Ask a Resourceful Human: How to break the news of a wage freeze

Welcome to our regular HR advice column, Ask a Resourceful Human. Here to answer all of your burning questions is Erin Grau, the co-founder and COO of Charter, a media and services company that aims to transform the workplace. Erin has over 15 years of experience at the intersection of talent and operations in global organizations and startups, including the New York Times and Away. You can sign up for the free Charter newsletter about the future of work here.

When it comes to delivering hard-to-hear news, no one does it better than an HR pro. (Think you can come up with a challenger? I’ll wait.) But that doesn’t make letting employees know of a company-wide wage freeze any easier. If you’ve been tasked with doing just that, you may be wondering: How can I break the news in a compassionate way?

Wage-growth reductions are typical during recessions and the recovery periods that follow, according to the US Bureau of Labor Statistics. If your organization is considering a wage freeze in order to weather the economic downturn, you’re not alone.

If your organization is freezing pay across the board, you’ll want to take these steps.

1. Involve your leadership team. Announce the news in a company-wide town hall, followed by team meetings where department heads can explain the wage freeze in more detail and answer questions. Before those meetings, equip leaders with speaking points so they can address employees’ concerns, like whether there will be more cost-cutting on the horizon.
2. Lead with empathy and humanity. This decision affects your employees’ livelihoods and families, so Slack CEO Stewart Butterfield reminds us that it’s important to express “the confidence that solutions will arise. Even just, ‘We're gonna get through this,’ is an important message for people to hear.” To ease their anxiety, fear and uncertainty, let employees know that everyone is sharing in the pain and emphasize how valuable they are to the business. They may feel undervalued and even resentful after hearing the announcement.
3. Deliver an honest, clear message. Be detailed in communicating not only the what, but the why. Share what you can about the wage freeze, how it works, and how long it will be in place. Explain the decision, why it was the right one for the business, and what the company’s compensation philosophy and strategy will be moving forward. Communicating the rationale behind the decision is really important.
4. Encourage dialogue. Host office hours and company-wide forums, allow time for discussion in team meetings, and remind employees of the resources available to them, including managers, mentors, coaches, and the HR team.
5. Share new ways of incentivizing employees. Consider, for example, an employee recognition program. Whether a small financial reward, like a gift certificate to a local coffee shop or restaurant, or public recognition in a company-wide Slack channel or meeting, recognizing employees’ achievements can keep morale up. Last year, I worked with a company that had a points-based recognition program, where employees could earn points for a job well done and redeem them for merchandise in the company store.

Remember: Wage freezes should be temporary. Think beyond the economic downturn so that your business is set up not only to survive, but thrive—and communicate that to employees.—EG

Has your organization implemented a wage freeze? Or do you have a different question about HR? Let us know at [email protected]. Anonymity is assured.