Communicate Compensation Changes To Your Team

May 30, 2022
Diya Mathur
Diya Mathur
Diya Mathur
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Table Of Contents

Without a question, the times we live in are extremely dynamic. It's a tough industry that requires constant adaptation to shifting market conditions.

When it comes to changes in business, a recent episode comes to mind. In the winter of 2021, on 01 Dec, when employees were warming up to the upcoming holiday season, the CEO of a company in the US fired exactly 900 employees over a Zoom call. The changing business ecosystem and the impact of the same on the business is inevitable, but there are better ways to communicate compensation changes.  Unfavorable changes in the business ecosystem can trigger changes to the compensation of employees and can have a cascading effect on the entire workforce.

Handling a change in compensation, particularly the one that has a negative effect on the take-home salary of an employee is one of the toughest challenges business leaders have to meticulously plan to tide over. In the sections that follow we shall discuss briefly about how a solid communication foundation and an open culture can help you effectively tackle business changes like changes to compensation. We also enumerate some well-advised tips to follow when faced with such a predicament.

Culture | Open and Predictable

While no business wants to go through a situation where they have to recalibrate the compensation system on the negative side, every business leader has to be ready for such phases. In the long run, though, the workplace culture will help to soften the blow if it is more of an open nature.

Workplace culture builds over a longer period of time. Values that are practiced consistently enable workplace culture to take root. As a business leader, you can take steps to inculcate a culture in your workforce that enables open and consistent business communication, including insights into various sales channels examples. With an open business communication culture and a flatter hierarchy, you would have much-needed trust from your employees to tide over difficult phases.

It is a good practice to regularly involve senior members of your staff in business update meetings. It does not have to be a reveal-all affair. Some businesses call it a “Townhall”, others call it an “All hands on Deck”. Usually conducted monthly or quarterly, these are a good way for leaders of multi-national businesses to connect with their top performers and guide teams in the right direction.

Another culture-building exercise can be local business leaders spending time taking interested staff through relevant training. A small session where they can take their audience through their own area of expertise.

The front line managerial staff cannot be expected to be the sole connection between the organization and the employee. Besides, having a consistent connection with the senior leadership boosts employee confidence and morale.

That difficult conversation

In any case, when it comes to communicating a tough approach to downsizing compensation, you can take a number of measures to keep the negative repercussions to a minimum. It is a series of steps you should take well in advance to cushion the impact.

An Early Notification

A planned and early notification about the circumstances that have forced your hand into changes in compensation can be a good cushion. Over time, employees will start to realize how changes in the business ecosystem impact their compensation and will likely have more confidence in the leadership. Additionally, utilizing a comprehensive sales deck during these notifications can provide visual insights into the broader context of compensation adjustments.

Be Prepared with all the Facts

Have your team go through all pertinent facts and likely questions before they communicate compensation changes. Build a team of subject matter experts and local business leaders to ensure all aspects are covered well ahead. Such sessions tend to generate a lot of curiosity and will invite a number of questions after you communicate compensation changes. Confidence and to the point answers to such questions will only help smoothen the impact.

Be Concise and Transparent

Being concise, to the point and transparent is key when you communicate compensation changes. It helps to keep the communication pointed and honest. Any attempts to veil this communication can only backfire. In a survey conducted it was found that over 99% of employees preferred honest communication. Overall, teams respond well to changes when the communication appears concise and honest.

Allow Feedback

An important part of communicating compensation changes is to allow a two-way channel. Be open to questions from your folks no matter how small or trivial they are. Keep all channels open for taking in feedback and queries. Quick 30-minute sessions by senior leadership can be organized even up to a couple of weeks after the changes are announced. Keep your staff informed of these sessions so they can come up with relevant questions about their immediate future.

Presence of Local Leadership

In a number of cases, businesses decide to communicate compensation changes via a finance team or the HR team. It is essential that the local leadership team is also present in such conversations when being communicated to entire teams. Getting communicated about such critical changes can be demoralizing, but coming from unknown faces can be even more shocking. You need to have your leadership team take charge and establish a connection with your folks on the ground to reassure them of your support.


While these changes are never easy these measures can help you retain talent through difficult times and bounce back when the conditions are more favorable. These measures also help you to restructure and reorganize quickly when changes are inevitable.

Compensation structures in sales are quite dynamic in nature and go through frequent changes. Having a transparent real-time sales performance and incentive compensation helps your folks to have a clear and unrestricted view of their performance and projected earnings in real-time.

Kennect offers you both these independent solutions that work together seamlessly to provide a quick and transparent employee engagement system. Incentive Compensation Management from Kennect lets your sales folks in on their earning potential in real-time from anywhere. Sales Performance Management system lets them and entire teams benchmark their performances and set dynamic goals in real-time.

Ask for a demo today.


Diya Mathur

Diya is a Product Marketing Associate and content writer specializing in Incentive Compensation Automation. Diya has honed her ability to bridge the gap between intricate software functionalities and accessible, reader-friendly content. Her articles are a testament to her dedication to breaking down intricate SaaS solutions into digestible insights that cater to both tech-savvy professionals and those new to the software landscape.


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