There are pivotal moments in your career…both as a manager and as an employee, and compensation is often one of them…receiving or delivering. Lately, I have been hearing story after story about compensation, and here are my lessons learned…

1. If your employee is shocked/surprised at their comp numbers in a bad way, that’s a problem. Either their performance wasn’t clearly communicated, and/or comp expectations weren’t managed. No one should be shocked. They might be unhappy…but they shouldn’t be shocked. You haven’t been as clear as you needed to be.

2. If you are giving someone a zero increase or bonus, you are telling the person you want them to leave. Unless there is a catastrophic event (like 2008), there is no other explanation. If someone isn’t expecting it (e.g. foreshadowing through a performance evaluation), they won’t get over it.

3. If you receive an increase in base and/or bonus, be grateful. Understand that making comp decisions is hard. And if you just got promoted, understand you’re supposed to be at the lower end of your grade so don’t compare yourself with other more experienced people at your new level.

4. Comp discussions should be short and to the point. I have heard crazy stories where managers try to justify their decisions “I didn’t know what to give you because I know you have kids in college” or “do you want the $5k bump because then your bonus gets accrued” or “I had nothing to do with the number”. Give them the number, provide some context (e.g. “you did a great job this year so we tried to reflect that in your bonus.” is one phrase I have used). That’s it. It’s not meant to be a long discussion about why…..that’s a different conversation for a different day.

5. Depending on your company, compensation varies in the proportion of art and science. Don’t try to over analyze it, don’t try to compare your numbers with someone else’s. If you think you are being underpaid, have that conversation with your manager, but not at the moment you get your comp numbers .

One company I worked at had a great process: first, they had bands for base salary based on title and function. So as a hypothetical example, if you were a VP, you knew your band was $70k to $150k. If you were at $145k, you understood you were at the top of your range and shouldn’t expect a base increase. The logic was that the marketplace price for the role was $150k at the top of the range. If you wanted to make more, you needed to get promoted to the next band or perform at the highest level to get the maximum bonus. Your bonus was based on guidelines set based on your performance, which had 2 grades: G and L. G was for goals-accomplishments. L for leadership behaviors and competencies. Personally, I liked this process the best.