The Advisors' Blog

– Broc Romanek

This blog by Margaret O’Hanlon provides some nice thoughts about how to handle the looming pay ratio conversation with employees and others. Here’s an excerpt:

So what good CAN you make of it? Well, your blueprint can address what employees DO after the announcement, which you are much more likely to have some influence on than their strong impulsive reactions. When it comes to imagining what employees could do that would be more constructive than feeling without thinking, my mental picture includes employees who:

– Don’t immediately verbally overreact to the numbers
– Are willing to listen to the rationale for the numbers with an open mind, even though they are skeptical (or more)
– Are able to spend a limited time mulling over with their colleagues what they have heard
– Won’t go on social media to comment on the announcement

Margaret’s second blog on this topic is even better than her first. Here’s an excerpt from that:

Use end-of-the-year focal review and merit pay communications. Articulate, repeat and reinforce what you do to make sure employee pay is competitive, how your practices are fair and how employee salaries are only one part of your company’s whole reward package. If you have made changes based on employee input, be sure to point this out,too. Evidence of a solid relationship based on responsiveness to employee needs will go a long way towards defusing employee disdain for select policies and practices — as long as employees would agree that you’ve been responsive.

Use people not technology. Distancing the message from the personal will leave your company open to employee claims that leadership is ducking responsibility. Identify a spokesperson to present the details of the CEO Pay Ratio, back it up with email or intranet information, but be sure that your communication strategy gives employees a chance to discuss their reaction with someone that they can open up to.

Train your managers. Whether or not you choose to use them as a primary communication channel, they will be. Every bit of research going back decades indicates that managers are employees’ preferred and trusted information source. Be sure they are able to handle employee questions well and that they are not afraid to talk about the findings in a group. If they have employees whose salaries fall near the median, odds are they will receive tough, candid questions that they will need to handle well.

Tune in next Tuesday, December 5th for the webcast — “Your Upcoming Pay Ratio Disclosures” – to hear Compensia’s Mark Borges, Gibson Dunn’s Ron Mueller, Wilson Sonsini’s Dave Thomas and Cooley’s Amy Wood discuss all the latest about how to comply with the new pay ratio rule.