Tag Archives: employee compensation

How to Handle Compensation Disputes

As a business owner, there’s a good chance you’ll encounter compensation disputes at some point. It’s only natural that your employees will want to maximize their salary, especially your top performers. How do you handle compensation disputes and keep the peace?


The Common Reaction

It’s normal for employers to be caught off guard or even annoyed with this type of situation. Often it hits you out of the blue, and it’s difficult to immediately formulate a response because there are so many variables. If you acquiesce and increase an employee’s salary, it can trickle down and impact your business in numerous ways. The same is true for denying the request.

As Karen Dillon, author of HBR Guide to Office Politics puts it, “As a manager, you’re starting with an impressionist painting of how people are paid and whether it’s fair. Also, it’s rare that giving the raise is entirely up to you — and there are a hundred things you have to account for. With a decision like this, there are always ripple effects.”


Hear Them Out

Before entering into any sort of negotiation, hear the precise reasoning behind the dispute. Of course you’ll be more receptive to listening to a linchpin employee with years of experience over a new hire with minimal influence. But it’s important to gather as much information as possible. Never shut the idea down right away because this can drive a wedge between you and your entire team.


Consider Key Factors

From there, you’ll want to perform some considerable research. Look at current market conditions to determine how your employee’s salary compares with individuals in similar positions. Next, check the projected salary for the next three to five years.

Assess what the employee’s overall performance and dedication level have been like during their time with your company. Have they consistently exceeded expectations, or have they merely been so-so?

Finally, you must consider whether or not increasing their salary is even a realistic notion. Would doing so take a huge chunk out of your profit margin? Or would it merely be a tiny divot?


Weigh Your Options

At this point, you should have a pretty good idea whether your employee’s dispute is valid. After examining your company’s financials, you’ll also know if it’s economically feasible. Base your decision on this information.


Resolving Compensation Disputes

If your employee has sound rationale and it’s feasible, negotiate to find a number that both parties are happy with. Otherwise, reject their request. If you choose the latter, do it with respect and tact. Explain your logic rather than simply saying, “no.” You may also want to give feedback on what they can do to potentially earn a raise in the future.

Compensation disputes are never fun and can potentially cause a rift between you and your workforce. Taking the right approach should enable you to come up with a reasonable solution that makes sense for both parties.

Creating a Total Rewards Program: Compensation and Benefits

Many employers are becoming increasingly concerned with how to sustain and recruit a high-quality workforce while also maintaining costs.

What steps are you taking to make sure that you are an employer of choice? How are you promoting the full value of your company and your offerings?


Total Rewards Concept

Establishing a total rewards program is not a new concept for employee recruitment and retention. For years, employer groups have produced total compensation or “hidden paycheck” statements that detail compensation and benefits costs. These programs are extremely important in improving recruiting and retention strategies in a tight labor market.

Total rewards programs provide monetary, beneficial and developmental rewards to individuals within an organization who meet specific goals. These incentives are perceived to be of value in the employment relationship, including:

  • Base and variable pay
  • Group insurance (medical, dental, life, retirement, savings, etc.)
  • Paid time off (PTO)
  • Recognition programs
  • Training and career opportunities


These elements are interdependent and may have different values and importance to each person. Ultimately, the outcome of a total rewards approach is to provide each individual with a combination of monetary and non-monetary rewards to motivate them to maintain desired business performance.


Weighing the Options

The Top Five Total Rewards Priorities Survey, sponsored by Deloitte Consulting and the International Society of Certified Employee Benefit Specialists (ISCEBS), surveyed Human Resources professionals from 22 countries around the world (in the Americas, Europe, the Middle East and Asia Pacific). Respondents were to represent their company’s views on many questions and to share personal opinions on others.

Despite differences in political and cultural climates, 35 percent of respondents reported that their top challenge in the coming years is to find, motivate and retain top talent.
Other challenges listed include the rising cost of total rewards, being able to afford significant pay increases in a cost reduction environment, navigating through uncertain economic conditions and anticipating new tax and regulatory requirements, and providing meaningful total rewards to employees.

When asked about changes employers planned to implement to their total rewards programs over the next 12 months, responses were as such:

  • Increasing health and well-being initiatives (43 percent)
  • Definition, mix of components, and/or redesign of overall rewards strategy (40 percent)
  • Alignment with organization strategy and brand (34 percent)
  • Differentiation by employee group (workforce segmentation) (23 percent)
  • Differentiation by business unit (14 percent)
  • Significantly reducing total rewards investment (8 percent)


Re-evaluation, redesign, alignment and differentiation of programs seem to be the most popular strategies among employers. To cater to your employees and determine what they value and prefer to receive in exchange for their time and talent, consider using surveys, focus groups and exit interviews to gather the needed information. Plus, on a consistent basis, communicate with employees concerning what incentives are offered and how they can take advantage of the rewards in their unique circumstances.


Creating and Implementing a Total Rewards Program

To create an effective total rewards program at your organization, consider putting together a team of individuals to assess your current benefits package and how it helps your company achieve its goals. If you find that you are not meeting the organization’s objective, then implementing or enhancing a total rewards program may be the right strategy for you.

Here’s how to develop a solid program:

  • Ask management to identify and analyze various rewards strategies to determine what would suit your workplace best. Consider pay rewards, nontraditional benefits and personal development opportunities to further company objectives.
  • Implement the new system by publicizing it to your employees and educating management personnel.
  • Train employees on how they can use the program to achieve results for personal success and for company goals.
  • Evaluate the program’s effectiveness and make necessary changes to further achieve your goals.


To help employees understand the concept of total rewards, there are many online tools that will allow them to view information on benefits and compensation statements, learning opportunities, paid time off, educational reimbursement policies, wellness activities, and career development and recognition programs.

Consider implementing a total rewards program or revamping your current one to meet the company’s needs and the needs of individual employees in order to increase the value of your investment.

For the complete results of the ISCEBS and Deloitte Consulting survey, visit: www2.deloitte.com/us/en/../top-five-rewards-survey-2014.html