Compensation teams consistently face a challenging reality:
- 84% of employers rely on managers to communicate pay
- Only 38% believe they’ve trained those managers well
- Most fairness-shaping decisions—raises, ratings, promotions—are made by managers
In other words, the individual responsible for delivering critical pay information is often the least prepared. WTW identifies manager capability as the primary barrier to effective pay communication. While the philosophy, pay bands, and statements are established, the ability to clearly explain them is often lacking.
Perception directly impacts employee retention
Only 32% of employees believe their pay is fair, and only 38% understand how it’s determined, according to research by Gartner. That understanding gap is the whole game: educating employees on how pay is determined lifts trust by 10% and fairness perception by 11%. Employees who perceive pay as unfair show 15% lower intent to stay; those who perceive it as fair are 85% more engaged and 60% more committed.
Research by Obloj and Zenger shows that perceived pay fairness is a stronger predictor of engagement than actual pay. Competitive compensation alone does not guarantee effective communication.
Companies are shifting their workflows accordingly
Pave’s platform data indicates that manager-led compensation activity has increased more than twentyfold in the past three years, with both greater participation and more activity per manager. Compensation discussions are shifting from HR-led broadcasts to individual conversations, regardless of whether compensation teams are fully prepared.
The positive outcome: when managers are properly equipped, the approach is effective.
- Employees whose managers communicate about compensation frequently view their total rewards at nearly double the rate of those whose managers rarely do: 98% vs. 47% (Pave analysis)
- Companies that added manager-led communications saw rewards engagement grow 25% more year-over-year vs comparable companies that didn’t (Pave analysis)
Enabling managers takes the right tools
Manager conversations are the most effective driver of engagement, surpassing portals, statements, and campaigns. But training alone does not address the 38% gap. Managers require access to each employee’s specific data and the reasoning behind decisions during compensation discussions.
Team View provides managers with controlled access to their team’s compensation details, including each employee’s package, market position, and decision context. This ensures conversations are based on verified information, without disclosing any data not approved by the compensation team.
Total Rewards empowers employees with an always-on, personalized view of their entire compensation package—salary, bonus, current-value equity, and quantified benefits—all built on the same accurate data and total-comp timeline their manager sees in Team View. When employees have already reviewed their numbers before a 1:1, managers don’t need to introduce compensation from the ground up; instead, they can focus on providing context and rationale. This also keeps the conversation active between cycles, giving employees a place to revisit after discussions conclude.
The Pave Agent streamlines preparation for managers. When a manager needs a quick answer—how a merit increase was determined, or where someone stands relative to their pay band—the Agent compiles the analysis with sources attached, enabling the manager to tailor the message and delivery.
The goal is not for managers to recite compensation philosophy, but to answer the three key employee questions: What am I receiving? Why? What determines my next increase?
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Don’t wait for your next cycle to begin
Two diagnostic questions from Pave’s Five Leaks Audit:
- Do managers have the individual’s numbers and the rationale — or just talking points?
- Is your comp-conversation training as robust as your performance-review training?
If either answer is no, the solution is clear: train and equip managers before expanding their role in pay conversations. Companies that followed this approach saw increased engagement, while those that did not experienced significant engagement gaps.
Learn how Team View, Total Rewards, and The Pave Agent can prepare every manager for effective pay conversations. Let’s talk!
Charles is a member of Pave's marketing team, bringing nearly 20 years of experience in HR strategy and technology. Prior to Pave, he advised CHROs and other HR leaders at CEB (now Gartner's HR Practice), supported benefits research initiatives at Scoop Technologies, and, most recently, led SoFi's employee benefits business, SoFi at Work. A passionate advocate for talent innovation, Charles is known for championing data-driven HR solutions.
