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Preparing Managers for Effective Compensation Reviews in 2024

Peter McKee
80% of compensation leaders list “coaching managers through the process” as one of the most significant challenges in managing compensation review cycles.

Sound familiar?

Compensation leaders like you often emphasize the need for better manager training and communication as the area of their review process that most urgently needs improvement.

“My biggest frustration with the process is getting managers to complete their reviews accurately, thoroughly, and timely!” - Christy, Sr. Employee Benefits Compliance Officer

If you find it challenging to help managers complete reviews efficiently and on time, this blog includes three ideas to help them nail the process every time.

Read on to find out how the people teams at Warby Parker, Braze, Hopper, Mixpanel, and WHOOP each improved the process for their managers to run fast, efficient compensation reviews. 👇

Managers understand the importance of compensation review cycles.

Many HR teams believe their managers don't always take compensation reviews seriously. But according to managers, that isn't the case…

Managers interviewed in the State of Compensation Review Management 2024 survey viewed successful compensation reviews as essential to retaining employees and ensuring their satisfaction. They know a well-executed compensation review cycle leads to increased team performance, makes employees feel valued, and makes them less likely to seek opportunities elsewhere.

"Successfully completing a compensation review cycle helps with building trust with team members and boosting the overall morale of employees and the team in general. It also helps with employee retention.” - Head of Engineering

Managers see these reviews as a way to set clear expectations, align goals, and motivate employees to contribute their best efforts. So why do they often struggle to complete them quickly and efficiently?

Managers are frustrated and confused by their compensation review process.

The managers we spoke with expressed difficulties accessing the compensation data they needed to confidently make compensation recommendations, rating it a 6.13 out of 10 on average. 

They also voiced frustrations with their review processes' inefficiency, rating them a 6.07 out of 10 on average. Outdated systems, scattered compensation and performance data, and the cumbersome nature of using spreadsheets are all slowing them down.

67% of managers who rely on spreadsheets for some or all of their compensation planning report losing a moderate to considerable amount of time that should be dedicated to critical projects. In contrast, only 27% of managers who have ceased using spreadsheets for this purpose experience similar time losses.

How can HR teams prepare their managers for efficient compensation reviews?

1. Prioritize giving managers easy access to crucial compensation data

With access to the necessary data, managers can confidently make recommendations about employee compensation.

This includes:

  • Current and historical compensation data
  • Employees’ position in salary and equity bands
  • Benchmarks against market rates
  • Performance data

Aeqium's Employee Total Compensation Dashboard

When managers can’t access this data quickly, it creates frustration and puts employees at risk of not receiving the pay they deserve.

"My biggest frustration is not feeling like I have a full view of information I'd like to have when thinking about compensation." - Director of Marketing

Since the success of your review hinges on managers making the best decisions possible, making this data available is priority number one.

Think about what data you’re most often asked for. Consider implementing a compensation cycles tool to get this information in managers’ hands from the start.

Providing this data upfront shortens the cycle's timeline and frees up more time for HR to collaborate on recommendations for increases.

2. Provide managers training with guided workflows

Processes outside of our core jobs are difficult to remember and execute well.

You can provide countless hours of training on a process, but without a smooth, fool-proof workflow, things will get slow and inefficient – quickly.

So take a moment and ask, "Where can I weave training content directly into my process?"

Challenge yourself and your team to create a process where managers instantly understand:

  • Which employees do they need to review
  • Proposed salary changes based on your compensation philosophy
  • Who in their organization still needs to complete reviews for their direct reports
  • How their increase recommendations will impact their budget and the total increase budget

Aeqium's Guided Manager Workflow

HR teams at Warby Parker, Braze, Hopper, MixPanel, and WHOOP use guided workflows that help managers make compensation recommendations quickly and confidently.

3. Equip Managers to Conduct Effective Pay Conversations

Manager compensation heavily impacts employee pay perception - well-communicated pay equity is 13 times more important in retaining and engaging your employees than higher pay levels.

How well managers do this is mainly up to compensation leaders like you. 

Before a review cycle kicks off, it’s up to you to make sure managers are prepared and have a clear understanding of details, including:

  • Your compensation philosophy and salary administration guidelines
  • How to administer the guidelines and when to reach out to HR for support 
  • The formal process for seeking compensation change approvals
  • Guidelines on your compensation conversations model – both in manager-initiated conversations and employee-initiated conversations

Think like a marketer. Do your best to deliver your training in as many channels as possible to help them stick.

Schedule an all-hands and send gift cards for lunch. Embed training docs in your compensation review platform. Send video trainings.

Run faster, more accurate compensation reviews with guided workflows for managers

Compensation review cycles are among your most significant chances to improve employee retention and morale.

You put so much time and effort into the hopes of running smooth, accurate reviews. Focusing on improving your managers' experience is a great way to improve efficiency and make sure the cycle is a success and that you look like a star.

Who knows, your managers might even thank you 😊

If you’re exploring ways to keep your managers on task to get reviews completed accurately and on time with guided workflows, sign up for a demo of Aeqium today →

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