communicating about salaries with employees is important, it is equally important to tread with care and manage expectations well. Money and salaries of employees are often inadvertently linked to their perception of their skills and how much value an employer is willing to place on them.

Hence, when an employee seeks an employer out for a discussion about a salary increment, it’s important that their concerns and needs are heard and acknowledged.

There are several ways to navigate salary negotiation and performance management with employees without having the conversation end on a sour note.

Set expectations for payment during onboarding

Getting off to a good start with employees on the subject of their salary is crucial as the first step in building their trust in you. The salary negotiation process is one of the first ways to put your best foot forward as a potential employer.

Set realistic expectations about how much you can realistically offer a potential candidate. This amount should be based purely on a candidate’s skills and experiences.

If there is a probation period, be sure to clarify if there will be a salary increment at the end of this duration.

Set a clear timeline for performance reviews

Instead of telling employees a vague, “we’ll discuss this at a later date” regarding salary, employers need to be communicative and have dates set to have these conversations.

Aside from the end of an employee’s probation period, employers should try to set a clear timeline for future performance reviews. This gives employees a clear idea of when to anticipate a conversation about their salary and gives them a date to work towards and meet their targets.

Be specific about KPIs and targets

During a performance review, employers need to set clear and specific targets for employees to meet. This reduces ambiguity and confusion for employees on how they will be assessed and using what metrics.

What will they need to achieve by the given performance review dates in order to be considered for a salary increment or possibly a promotion?


Setting clear targets that are quantifiable also lays the foundation for future conversations about salary because employees can then make a solid case for why they deserve an increment at a future date.

Be open to pay rise discussions

When an employee approaches you about a potential salary increment, be open to the discussion. It can be terribly demotivating for an employee if an employer refuses to even engage in a discussion about a raise.

Being open to hearing what an employee has to say in terms of the milestones he or she has reached is important in understanding whether or not a salary increment is on the table. Take a close look at the agreed upon KPIs and metrics and carefully assess how far your employee has come.

Should you feel your employee is not quite ready to receive a salary increment, do your best to communicate this in a diplomatic way during the performance review. Highlight the ways this employee has progressed thus far, but at the same time, explain the other requirements they have not reached just yet.

You could also advise them on ways to reach those requirements should they be having trouble or be facing any blockers. Then, set another date to revisit the conversation.

Be fair and compensate according to skills

An employee’s salary should always be based according to their skills and experiences. They should not be based on their age, background or gender and should be a fair representation of the role he or she is carrying out.

You may reach a point where you reach an impasse with your employee on how much they should be paid. If this happens, it is always better to be honest and upfront about what you as an employer are capable of paying them, rather than giving them false promises.

If you cannot meet their desired salary increment amount but do value their contributions, be sure to communicate this to them honestly. You may be able to offer them other benefits which are attractive enough for them to want to stay.

Ultimately, if you cannot meet their desired salary requirements, it’s best to be honest about it and be ready to let the employee move on to another opportunity.

Not all employers handle this situation well, but if you do, it will speak volumes of your integrity as an employer if you genuinely wish them all the best for their next career move.

For more articles on HR, recruitment and employee experience, visit the JobStreet’s Insight page.

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