Kaitlyn Knopp is founder and CEO of Pequity, a compensation management software built for compensation leaders, by compensation leaders.
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Compensation philosophies can make or break how managers and recruiters discuss pay with their teams, which, in turn, can make or break employee trust. So it's crucial—but very delicate—to fully vet and develop your compensation philosophy.
Employee compensation is not just core to the employee-employer contract; it can also be deeply personal. This can make it tempting to develop your compensation planning methods and philosophies with strong words that exude confidence. But it's important to remember that what you say and how you say it can dramatically impact the level of trust within the organization.
A decade of working in the compensation space, and now running my own compensation management software company, has taught me some valuable lessons. In particular, I know how important it is to be deliberate about the words we use when it comes to employee compensation. To increase the chances of setting yourself up for success later, I recommend avoiding these three terms when discussing compensation.
1. Always/Never
“We will always pay top of market.” “We will never pay unfairly.”
You're not in control of every decision or influence that impacts your employee compensation strategy, and it's important to acknowledge that. Using words like “always” and “never” can be problematic because exceptions can be unavoidable. Such powerful language can trap you into making poor business decisions or force you to lie to your team—neither of which is an effective way to run a business.
2. Guarantee/Promise
“We guarantee fair pay.” “We promise compensation ahead of our competitors.”
Guaranteeing or promising anything can be seen as a legally binding commitment within your employee compensation strategy. Similar to "always" and "never," there will be exceptions to what you can offer. Instead, consider phrases such as "Our aim is..." or "We strive for..." to express your intentions and dedication without creating legal liabilities. It's more authentic communication.
3. Fair/Unbiased
“Our compensation program is fair.” “We are unbiased in our compensation planning.”
Words like "fair" and "unbiased" are highly subjective, so their meaning can vary from person to person. In a recent podcast I joined with executives from Greenhouse, there was a great example of how using words like “fair” and “equal” can backfire in your employee compensation strategy. Imagine a company giving every employee the same-sized pair of shoes as a gift. While it's a nice gesture and treats everyone equally, not everyone will feel comfortable in their new shoes. So while equal, it's not exactly fair.
Similarly, what one person sees as unbiased may unintentionally introduce a different form of bias. Considering we can never really escape our biases, only combat them, claiming an unbiased decision can be dissonant to employees.
Instead of these subjective terms, consider using "consistent" or "accurate." While you may not be able to achieve a universal perception of fairness or unbiasedness, you can strive to create an environment that promotes consistency and accuracy in compensation decisions.
When talking to your team about language choices in your employee compensation strategy, explain why you should try to avoid these terms. They'll likely appreciate how much you care about your interactions and understand that using less specific terms actually fosters a more equitable environment. It will also help emphasize that leadership is committed to making decisions that are in the best interest of both individual employees and the team as a whole. This approach helps maintain trust and ensures that compensation discussions are handled with care and transparency.
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