How to Prepare Your Managers for Merit Cycle Season

For many organizations, merit cycle season is right around the corner. With the clock ticking, it’s critical to equip managers with the necessary context, communication tactics, and data. Keep reading to learn how to successfully prepare your team for your upcoming merit cycle.

Reiterate Your Compensation Philosophy

Start with the foundation by buttoning up your compensation philosophy. 

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Revisit and update your documentation to ensure it clearly communicates the logic behind compensation decisions.

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For example, the team at Affirm discloses their compensation philosophy and pay structure externally by publishing documentation on their careers page. In their compensation guide, they provide transparency into key elements, such as:

• Compensation structures and how they were determined
• Geo tier compensation differentials
• Equity award details
• External grade structure including base pay and equity ranges 

With well-defined pay principles like the ones above, you can then communicate (or re-communicate) the ins and outs of your compensation philosophy with frontline managers. It’s critical to explain the “why” behind important salary, equity, and bonus decisions before diving into the “how”.

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Consider sharing your philosophy in multiple formats to accommodate different learning styles. Email or Slack team managers the documentation, present your philosophy in relevant meetings, and offer to set up 1:1 conversations to avoid confusion and proactively get ahead of employee questions.

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Ensuring your managers understand and can easily reference your compensation philosophy is a critical way to boost compensation philosophy adherence, which is one of the top three merit cycle metrics to track. 

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Define Communication Guidelines

Compensation decisions and discussions often involve sensitive information, so setting clear communication guardrails helps make for a smoother merit cycle season.

“Ensure frontline managers have a really strong grasp of your compensation philosophy and principles and how to communicate merit cycle decisions effectively. This is really where things are made or broken. Managers should feel confident and prepared throughout the cycle.”
– Dana Paul, People Operations Lead at Pave

Here are some questions to consider when preparing managers for conversations with their employees.

• Should managers discuss performance and compensation separately?
• Should managers share salary ranges with their employees? 
• How should managers prepare for difficult conversations, like when there is a pay freeze? 

The last point is particularly important. Don’t forget to help prepare managers for difficult discussions. In instances where employees are not receiving merit increases, managers should know what can be said and how to conduct the conversations tactfully and appropriately.

Provide Clear Examples And Training

As you gear up for the upcoming merit cycle, train your managers on how to approach the process from both a philosophical and tactical perspective. 

• Philosophical: Articulate how compensation decisions are made on a company-wide level (refer back to the all-important compensation philosophy). And explain how managers should approach budget and team planning decisions.

• Tactical: Equip your team with the right tools and technology. For example, if you use a compensation management solution, show managers where they can view salary bands, set or approve merit increases, access historical employee pay information, and more.

In both cases, consider diversifying your training approach. 

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We’ve seen compensation teams successfully train managers by recording Loom videos and product walk-throughs, creating example planning scenarios, hosting office hours, and facilitating role plays. As Dana Paul, People Operations Lead at Pave, shared, “Everyone learns differently so take a multi-channel approach when training your managers.”

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With a robust training and enablement plan, your managers will be ready to sail through merit cycle season. 

Set Your Managers Up For Merit Cycle Success with Pave

Avoid merit cycle stress by using a compensation management solution like Pave.

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Pave is your one-stop shop for data-driven compensation planning. Today, compensation leaders at organizations like Zapier, ClickUp, and Plaid use Pave to:

• Set customizable merit cycle guidelines for managers
• Enable managers to view team compensation details, including salary and equity
• Assign approval workflows and keep their merit cycle on track

‍Request a demo to learn more.