Preparing Managers for Effective Compensation Reviews in 2024

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

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Sound familiar?

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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.

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

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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.

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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. 👇

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Managers understand the importance of compensation review cycles.

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

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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.

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"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

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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?

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Managers are frustrated and confused by their compensation review process.

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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. 

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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.

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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.

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

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1. Prioritize giving managers easy access to crucial compensation data

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

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This includes:

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

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

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"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

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

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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.

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

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2. Provide managers training with guided workflows

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

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

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

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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

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

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3. Equip Managers to Conduct Effective Pay Conversations

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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.

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

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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

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

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

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

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

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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.

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Who knows, your managers might even thank you 😊

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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 →