By Jean Roque, President, Trupp HR.

Employee pay can be an extremely challenging topic for business leaders, especially for small to mid-sized organizations where compensation decisions may be more ad hoc. In today’s market, leaders often find themselves making hasty salary decisions to attract or retain top employees while struggling to keep pay within budget and fair across the employee population. So what’s a savvy employer to do when employees raise questions about their pay? Let’s take some of these questions head on!

What to say when Mary googles her job title and discovers she is underpaid by $20k.

“Let’s talk.” It’s important for employees to realize, for example, that a “manager” at one company may be a “director” at another. All too often, companies hand out impressive job titles that may exceed the scope of job duties in comparison to the overall market. Employees should also be educated as to how pay decisions are influenced by internal equity as well as the organization’s compensation philosophy, size, location, and industry.

What to say when Joe says he has been offered a job elsewhere for higher pay.

“Congratulations!” Assuming you have been making sound pay decisions based on a fair and equitable compensation plan or salary structure, now is not the time to upset the apple cart. Raising someone’s pay in response to a job offer often turns out to be a disappointment. The risks? Joe already has one foot out the door and keeps looking in spite of the raise. Joe’s peers are crafty and take a page out of Joe’s book. Your employees spend more time checking their Twitter feed because engagement has declined.

What to say when Mary realizes she is making less than her peers.

“Let me look into that.” Internal equity (making sure we pay employees fairly when compared with others in the same organization) is even more important to employees than knowing they are paid fairly compared to employees in other organizations. To determine if Mary is paid fairly, first assess where her pay is placed within her job’s salary range—especially with regard to her expertise, tenure, and job performance. Then, look at other employees in the same job as well as other jobs of similar value to the organization that are (or should be) placed in the same salary range. Ideally, you should be able to provide sufficient justification—based on expertise, tenure, and job performance—for where Mary is placed in her salary range. Otherwise, Mary may be getting an unexpected pay raise!

What to say when your new hire demands a higher pay than Joe.

“Have you met our office dog?” When an applicant relates to your employer brand and company culture, they will usually be less concerned about salary. Promoting the non-monetary aspects of your organization that make it attractive to new applicants will increase your organization’s ability to attract and retain employees who align with and are motivated to contribute to the success of your organization.

The bottom line.

Are you seeing the common thread here? These conversations are challenging at best if you don’t have a well thought out compensation strategy in place. On the other hand, if you do, you know exactly where each of your employees falls within your company’s pay structure and where they are headed. Armed with this knowledge, you are able to address these concerns with confidence. This level of objectivity enables you to be transparent with your employees—defusing these emotionally-charged conversations. In the end, a reliable compensation framework contributes to a more engaged and thriving workforce while ensuring that your organization is running at peak efficiency.