Ask the Experts: Employee Pay and Salary Benchmarking Tools

Question: One of my best employees is asking for a raise because he found salary data on a salary benchmarking tool on the internet that he believes shows he is underpaid. How should I handle the conversation? I don’t want to lose him, but I am skeptical that he is underpaid.

Answer: Handling this type of discussion on such a sensitive subject can be difficult, but it also provides an excellent opportunity for a conversation with the employee about his professional needs while you get direct feedback about his view of his job and the company. Consider this approach:

  • Involve the employee’s manager in the discussion and have him or her lead the conversation with the employee.
  • Treat his concerns with respect and schedule time with him to discuss his issues. He may have been searching the Internet for jobs as well as salary information.
  • Let him know that he is valuable to the company and you want to hear his concerns and review the salary data that he has compiled.
  • Prior to the meeting, review the employee’s job description and current salary structure. The compensation rates are probably due to a number of factors, including your compensation survey data, your internal company compensation strategy, and his performance level. For example, your company’s strategy might be to pay below market level because your benefits or time off plans are so rich.
  • If you are satisfied that you are paying him an appropriate salary that is aligned with all of the internal company equity considerations, then think about how you will present that information to him during the course of the conversation. If you believe that there may be some valid concerns about his level of compensation, discuss those concerns in advance with your manager and Human Resources and consider what may be done to ensure his compensation is adequate.
  • Try not to minimize the salary data that he is bringing to you to discuss. The information on the Internet can be very broad, general, and tied to a job title (that could be very different than what the employee is actually doing in your company), where the data your company uses is probably carefully matched to the industry and the specific job description’s duties and responsibilities.
  • You can point out that general compensation surveys can be misleading and may not consider the total compensation package being offered, especially if you have more specific information that you can share with him about how his total compensation package was derived.

During the course of these types of conversations, although compensation may be mentioned as the presenting problem, often the issue is something else entirely: You could find that the issues are more about the job itself, development opportunities, career goals, or other considerations. Consider the complete picture and be prepared to have a career development discussion with the employee about where he currently fits in the organization, what additional skills he may need to move his career in the direction he wants it to go, or other considerations. The keys to these types of conversations are to treat the employee with respect and not dismiss his concerns without a good discussion of all of the relevant factors. Assure the employee that you value and respect his contributions to the business and want to do all you can as his manager to help him be productive and feel good about his contributions to the business.