Authors: Marjolaine Lapierre Ivana Lemme
In today's workplace, rising salary expectations, greater transparency and evolving performance‑management practices mean managers are increasingly required to lead sensitive, high‑impact conversations. Whether discussing annual increases, performance feedback or career aspirations, these conversations influence both the employee experience and the organization's overall sense of fairness.
To be effective, these discussions should occur regularly throughout the year, not only during annual reviews. Ongoing communication helps ensure shared expectations, strengthens alignment on goals and performance and reduces year‑end surprises.
Because these conversations can be emotional, managers need to come prepared — with empathy, clarity and a solid grasp of compensation and talent‑development principles. Below are three common scenarios organizations face, along with practical guidance to help managers turn challenging moments into constructive and empowering discussions.
1. The underperforming employee: Explaining a lower‑than‑expected increase
When an employee's contribution falls short of expectations, a lower salary increase can trigger disappointment or concerns about fairness. In these situations, the quality of the discussions held during the year becomes essential.
As Marjolaine Lapierre, senior compensation analyst, puts it: "Employees should never be surprised when their increase is communicated. Performance should be an ongoing conversation."
Linking pay to performance is a widely recognized best practice. For managers, leadership effectiveness in this context relies on:
- Grounding the conversation in specific, observable facts
- Understanding the fundamentals of the compensation program
- Identifying possible employee reactions in advance
- Demonstrating openness and active listening
A constructive conversation should balance transparency with support. Beyond explaining the decision, managers should offer tangible actions or developmental steps that help the employee progress.
2. The high performer at the top of the salary range: Turning constraints into development opportunities
In some cases, a high‑performing employee reaches the maximum of their salary range. Even when contributions are strong, pay progression is limited — sometimes leading to perceptions of stalled growth or reduced recognition.
Clarifying the rationale behind the salary structure — including internal equity, market positioning and competency‑based progression — helps employees better understand what salary range limits really mean and reduces emotional reactions. These limitations exist to maintain fairness and consistency across the organization.
This scenario can also spark a more strategic conversation around professional growth. Managers can explore levers such as:
- A tailored individual development plan (IDP)
- Stretch assignments or cross‑functional projects
- Coaching or co‑development opportunities
- New competencies or capabilities to build for the next career stage
As Ivana Lemme, director, Talent Assessment and Development, emphasizes: "Even if salary progression is capped, an employee's professional growth can remain dynamic and forward‑moving."
3. The high performer with unrealistic expectations: Reframing without discouraging ambition
Some high performers develop salary or career expectations that exceed organizational realities or budget constraints. These expectations may stem from online compensation data, informal comparisons or misinterpretations of market trends — sources that don't always reflect the organization's target market or internal structure.
Managers should begin by understanding the motivation driving these expectations: a desire for recognition, influence, learning opportunities or broader impact. By clarifying the organization's compensation philosophy, total‑rewards structure and job‑level frameworks, managers can realign expectations while preserving the employee's motivation.
Explaining how market data is interpreted, how pay decisions are made or why certain roles have defined boundaries helps reframe the conversation constructively.
Preparation, transparency and ongoing dialogue are key
Whether dealing with performance issues, salary‑range limits or overly ambitious expectations, the quality of the conversation depends first and foremost on the manager's preparation.
Effective managers:
- Understand compensation principles.
- Anticipate employee reactions.
- Use specific examples.
- Communicate with clarity, fairness and empathy.
A well‑explained compensation structure reinforces organizational equity and consistency, while an authentic and human approach strengthens trust.
Maintaining an open dialogue throughout the year — rather than concentrating everything in the annual review cycle — helps eliminate surprises, realign expectations in real time and proactively support employee development and engagement.
In an environment where transparency is increasing and career expectations are evolving rapidly, equipping managers with the right tools, training and aligned organizational messaging is essential to elevating the employee experience and strengthening confidence within teams.
