Compensation and Employee Communications

Compensation and Employee Communications

By , SPHR CCP, Director of HR Services, Trupp HR.

Once an organization has established a well-rounded compensation and benefits package that aligns with organizational goals, it is essential to develop a communication strategy to build employee understanding. This is important because employees who grasp the values behind an organization’s decision-making process when it comes to total rewards, have a clear line of sight to the end-game.

A study conducted in 2011[1] found that employees are often unclear about the salary ranges and incentive programs offered by their employers. This is not surprising, since the same study also reported that 61% of organizations withhold some or all salary range data. Only 13% of organizations are highly transparent. Even worse, when it comes to short term incentive plans, only 31% of organizations surveyed believed that their employees understood how these plans worked, including the criteria required for them to receive payouts at the various levels of performance.

This is somewhat alarming because compensation is often one of the largest budgetary line items for most organizations. In order to get the best return on this investment, employees need to be informed about the compensation levels that are available, along with the performance expectations to achieve them.

Building awareness of all elements of the total rewards package and how pay and performance are linked can create a mixture of understanding and appreciation among employees. This strengthens workforce retention, attracts top talent and provides motivation for your team to achieve critical business results.

Strategies for Communications

Train Your Line Managers
A 2013 poll posing the question “Who is responsible for communicating compensation-related information to employees?”[2] found that 61% of organizations rely either solely or partially upon line managers to handle this communication. Most line managers have not been well-trained in compensation and benefits strategy or programs. Paying attention to building knowledge with this group and equipping them to be effective communicators on these topics provides a stronger foundation for getting employees connected to organization goals, effort and results required, and rewards offered.

Tailor Communication Methods to the Needs of Your Workforce
This is not a one-size-fits-all topic. Technology and generational needs contribute to a diverse range of employee needs. At least 49% of organizations have adopted the use of annual total rewards statements. This point-in-time communication tool is a great start for spreading the word about the strengths of your rewards package. For more frequent communications on this topic, organizations may also consider the Internet, president or management team blogs, email messaging, brochures, newsletters, department meetings, or lunch and learns. Employees pay attention to messages regarding their compensation and benefits package. Opportunities to tie those messages to organizational goals can create considerable improvement in employee performance.

Equip the Right Communications Team with the Right Message
Identifying individuals who understand the reward programs and can easily connect with employees is an important step in getting the most from your employee communication efforts. Equipping them with the key messaging on how rewards work at your organization and what efforts are rewarded, provides a winning delivery. A poorly developed communication plan can undermine your efforts; take the time to select the right people and develop a clear and accurate message that is tied to your business objectives.

Check in with Employees
Want to know if your communication plan worked? Just ask your employees if they understand the programs better or are still unclear. Apply what you learn to your next communication to continuously improve and reinforce understanding.

Alignment of the compensation and benefits program between desired outcomes and employee effort creates a strong return for employers on their expensive labor and benefits investment. Communications that strengthen your human capital ROI include sharing the rewards strategy, explaining how salary ranges and individual pay rates are determined, and clarifying what behaviors and outcomes are expected for base pay to increase. Making communications routine, relevant, and accurate will solidify your company vision among your team and is one of the most significant contributing factors to meeting your business goals.


[1] Total Rewards Communication Practices, Pearl Meyer & Partners, 2011
[2] WorldatWork, Compensation Focus