Manager Training Deck: Equip Managers to Conduct Effective Pay Conversations Customization Notes: Please note this deck is intended for you to customize it for your organization. Most slides will require customization. Specifically, look out for information in [brackets]. Delete the customization notes when you are done, and populate the facilitator notes if there is anything pertinent to convey. McLean & Company is a research and advisory firm providing practical solutions to human resources challenges via executable research, tools and advice that have a clear and measurable impact on your business. © 1997-2017 McLean & Company. McLean & Company is a division of Info-Tech Research Group. SAMPLE Learn about becoming a member

Customize the manager training deck 1 Determine the degree of transparency in your organization. 2 Gather supporting documentation. 3 Update the training material and plan for sessions. SAMPLE

SAMPLE TRAINING SLIDES

Manager compensation communication heavily impacts employee pay perception Manager’s Role Managers play a critical role in an employee’s compensation understanding and perception of pay. Complication There is room for improvement in how managers conduct compensation conversations. Today, only 19% of organizations believe that their managers are able to effectively have difficult compensation conversations with employees. However, that being said, only 30% of organizations actually train managers on how to have these conversations. Speaker’s Notes: Managers have a huge role to play in compensation communication. Managers ensure that employees understand their compensation and significantly impact their perception of pay. In fact, manager communication about pay has a positive impact on engagement, job performance, and retention. Why? It’s likely so impactful because it is so personal. Managers can best explain and personalize compensation decisions for their staff, making pay decisions seem less like a “black-box” HR exercise. These decisions include: How an individual employee’s pay is determined. Where the employee sits in the pay band/range, if applicable (and if target degree of transparency allows). How each employee can increase their pay (e.g. training, development, certification). However, there remains extensive opportunity for improvement of manager compensation communication. Only 19% of organizations believe that their managers are able to effectively handle difficult compensation conversations with employees. Organizations are not responding to this skills deficit accordingly. They are not equipping managers to be able to have these conversations. In fact, less than one-third of organizations actually train managers on how to have compensation conversations. When compensation training does occur, it often is “light.” Today, we are going to focus on equipping you to navigate compensation conversations more effectively by [reviewing our compensation philosophy, base pay structure, variable pay plans, and key communication practices]. (PayScale, 2017) Today, we are going to focus on equipping you to navigate compensation conversations effectively. SAMPLE

Total Cash Compensation Total Cash Compensation Understand key components of compensation Total Rewards Non-Cash Benefits Recognition Total Cash Compensation Variable Pay Total Cash Compensation Speaker’s Notes: In order to be able to effectively have compensation conversations it is key to understand some basic terms. We follow a Total Rewards approach. Total Rewards is a holistic approach to rewarding employees that includes three key areas: total cash compensation, non-cash benefits, and recognition. Total cash compensation consists of base pay and variable pay. Together this comprises the total dollar amount (in cash) that an employee receives. Base pay is the fixed, guaranteed portion of pay that an employee will receive regardless of performance. In addition to base pay, an employee may receive variable pay. This is pay that is not guaranteed. Based on demonstrated performance against a target an employee will receive a pre-determined amount. There are three types of variable pay: short-term incentive plans, long-term incentive plans, or bonuses. Non-cash benefits in our organization consist of offerings such as [retirement plans, health care insurance, life insurance, etc.]. This is often overlooked by an employee when they are evaluating their compensation, but remains a critical, substantial component of our Total Rewards offering. The last component of our Total Rewards offering is recognition. Recognition can come from managers, peers, or subordinates. Recognition is a key way to motivate, retain, and engage staff. Please note the training today will only focus on total cash compensation and non-cash benefits. Recognition will not be covered. [Additional training on recognition will be provided at a later date.] Base Pay SAMPLE

Today we will reviewing the foundations of our compensation program Compensation Philosophy Base Pay Variable Pay Job Worth Market Assessment Short-Term Incentive Pay Long-Term Incentive Pay Bonuses Administrative Guidelines Facilitator’s Notes: Delete any elements of the diagram which you will not be reviewing. Speaker’s Notes: As I mentioned earlier, today we will be covering a number of key topics. We’ll talk about our general intent to compensate employees relative to our target labor market, [as well as the composition of the target labor market (i.e. industry, geography) and where we get our external salary or market data]. We’ll also talk about our compensation structure. Over and above what can be shared with employees, you’ll learn [add in the extra information]. To help navigate through the next section, keep an eye out for icons in the top right corner of the slide. Compensation Communication SAMPLE

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