Communication and Compensation


As a relative newcomer to the HR profession I am continually bemused by the amount of effort certain firms appear to invest in fighting transparency in compensation matters (it’s about time I worked in the name of our blog).

The latest occurrence is a recent piece in HR Magazine that espouses ‘best practice’ approaches to wage communication. Communicating regularly with employees about compensation seems like a no-brainer for the obvious situations involving variable pay matters, clarifying misconceptions and misunderstandings about pay policies as well as getting ahead of increasing compliance regulations.

But what about the really important stuff, you know attracting and retaining the best talent? 

Defensible compliant job descriptions increase employee alignment and improve job satisfaction.  Clear expectations help align employee values to company values. The emphasis for strategic HR management should be on the company value chain.  Reducing risk and making clear compensation communication a standard operating process frees up valuable HR resources to focus on vital human capital management tasks.

My sense from clients is the desire to communicate is often outweighed by the lack of substance and specificity of many compensation and pay policies.  Many years ago at a large US automotive company we were regularly reminded to not divulge our compensation to anyone, lest some undefined, but certainly heinous consequence might befall us.  It seemed almost comical given that everyone in the department knew everyone’s’ business anyway.  Or so they thought.  The only harm I ever saw was to those few individuals who only thought they knew, but didn’t really.

I’m not advocating for full transparency necessarily, but we do believe that good compensation communication starts with a clear understanding of the position and its relative value to the organization.  The foundation is consistent and easily explained job descriptions.  The approach and process for establishing the relative value of each position to the firm leads to effective alignment with business objectives as well as establishing the core tenets of compensation policy.  From there you can have an intelligent conversation about competencies, personnel development and yes even salary and benefits, but within a logical and defensible framework.

People will always want to be paid more.  Who doesn’t?  The communication needs to start with the position and its place in the company value chain.