How to Manage Employees’ Salary Expectations


The dilemma of how to manage employees has been ongoing since the creation of business. With a stalling economy and the high cost of inflation, managing salary expectations has become an even more slippery slope than in years past. If you're dreading performance evaluations and the inevitable talk about compensation, set yourself up for success with these tips on how to manage employees' salary expectations.

Start With A Salary Review

The grass is always greener on the other side, and every employee knows that employees with Company A, B, and C is making more than they are. Undertaking a yearly salary review is a great way to realign employee expectations, company expectations, and the reality of the market towards the same goal. When thinking about how to manage employees' salary expectations, start with a review of your competitor's salaries and where yours fall in that list. Make sure to factor in additional benefits like time off, insurance, and retirement matching which can be used during employee performance reviews. By keeping competitive with other companies, your business can attract the best talent and keep them. An annual salary review is also a great piece of information to share with employees when discussing wage expectations. 

Be Transparent

Companies that don't set realistic promotion and salary increases set themselves up for failure when thinking about how to manage employees salary expectations. Managers and employees may all have different ideas of what constitutes adequate compensation, and if the process for awarding bonuses or salary increases isn't written down and public, those disparities can blow up. Employers need to give their employees clear cut insight into the salary process. When performance review meetings take place, discussing the policy for salary increases and in which areas the employee excelled to achieve a raise makes the process more transparent and harmonious for the employee and manager. 

Check In More Often

One of the problems with annual performance evaluations is they turn into the focal point of salary negotiation and job performance. While an employee's performance may be excellent, if the company isn't offering additional compensation, the meeting may take on a sour note. The employee feels unappreciated and the manager is put in an awkward situation of praising their staff, yet not offering anything for their hard work. Unlinking job performance from wage expectations is as simple as creating more frequent job performance review opportunities and discussing wage expectations at a separate meeting. Discuss job performance throughout the year and sit down for a wage expectations meeting separately. 

Think Outside Of Salary

For some businesses, salary increases aren't possible and that reality may have nothing to do with employee performance. That doesn't mean that business has nothing to offer though. Millennial employees have shown in study after study that they'd prefer a better work-life balance over more money. The ability to telecommute, longer hours to reduce the five day workweek, and increasing educational opportunities are all low to no-cost ways for businesses to retain their employees without offering a traditional salary increase and manage employee wage expectations by providing job perks. 

The balance of how to manage employees' salary expectations in a down economy can topple some businesses. By keeping competitive with the field, offering alternatives to straight salary increases, and providing employees with a straightforward salary policy and several opportunities to discuss job performance throughout the year, managers can avoid disgruntled employees when funds won't allow a salary increase. Use these four tips to manage employee salary expectations in the coming year. 


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