Communicating Pay Changes: Suggestions For 2003

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By, Pat Zingheim and Jay Schuster

When you think of it, your organization's pay program is really a powerful communicator of values and directions to your employees. How many times have you heard people say, "You get what you pay for"?

Pay systems are being re-designed to focus on issues of total rewards, adding variable pay to the formula for large segments of the workforce, and implementing performance-based pay solutions that recognize the influence employees have on key measures of organizational performance. So pay is increasingly becoming a communications ‘rudder' that helps define the role the organization needs employees to play in making them a success and basing pay and rewards on the speed and quality of the transition of the workforce to this new formula.

Moving to Practice: Challenges to Consider

But all organizations say they expend considerable time communicating about pay. Some do it much better than others do, but all do it in some way. Why is it that communications about pay becomes an issue at this time? It's because new emphasis on communications is necessary—pay and rewards are changing from what they were in the past. These changes are substantial and have major implications that employees need to understand.

New pay solutions need to get employee attention. Here's some of the trends in pay management that will need extra communications attention:

True Pay-For-Performance: Many organizations have moved to finally linking pay adjustments to their performance management system. This was very slow in coming but now is becoming more of a reality. This is a significant change for managers and employees and getting the new message through is critically important.

More Variable Pay Deeper in the Organization: Surveys constantly show that more and more organizations are adding variable pay that does not fold into base pay to non-management employees. This is a significant new change and employees need to trust the measures used and understand this is not a strategy to save money for the organization.

Pay Freezes/Unfreezes: Unfortunately we have had quite a few employees who did not receive any pay adjustment due to business slowdown. In some cases pay reductions occurred. Organizations need to put these actions in a long-term context. These actions tend to demoralize work forces and communications must give them hope for better days.

Cascading Goals for Pay: Organizations are moving to strategies to align the goals of the most senior people with everyone in the organization. This cascading goals concept requires that employees understand how they add value to measures and goals that represent a longer line-of-sight from those they are most accustomed to.

Communications Ideas and Plans

The problem with communicating about pay is that employees are often tired of the same boring manuals and written material. If your organization wants to change the message about pay, it needs to change how the message is delivered. Here are some solutions we have seen work in a wide range of very successful organizations that communicate very well:

Employees Design Communications: The best way to communicate is to get the employees involved in picking how to do and then helping get the message through. Employees best accept what they are involved in designing. And they are likely to be better equipped to understand what other employees need to know about new pay directions. And having them participate in getting the message through is really important. The more involvement, the better as it relates to pay communications.

Add Recognition and Celebration: Tying pay changes to new recognition and celebration plans always helps. When goals are met and employees help, do something to acknowledge the success. If pay is changing, providing some small recognition of the acceptance of change is very important. And employees can help here too. Employees develop some of the very best recognition and celebration programs. So linking employee involvement in communications design and recognition and celebration makes perfect sense.

Managers Make Communications Fun: Pay is usually very boring—but counts importantly to employees. Managers need to make the communications process more fun than a bore. Adding cartoons to communications and announcements can help this communication strategy. This is a close balance and must be programmed carefully. It is the small things that are important to getting attention to new messages.

Use Tools You've Not Used Before: Use all the communications tools you have to communicate the new pay messages. If you have a Web site for employees, use it. Provide e-mail question and answers and also have a pay hotline that gives employees access to understanding about pay. Let employees who are involved in bringing the message through participate in question and answer sessions. But the most important thing is to keep up the communications for the long term. Everyone does a good job for a few months, but the organizations with most success are in the communication process for years.

Think Out-of Box on Communications

The best way to communicate on pay issues is to go where your organization is not going on communications presently. Try a new solution each month. If that does not work, try something else. Employee involvement is in our mind one of the most unused secrets about communicating about pay. Employees will have the best ideas about how to get the messages through in an understandable fashion. Not all the messages about pay are positive these days. But trust will be built around pay matters in the next year or so. You organization should become part of the solution.

Pat Zingheim

[email protected]

Dr. Patricia K. Zingheim and Dr. Jay R. Schuster are partners in Schuster-Zingheim and Associates, Inc., globally recognized pay and rewards consulting firm located in Los Angeles. They consult with a wide range of companies throughout the world on the development of total rewards, incentives, and other pay solutions.

They speak throughout the world to leadership audiences interested in creating a high-performance workplace through people. Their books are available on

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